Secrets of client acquisition

By Ed Morrow

Intl. Assoc. of Registered Financial Consultants


If you do not acquire a sufficient number of new clients, you will not keep your practice going on a sufficiently profitable basis. Furthermore, if you already have an established practice, you are experiencing a loss of clients due to:
  • Deaths
  • Disabilities
  • Job losses
  • Relocations
  • Retirement/moving
  • Portfolio losses
  • Competition
If you are not doing the following, you are headed for trouble:
  • Acquiring more clients
  • Acquiring better clients
  • Selling more products
  • Selling more services
In our current economic environment, you cannot simply sell the consumer a financial product and "let the buyer beware;" it's a sure pathway to compliance nightmares and a lawsuit that can swiftly wipe you out.

The solution is to create a client relationship before you propose and close a sale of any financial products. Granted, I am not suggesting that you must have a CRM (client relationship management software program), although that could be an important tool in your arsenal of client acquisition techniques.

First, you need to have a client

That means the prospect must realize that he, she or they have financial shortcomings that require professional attention. They must agree that there is a substantial need that calls for your advisory services. Yes, you should charge a fee for this advice -- but it's not absolutely essential. You can give away your advice and services if you choose to do so, but undeniably, the client will have greater respect for advice for which they have paid a fee.

Does this mean you must become a registered investment advisor (RIA) and file with the SEC (nationally or state) and be subject to all those regulations and requirements? The answer is no, provided that you do this correctly.

The SEC was charged under the Investment Advisor Act of 1940 with regulating the sale and service of securities. It does not regulate estate planning. It does not tell you how to sell critical illness coverage or long term care policies. Nor does the SEC control how you guide a family in the development of their budget, the refinancing of their home, or in determining how much cash will be required to send Johnny to college. As long as you do not give the client advice regarding securities, you may offer these services. Furthermore, you can charge for this advice.

Of course, you must be careful that your discussion of estate planning does not cross over into the practice of law. You must also be careful that you don't run afoul of insurance consultant regulations in your state when charging a fee for survivor income planning. Your fee should be for the needs analysis -- not for the selection or sale of products. But you can easily navigate around these obstacles.

How do you get this client?

Easy -- you ask; it's really that simple. However, asking properly is a bit more involved, since you must do it very carefully. You must be prepared. You must be more effective than all of the TV ads and billboards that are urging your prospective client to spend money foolishly. How do they motivate buyers to take action? First they create a desire for the solution. This is generally done with fear (of a problem), greed (acquisitiveness), or passion (sex or hobbies). In financial circles, it's fear or greed that motivates purchasers.

The advertisers make the consumer believe they are offering a solution, product or service that will fill that need. They do not even need to tell them that their solution is inexpensive. One of the most successful advertisements in marketing history was a billboard that showed an unusually shaped bottle of whiskey with red wax on the top. The ad (for Maker's Mark) simply said: "Tastes Expensive and Is!"

It is perfectly acceptable to tell your prospect, "My advice is pretty expensive, but I will very likely save you thousands of dollars in taxes or lost earnings." Everybody knows, deep inside, that quality is usually more costly at the outset, but beneficial over the long-term.

You should have a well-organized, comprehensive plan and some sample modular plans -- plus a fee schedule, of course. It is much easier to show than it is to tell.

How extensive are their needs?

Your prospect may need a modular plan of some type. They may want advice -- related need a comprehensive financial plan. Certainly your prospect will have various types of advisor or strategic decisions to be addressed in addition to a need for financial products. How do you prepare yourself for these alternate paths? Do you have sample plans to display?

Back to square one -- make them a client

You must make a strong presentation to the prospect that gives them an opportunity to accept that they need your strategic financial help. They must recognize that with all the financial choices facing them in the midst of their busy personal, family and business lives, they're in need of assistance. They need help, they need guidance, they need you.

Such a presentation is not a matter for mere verbal disclosures. It is certainly not a "yellow pad" event. There would be no way to confirm and verify what you had committed to perform and whether that met clients' expectations. This is just the first step in a process. If there is no client relationship, the rest of the process doesn't matter very much. If the prospect has been converted into a client, then sooner or later, they will follow through on the implementation of their financial concerns -- through the purchase of products or services.

Do you have an agenda for your client acquisition interview? Are all the necessary start-up papers organized? Make sure the first step of your client acquisition is performed correctly. Then, everything else can "fall into place" for you and for your clients. Hopefully, this will take place sooner than later; occur in a very efficient sequence, and will result in many referrals. But, remember, the transition from prospect to client must take place first.

But you didn't study this! All of the above was not in your coursework if you studied the Chartered Financial Consultant (CFC) course or the Certified Financial Planner (CFP) curriculum. You acquired knowledge and you passed tests, but you didn't learn Marketing 101 -- completing the client engagement.

What business are you in?

I know addressing the economic needs of your prospects and clients is a process. Learning to operate a process is quite different from learning things, acquiring facts and figures. One is learning; the other is doing. Maybe what you need is to take a "Doing" course in addition to the traditional "Facts" approach. It might be very good for your pocketbook.

And finally, such a course is available: The Financial Planning Process(TM) is an intensive curriculum that is not based on just the acquisition of knowledge and test-taking. It both educates and trains the practitioner how to operate the process -- to move prospects through the planning and implementation phases to obtaining referrals. Soon you can get off of the prospecting rollercoaster and be making more frequent trips to the deposit window of your bank. Think of it as a financial apprenticeship where you learn to use new tools and, furthermore, take your new toolkit home with you in an effort to immediately utilize your new skill set.

Check it out

The first step I would suggest is to review the difference between the Financial Planning Process(TM) and the courses you took in college or your post-graduate financial studies. This is not your typical lecture, study and exam approach. The first area of the curriculum is client acquisition. The students also produce both modular and comprehensive plans. They learn to use all the software necessary to move clients from the prospect to the client stage. Think back on all the courses you took in college. How many of them made you any money last week?

Follow through -- now

The economy is uncertain. The costs of doing business are going back up, and your personal budget needs aren't reducing. It may be time for a new approach. For most readers, it isn't practical to solve your career problem by working harder and longer. You're probably already doing that. What you need to do is work smarter. Maybe now is the time to change the dynamic of your practice. Increase your NCR!

*For further information, or to contact this author to request a course brochure, please leave a comment and your e-mail address in the forum below.