When serving and helping people like you get the most life out of their money, not only am I competing with the hysterical financial news media, but I am also often fending off other financial advisors who try to distract my clients.
Remember that for the past twenty years I have attended countless seminars, training sessions and conferences. I have an intimate understanding of how the financial advising industry works. In fact, I have been trained, extensively, on how to “steal away” a client from another financial advisor.
So, today, I am going to pull back the curtain and show you the strategies and techniques financial guys like me use to get you as a client. Why am I doing this? I don’t want you to get sidetracked. Don’t let some sales tactics derail a well crafted plan.
Here is the Scenario: You are sitting down with a financial advisor for the first time. Let’s just assume that you are currently working with a different advisor at a different firm. How have I been trained to get you to sign over your finances to me?
Tell them their current portfolio is way too risky.
If you sit down with anyone who has any money invested in the stock market, say something along the lines of, “Hmmmm… that’s strange. We don’t usually see people at your age with this much money in the stock market. Do you understand the incredible risk you are exposing yourself to?”
My Commentary: I have written extensively on this subject. In short, stocks have an incredibly consistent and successful 200-year track record.
Tell them they are too conservative. That they have too much money in low-growth bonds.
If you sit down with anyone who has any bond investments, say something along the lines of, “Hmmmmm…that’s a lot of money in bonds. Did you know that when interest rates rise, bonds lose money? Do you understand that we are in a historically low interest rate environment? This is practically a guaranteed loser!”
My Commentary: First of all, you are not getting the whole story. While rising interest rates could adversely affect some bond prices, it does not apply to every kind of bond.
In addition, when rates do rise, bonds are “self-healing.” Rising interest rates translate to increasing yields. The yield of your bond investments will go up because newly issued bonds placed inside the portfolio will be paying the new, higher interest rates.
Most advisors can make any portfolio look terrible (even if it’s not). It all depends on “reading” the prospect. If they express fear, you attack that fear and tell them their portfolio is too aggressive. If they express a desire to really grow their portfolio, you tell them how you have too many conservative investments.
Tell them they need GUARANTEES.
When sitting down with a new prospect, simply ask them, “Are guarantees important when it comes to your money?”
Of course, everyone says, “Yes!!!”
“Well then,” I continue, “your current retirement portfolio has no guarantees. If the investments go down and you live too long you could run out of money. You need guarantees on your retirement portfolio. I can’t believe your current advisor doesn’t have any of this money in guaranteed vehicles.”
My Commentary: I have written extensively on this subject as well. In short, often times putting “guarantees” on your money results in poorer performance and restricts access to your funds.
It might sound like a great idea, until five years later when you realize the guarantees did nothing but dramatically reduce your investment returns. Really, nothing in life can be guaranteed. Well, I guess besides death and taxes…
I’ve also spoken about how even a guaranteed investment can lose you significant money. If inflation is going up, you lose purchasing power. If the economy is doing well, you lose that money too (which is referred to as “opportunity risk”). You can lose quite a bit of money by trying to not lose money.
Tell them that your investment research team is second-to-none.
When sitting down with a new prospect make sure they understand the size and stature of the brilliant financial minds you have in your corner. It helps to use words they don’t understand.
“If you were to work with us, we will be able to increase your alpha and diversify your beta. The standard deviation is within your risk tolerance, while making sure we keep an eye on the P/E ratios. Our investment managers utilize a core and satellite strategy focusing on sector rotations. We have won many awards.”
My Commentary: Nobody knows when the stock market is going to go up or down.
There is no super-smart-analyst-man sitting in a secret office at your local bank that has insights or information to which other advisors do not have access. It’s all smoke and mirrors. Most advisors have access to the same products and investment solutions. In fact, it is patently illegal to possess information to which no one else has access (it’s called “insider trading”).
The bottom line: You need to find an experienced advisor who specializes in people just like you. The advisor should also focus an understandable financial plan as much as the portfolio itself. And most importantly, it is the advisors job to keep you on track (sometimes I feel like a therapist- LOL).