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Financial advisors are often speaking from different points of view or contexts from their clients and don’t realize it. Result, no sale.
If you think about most “great debates” such as presidential elections or most macro issues, the difference in opinions often boils down to different points of view (the two parties are looking at different scopes of the problem such as different time horizons). If the points of view were the same, the opinions could be the same by both parties. How does this impact your sales presentations?
Take the example of the client who has an estate tax issue and you recommend harvesting the IRA money now to buy life insurance to pay the future tax. The client thinks this is a little crazy because he has always been taught to defer IRA money and tax sheltered money as long as possible. Here’s how to proceed to get any forward motion in such a conversation.
- legitimize his point of view and his knowledge
- then explain that his point of view is correct when ONLY income taxes are considered
- that when a bigger picture is considered, does it now make sense to pay taxes of say 30%, to save an estate tax of 50%. When a bigger picture is considered (your point of view), the correct decision is different. Show them the numbers on paper; give the evidence.
The issue arises more commonly in down markets when a client calls you about the decline in their portfolio value over the last 3 months. Their point of view is three months. Your point of view is much longer. You won’t get them to change their point of view without illustrating it.
Ask them the size of their portfolio 5 years ago (it’s not relevant if your were the advisor then). Compare that value from 5 years ago to their portfolio size now. They will agree that today’s figure is bigger. Then, you point out, “Your portfolio is down currently and still we see that it’s a lot larger than 5 years ago. So even including this down period, if it grows at this rate, similar down periods included every 5 years, over the next 10 years, you will have $xxx,xxx. Would that be okay?”
So do not just tell them to have a long term view, show it to them by providing some evidence.
Here’s another example. Ever have a client call about something he heard on the radio today or read in the newspaper today? This attachment to one piece of news or one factor is a common psychological error among investors. Some investors will latch on to one fact (employees striking at one of the company’s 16 plants) and they call all worried about their shares in the company.
They think this one variable in important (their point of view), while you realize there are about 10,000 variables that can affect a stock’s price. The best way to handle:
- legitimize their concern
- put their concern in context, “I would also be concerned if this strike affected more than 2% of their work force. Did you know that this only affects a tiny portion of their workers?”
- Provide evidence to support your point of view. “My figuring is that even if that strike would last a month, it would impact the company’s earnings about ½% this year. Since their earnings are expected to grow at 20% this year anyway, can you see that this will not hurt your investment?”
Next time a prospect or client conversation is not going as smoothly as you would like, ask yourself if you can identify their point of view. It’s not that they have the facts wrong. Most likely, their context needs to be adjusted. Then, with evidence that you can make as personal as possible, provide them the broader point of view leading to a better decision.
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