by Jonathan Henschen, CFS and featured in Broker/Dealer Journal
In 1989, one of those “penny” stocks so common at the time sponsored my Series 7 license. After passing the exam, I spent three days listening in as experienced brokers made cold prospecting calls. At each advisor’s side was a copy of Jim Pickens’ and Ben Gay III’s, The Closer, now in its fifth edition (LJR Group/Hampton Books, 1980). For those unfamiliar with The Closer, it’s the classic, how-to sales text that promotes the same techniques demonstrated in “Boiler Room,” an intense film released in 2000 starring Giovanni Ribisi, Vin Diesel and Nia Long.
“Boiler Room” is well-named, pulsing with the vigor of rich young people wreaking the deliberate mayhem that comes from greed run amok. Boiler Room’s testosterone-junkie brokers at the fictional brokerage firm, J.T. Marlin (the only female in the office is Abby, the receptionist and love interest, played by Ms. Long), are out to make the sale, and whether that sale is legal or ethical doesn’t matter!
A typical example of a sales technique the film picks up from the book was to emasculate male prospects who “objected,” claiming they had to check with their wives before making a decision. “Mr. Prospect,” the film’s advisors would tell them sarcastically, “I didn’t realize your wife wore the pants in the family. Apparently she makes the decisions in your household. We might as well forget it: by the time you get back with me, these shares will be long gone. We need a decision now!”
After three days of that nonsense, I resigned and moved on to greener, more ethical pastures not involving such blatantly manipulative selling.
Try Building Relationships
I’ve since learned salespeople typically resort to those techniques when they haven’t earned their prospects’ trust, and that relationship-building is what it takes to establish that trust, thus eliminating the need for sales practices bordering on the unethical. Moreover, prospects see those tactics for what they are, and they don’t like it. For example, feedback I get from advisors subjected to such treatment by broker/dealer recruiters include comments like, “He was like a used car salesman!” -hardly a compliment. Qualified advisors are invariably turned off because people like buying, they don’t like being sold. When was the last time you enjoyed buying a car at a dealership?
Sell By Not Selling!
The same relationship-building techniques that work for advisors and their clients can do the same for broker/dealers and prospective advisors:
- Give prospective advisors generously of your time. People want to be heard and to feel important and needed- so give them all the time they need. Some require more “TLC” than others, so read prospective advisors during the first few minutes of recruiting calls, but begin with the assumption that cutting conversations short is rude and counterproductive.
- Call back promptly and keep in touch frequently, but not so often that prospective advisors feel they’re being stalked.
- Invite interested prospects to visit your office to solidify relationships further.
- Fly them in; have a town car pick them up. Lodge prospective advisors at a Westin or comparably impressive establishment.
- Take prospects to dinner the night before their first meetings with the firm’s President (preferred) or other upper-management types, and yourself. Then, take them to lunch the day of the meeting.
Advisors enjoy being spoiled, pampered and feeling important. They will gravitate to firms that demonstrate warmth, an eagerness-to-please, and that make them feel wanted. In addition, they appreciate being made to feel special, so each time a broker/dealer offers time, travel, quality lodging, fine dining and overall first-class treatment, prospective advisors worth those efforts will reciprocate. And those good first impressions will resonate, swinging the vote when it comes to making a decision.
Decisions are based more on emotion than reason. advisors won’t necessarily go with firms perceived as the “best”; they will choose the one that makes them feel best. As in, “I just like this place. We click!”
Top Two Qualities
Marketing companies have accumulated years of survey data detailing what advisors value most in broker/dealers, and these two traits are always among the top two:
1) The firm showed an interest in a long-term relationship with me.
2) They returned my phone calls promptly.
In fact, returning phone calls promptly carries more weight with advisors than many broker/dealers realize. If your firm doesn’t yet have a 24-hour call-back policy, get one. I’ve had prospects write me off after waiting two or three days, so I’ve learned the hard way. Now, I check my messages once a day, even while vacationing.
That’s the key information broker/dealers seek from marketing surveys. However, most struggle with it, often to no avail, not realizing what simple relationship-building can do for them.
