Six steps to turn HNW friends into clients

“Your friends may have wanted to do business with you for a long time. The thing they haven’t figured out is why they need you.”  A New York advisor shared this observation years ago. Put another way, your friends don’t have the big picture of how you help people. How can you set this right?

This might sound ridiculous. “They know I am a financial advisor at [firm]. What else do they need to know?”  Everyone pigeonholes. You have a friend who is a lawyer. What type of law do they practice? Off the top of your head, you know about corporate law, criminal law and personal injury law. There are many other branches of the legal profession. You need to raise your friends’ awareness of what you do.

The easiest way to get into a conversation about what you do is to give them the opportunity to talk about what they do. People love talking about themselves.

Six steps to establish awareness with friends

Step One: Build a list of friends, family and relatives. You want to include anyone with future client potential. Even if you don’t think they have the assets (You might be surprised!), keep most on the list anyway because they might be in a position to refer.

Step Two: Meet privately with each person. This is all spontaneous. You finished playing tennis and saw a friend sitting at the coffee bar. Say hello and ask if you can join them. You might move to a table because it’s more private and comfortable. It is important for both of you to have an open timeframe. Neither of you should need to be out in five minutes. You are relaxing together.

Step Three: Ask about their business. Listen and focus. It sounds something like: “[Name], we have known each other five years. I know you are an engineer and work at [firm]. It has something to do with software development. I have always wondered, ‘What do you do at [firm]?” Stop talking. They might pick up there and add more detail. You might be surprised if they say, “That’s what I did five years ago when we first met. I have moved into management.  Now I run the department.”

Step Four: It’s your turn. If they are polite, they return the compliment, asking “What do you do?” If not, resist the temptation to say: “It’s my turn. Let me tell you what I do.” If they assume your job involves sales, they are thinking “Now comes the sales pitch!” Try this instead, an approach I learned more than a decade ago from a financial planner. “You know I work at [firm].  When you tell your friends about me, what do you say that I do?” Stop talking. Now we get back to pigeonholes and one-word answers. “You sell insurance” or “You are a stockbroker.”

Step Five: Explain your business and highlight the benefits. If they gave one of those narrow answers, here are two good starting points: “That’s what I used to do. Today, my role is much broader…” Another approach is “Selling insurance is part of what I do. I also help people in other ways. This is where you tell your story, aligning it to their situation. Keep it brief. Less is more.

Step Six: Your friend might be expecting a sales pitch now. They have tensed up. If selling insurance is part of what you do, they think they know what happens next. Surprise them! “Now that you know what it is that I do, if you know anyone in [this situation] or [that situation], I would like to know about it.  I may be in a position to help them.” The situations you mentioned might be very similar to their own situation.

You accomplished your objective. You have not scared them off. Move to an unrelated subject.

It’s time to dispel myths

Your friend might start asking questions. That’s good! Here are some points you might need to address.

• How you do business. You are a relationship manager. You have a multi-step process.

Dispel the myth: You are not an insurance salesman or a stock picker.

• Talk about your years in the business. If you are newer, talk about the experience on your team. Talk up the firm.

Dispel the myth:  You are new at the job and will be practicing with their money.

• How many clients? If you have a small, manageable number - perhaps 250 or less - bring it up. Do you know each of them on a personal level?

Dispel the myth: You have 10,000+ clients. The last time you spoke was when they made their initial purchase.

• Size of relationships. Personally, I like to give an average, then mention the smallest and largest as your size range.

Dispel the myth: They might not have been asked because they feel they are too small or too big for you.

• You are priced fairly. Explain how your pricing works. This might be asset-based pricing or fees built into products.

Dispel the myth: If you have a good lifestyle, people might think it is funded by extortionate fees paid by unsuspecting clients.

• The client’s needs come first. Explain how you get to know each client, establish a risk profile and make recommendations consistent with their tolerance for risk.

Dispel the myth: Your friends might think advisors bully their clients.  They might think if you don’t buy what they tell you, they drop you as a client.

This open exchange of information “enlightens” your friends about how you help people. They can tell you know your clients and sincerely care about them. You are emotionally “invested” in their success. Many might become clients or become your advocates when one of their friends has a problem needing a solution.

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