Why haven’t some friends asked to become clients?

Let us assume your friends know you “work on Wall Street.” They are invested in the market. The topic of investing comes up in conversation. They have not said, “I want to become a client. Please handle my money.” What is holding them back from asking you?

Nine reasons have a workaround.  The 10^th reason has no solution.  Let’s start with the good news:

1. Can you keep their secrets? They assume you talk about your clients. Professionals in many industries tell friends how much money they do (or don’t) have.

Approach: Like lawyers, accountants and doctors, we are bound by confidentiality. It’s a shared trait across our professions.

 

2. Do they understand what you do? They might call you a “stockbroker.” Do they understand the full range of how you help people? People might assume all lawyers are like Perry Mason or ambulance chasers. They don’t know there are dozens of branches to the legal profession.

Approach: Over coffee, mention what you think they do. Ask them to elaborate. They often ask you to tell your story. If not, try this: “You know I work at [firm]. When you tell your friends about me, what do you say I do?” They give a general answer. Starting with “That’s part of what I do…,” you add additional details.

 

3. Can you deliver? This is the “risk to friendship.” It’s always on the downside. They worry if the match doesn’t work out and they leave the firm, they have lost a friend in addition to money.

Approach: They must take ownership of the results. Any advisor would start building the client’s portfolio with large cap value and growth investments. These might be mutual funds or exchange-traded funds. Later, the client talks about adding small cap or sector specific investments. The advisor is responsive, adding them to the portfolio.  If the market drops sharply, large cap growth or value stocks often suffer less than those others.  The client realizes the “core” holdings often performed well. It was the addition of the other investments (suggested by the client) that did the damage.

 

4. Have they been asked? You might wonder why your friend hasn’t approached you. They might wonder why you haven’t approached them. They might assume you don’t do business with friends.

Approach: Everyone should have the opportunity to say no.  If you ask and they say no, that is fine. If you don’t ask, you are making the decision for them.

 

5. Do they know you are still adding clients? They might assume you have all the clients you can handle. They get this idea if you have no time to go out with them.

Approach: Share anonymous stories about adding new clients. It was an introduction through a current client or a friend from college that brought those new clients into your practice. Your practice is still growing.

6. Am I too small? Do they know your account minimums? No one wants to be told they are “too small.” If you throw out a number, it becomes an “over or under” situation. This implies the person is not important, only the asset size.

Approach: Explain the number of clients you have. Give the range from smallest to largest and the average. Your approach is inclusive. They see where they fit within the range.

 

7. Do they have money now? Business is discussed, but they aren’t interested. They don’t have money now. They might have it later, though. Don’t assume “not interested now” means never.

Approach: Acknowledge this might not be the right time now, but ask, “When you think we should talk?”

 

8. Are you experienced? You are new. They don’t want you practicing with their money! They might be thinking, “If you are still around in two years, then we will talk!”

Approach: Sell the firm. Sell the team. They might assume you are a stock picker. If they see you as a relationship manager, they may be more comfortable with your experience.

 

9. Do they work with another advisor? Many people think one advisor is enough. They have one auto mechanic and one barber. They forget about the number of doctors they see!

Approach: Studies have shown the wealthy work with multiple advisors. Substitute “successful” for “wealthy.”  Mention successful people often work with several advisors.  You are obviously successful. How many do you use?

The tenth issue might not have a solution.

10. They do not want to do business with you. Perhaps you married into the family. They always assumed their relative should have chosen better. They think you are flashy. They can’t stand you.

Approach: There isn’t one. If you must work together, stick to investments with few moving parts like certificates of deposit and Treasury bills.

There are many reasons certain friends have not approached you. Most of these reasons can be addressed.

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