The Recruiter’s “Holy Trinity”
In the late ‘90’s, a successful broker told me what accounted for his success. “I talk a little, listen a lot, and ask the right questions” he told me. So, if I were to offer the Holy Trinity of recruiting, it would be this:
1) Talk a little
2) Listen a lot
3) Ask the right questions. AMEN!
Here are some additional relationship-building techniques broker/dealers can use with prospective advisors:
Communicate clearly and succinctly — or as writer, E.B. White put it: “Be clear, brief and bold.” Speaking clearly inspires trust and faith. By speaking clearly, you come across as an expert, and simplify the many complexities of your business. There is simply nothing like it for gaining a prospective advisor’s trust.
A case in point: I recently visited a Best Buy store shopping for a camcorder. A young sales assistant directed me to the right department, and offered his help. I explained I was looking for a particular model I’d read about in Consumer Reports. He said they did not stock that model, but that I should consider this other model. He then launched into a long, jargon-filled dissertation on camcorder features, replete with electronic technical details. I let him talk until he was done before responding. “You know,” I said, “You might as well have been speaking Greek because I have no idea what you’re talking about.” The sales assistant wasn’t interested in being understood or in my understanding him. He was on a stage flaunting his product knowledge, and lost the sale when I crossed the street to Circuit City.
In our business, we collect long lists of designations to establish our validity and credibility. You’d think prospective advisors would place more faith in an expert with the most designations, college degrees or articles running in respected publications. Statistically, they don’t. Advisors place faith in recruiters who communicate clearly. When we talk over people’s heads without being understood, we fail to communicate, and will suffer the consequences.
Broker/dealers can communicate their value and credibility more effectively and efficiently through stories rather than by reciting credentials. Stories engage both sides of the brain, and are more readily remembered; facts, figures and statistics cause the mind to wander, and are quickly forgotten. I witnessed one noteworthy example of this at an advisor’s client seminar in 1990. The advisor addressed a group of 200-plus clients, and had invited a mutual fund wholesaler as guest speaker. The advisor first thanked the group for attending, then turned things over to the wholesaler, who had a Power Point presentation with many graphs, charts and statistics. After about ten minutes he began having a hard time holding the audience’s attention. As time went on, people in the audience began talking among themselves out of sheer boredom. The advisor and wholesaler would have been much better off simply telling real-life stories of how they’ve improved their clients’ financial lives.
Broker/dealers who are the best at attracting advisors are those who have crafted successful stories, including:
- Stories detailing the firm’s history, from its humble beginnings to where it is now, and its vision for the future.
- They tell success stories of advisors who have grown their businesses by joining the firm.
- Stories of how they’ve helped advisors attract clients or recruited additional reps to their group.
- Stories of helping advisors free up two or three hours a day using the firm’s time-saving technology.
The best stories depict a broker/dealer’s vulnerability to imperfection, while relating how they’ve learned from their mistakes, and demonstrating their humanity. In a world where broker/dealers all have the “best” technology, service and platforms, advisors appreciate stories that communicate objectively.
It’s All About Them!
Advisors don’t really care how good you or your broker/dealer may be. They want to know how your firm can help them better service their clients and improve client-retention. An advisor once told me of an experience he’d had at his former broker/dealer’s conference, much of which was taken up by each department patting themselves on the back for doing such a great job. The advisor’s response was a disdainful, “Is this about the reps or the back office?” Despite the firm’s well-respected status, the advisor ended up leaving. Independent Advisors want to know their firms are working for them. Unfortunately, many firms tell advisors how to run their businesses, what their product mix should be, and why they should be doing advisory. If Independent Advisors wanted to be told that, they’d go to a wirehouse or captive firm where that sort of treatment is expected. Independent means just that. Independent representatives go the independent broker/dealer route because they want to run their business as they see fit. As they see it, broker/dealers work for their advisors, not the other way around. If a broker/dealer is not up to an advisor’s standards, the rep is free to move on. Advisors may appreciate ideas and suggestions, but they will not be dictated to unnecessarily. And as the best of them will tell you, “It’s all about my clients and me!”