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All financial professionals lose clients. Some reasons are obvious. They die. They move away. A family member becomes an advisor. Other times, it’s old fashioned competition. If your best prospects already have an advisor, it makes sense your best client is someone else’s best prospect. How do they lure clients away?
Here are a few approaches they might use:
1. They don’t want you. Your current firm has raised their threshold limits again. They wanted clients to bring a minimum of $250,000 into the firm to have a local advisor. Now they have raised it to $1,000,000. They have a customer service desk to handle what thry consider smaller accounts. Soon, you won’t have a local advisor anymore. We want to be your local advisor.
Response: As a financial advisor at (firm) I choose the clients with whom I will continue to work. I might have the option of referring them to another area of the firm if I feel I cannot give them an adequate level of service. I think you will agree our service relationship is fine. You have been my client for many years and I do not see anything changing.
2. Independent research. Some large firms are engaged in both investment banking and retail investment. This can create a conflict of interest. Our firm uses independent research to advise you.
Response: Yes, our firm is includes investment banking as part of our global business. We also have a separate research department providing proprietary research to our clients. This includes you. Major financial newspapers also provide insightful research. A current daily issues costs $4.00. It has been said the price reflects the value of the information because everyone has it. However, we also provide company research from additional sources so you have a point of comparison alongside our research.
3. Wide range of products. The firm you are with tends to push “in house” products and funds. They often have a ‘product of the month.” We don’t have incentives like that at our firm.
Response: You are referring to stories from decades ago when many firms had in house mutual funds and other products. Although there can be reasons to criticize them, they did benefit from economies of scale, which could lead to lower fees. However, today most firms offer products from a range of providers, many who we consider “best in class” through our internal vetting.
4. We are fiduciaries. We put the client first. We don’t charge commissions. We make money when you do. Big firms are bad. They put making corporate profits ahead of the individual investor. We are not like that.
Response: Fiduciary is an interesting word. In this case, it means acting in the best interests of the client. Advisors at major firms have been doing this for years. Otherwise, clients would leave. Advisors want long term relationships. You mentioned commissions. Those existed years ago, when this was a transactional business. Almost everyone works on asset based pricing. You are only paying for as long as you remain a client. Our shared goal is for you to make money. When you do, the asset based pricing makes more money for us too. Everyone wines.
5. We are a local firm. We have been part of the community for 50 years. We are not closing offices or pulling out of markets like some large firms.
Response: We have history with the community too. (explain.) We support the community through charitable giving. (explain) Yes, it’s true we might move offices. There are plenty of logical reasons. I am still your advisor. I am a phone call away. If my office moves five blocks in any direction, it’s not a big issue.
6. They are too expensive. Your firm has those big buildings and corporate campuses. Someone has to pay for all that. That’s you, the client! We are smaller, so we can be more cost effective.
Response: We have economies od scale on our side. We also need to be priced attractively in a competitive marketplace. Our pricing is transparent. Lets compare them side by side and look for hidden fees while we are at it.
7. You are too big for them. Your firm is for “the little guy” with basic needs. Their ideal client does a financial plan and buys mutual funds. It’s a cookie cutter approach. You are a sophisticated investor. You deserve better.
Response: Our firm offers clients service on three tiers. Smaller clients might use out online or customer service centers. Most clients work with a local financial advisors who knows them and their family. There are instances where the super wealthy work with out UHNW group. However, I have 250 clients, including yourself. I help manage 200 million in assets. My average client is $800,000 in assets. The range is between $250,000 and $ 10,000,000. You fit into the range. Hopefully you are comfortable with that.
Competitors seek to bring your clients over to them. You do the same. You must make a compelling case why they are in the right place and should stay.
Related: When Results Matter, You Want a Personal Relationship