In my previous guest blog post, I explained how I dissected the confirmed file note by dividing it into four separate quadrants in order to create a strategy to take to my next meeting – the Strategy Paper Meeting (SPM), It should lead to a “yes”, the prospect agreeing to do business with me.
In summary, the primary purpose of the SPM is to highlight a problem; get their agreement to the problem; that they want to solve it; and then involve them in the decision-making process. That way the decision becomes theirs and all I had to do was the numbers based on their ability to pay. In relation to the latter, I found the best time to do that was after I had proceeded through the strategy paper up to the point of discussing the shortfall with them. More on that later. Now let’s focus on the strategy paper itself.
Formatting the Strategy Paper
The process for my strategy paper involved first of all my drafting what I wanted to discuss and then having my staff prepare a one-page original for me and a copy for the prospect. When I was not able to present my strategies on one page, I only ever gave the prospect one page at a time – even if a comprehensive strategy paper ran into 4+ pages. That way I always had control of the presentation.
Before proceeding, recall the following information from my previous guest post, forming the content of the four quadrants:
45-year-old married male, “Bill”; two children aged 8 and 11; homemaker spouse; salary $200,000 gross per annum; mortgage $400,000; personal life insurance $300,000, group life insurance $500,000 and superannuation pension fund $200,000. Recall in the event of his death he wants his mortgage to be paid out and for his family to have a guaranteed ongoing income of $100,000 net per annum*.
(*In the initial meeting I discussed the need for a capital sum that would generate the guaranteed ongoing income. Within this discussion it was determined that Bill wanted a low risk-type investment so that his wife was not distracted with one eye on the stock market and the other eye on looking after the children. In this case a 5% CD rate of return was agreed upon.)
When confirming the SPM either I or my staff would always mention that I was going to use the file note as an agenda for the meeting. Their reviewing the file note close to our follow-up meeting avoided the need for a long preamble at that meeting.
Now, let’s look at how the four quadrants were assembled into a one-page strategy paper.
IF BILL HAD DIED YESTERDAY!
| Pay out mortgage | $400,000 |
| Gtd. Family income –$100,000 net p.a. *($100K net = $140K gross = $2.8 M@5 %) *USE OWN TAX SCALES |
$2,800,000 |
| $3,200,000 |
| Personal Life Insurance | $300,000 |
| Group life insurance | $500,000 |
| Pension Fund | $200,000 |
| $1,000,000 | |
| SHORTFALL | $2,200,000 |
Q. “Where will the shortfall come from?”
Now as soon as I asked that question, I remained silent, resisting every temptation to talk through to a conclusion. So, it’s important not to break the silence until the other person speaks. As previously mentioned, there are always two solutions, theirs and yours!
If Bill offered an alternate solution, then I obviously have to first listen to that with the “ear of the heart” and then make the decision as to where to go from there. Remember we haven’t yet discussed the budget constraints at that stage.
My experience was that in almost all situations where I posed the “shortfall” question the silence was deafening! To be honest I can’t recall the silence everlasting more than about 10 seconds.
Normally thanks to a thorough initial meeting and confirmation of the file note they usually came up with a statement along these lines: “What do you think I should do?”
It’s important at this stage to ensure that they agree in principle that something needs to be done. Once you secure that agreement it is appropriate to answer the “what do you think?” question by introducing the topic of budget constraints.
Now my role was to find a commitment that they felt they could afford. I would start off by saying something like “Well, now that we agree on what you need, we now have to make sure that it’s what you can afford.”
Obviously in my preparation for these meetings I always did approximate figures for the needs under discussion. However, at this particular stage I still had no definite idea as to what they could actually afford.
From experience I learned that if I then started discussing cost before securing their agreement in principle then their focus would fixate on affordability rather than benefit.
I needed them to take the responsibility of being able to decide on a figure that they were prepared to commit to. If I knew it was going to be less than what was required, then away from the meeting I could adjust the figures accordingly.
Mostly they needed me to make an initial indication to get the “affordability” discussion going so I usually suggested a monthly figure which I knew would draw an immediate negative response. Then we worked “downwards” to arrive at their affordable figure. I found this an easier exercise than starting with a lower figure and then going through a lengthy procedure to arrive at an appropriate amount.
On the other hand, if they nominated a monthly premium which came within the calculations I had already done, I would tell them that straight away. All that would be required from that point on for these people would be to have a further meeting which I would present my final recommendations in accordance with their decision. Also, if time permitted, I would complete the necessary application forms at that meeting.
However, in those circumstances where I knew the need for the insurance would exceed their financial commitment, I would always say something along the lines of: “the next step now is for me to do some actual calculations to see whether your nominated figure will allow you to take up what we have discussed at this meeting. If not, I will tailor the figures to suit your budget requirements and come back to you for another meeting to confirm my recommendations and your agreement to proceed”. In this type of situation, I would obviously then prepare final recommendations based on their affordability.
Related: Advisors: A Well-Crafted Marketing Resume Is a Differentiator