The end of each calendar year provides a natural setting for serious prospecting. Full-year performance and other results are easy to present to potential clients and their accountants, who can quickly make comparisons among competing advisors, retirement plans, mutual funds and managed accounts. So how can you use this moment to capture additional assets and referrals?
To avoid being
trapped in a basis-point beauty contest
against another product or provider, try
to engage clients in a real-life
dialogue. If you can get clients
talking, you can pull assets away from
disengaged and lazy competitors. Try
pressing their “hot buttons” — issues of
emotional sensitivity that get at the
essence of what good advice is all
about.
Millionaire Hot
Buttons — Press Here
Doubts about quality of advice
Strategy: The second opinion
One of the best opportunities to
acquire high-net-worth clients today is
to offer a “second opinion” to prospects
whose current advisor is inattentive.
The goal is to demonstrate that you can
offer so much more than the current
advisor. Most retirement-plan wrecks are
caused by violation of the basic rules
of intelligent investing. Don't assume a
millionaire household fully understands
why they have not succeeded or how they
can recover. Offer your experience and
perspective via a short, professional
note with your card attached.
Fear of losing
independence
Strategy: Help them write stories
Surveys of baby boomers reveal
that their primary concerns — a major
illness, inability to afford health
insurance, getting shipped off to a
nursing home — center around the fear of
losing their independence. The trick is
to turn the emotion here into positive
energy so that the problem can be
addressed without stirring up too much
family angst.
Remind clients that nursing-home care
and other long-term care needs can be
funded with long-term care insurance
and, perhaps, early purchase of
accommodations at a continuous-care
retirement facility. Make sure there are
extensive advance directives in place to
ensure that the client's wishes are
carried out. An old therapist's trick to
help children address their fears is to
have them write out a story or draw a
picture. Clients can gain similar
perspective by completing a booklet
outlining how they want to live in their
older years — and the provisions they
have made for that life. Offer a
workshop about preparing such a booklet
to clients and prospects.
Aged parents
Strategy: Discuss a wide range of
options
Baby boomers, on average, have
more parents than children. This
demographic reversal has shifted the
economic burden of aging
disproportionately to the boomers. Your
target clients may be caught off guard
by the need to provide care, both
economic and emotional, to parents who
may have underestimated their own
longevity. Your strategy could be to
provide a survival package of late-stage
liquidity and expense-mitigating ideas.
These include long-term care insurance,
immediate annuities for longevity
protection, information about how to buy
medical insurance and reverse mortgages.
Consider sponsoring a discussion group
for clients who have parental-care
challenges.
Too much debt
Strategy: Become a flexible lender
Wealth is a balance sheet, and
huge inroads are possible if you can
assist history's most accomplished
debtors — the boomers — with their
liabilities, especially if their real
estate values are beginning to slide.
Many firms have been successful
attracting boomer clients using
interest-only mortgages. In addition,
lines of credit can open doors to
otherwise elusive business owners. Your
compensation here is a referral fee.
Your family's
vulnerability should something happen to
you
Strategy: Add estate planning and
insurance
Appeals to a client's fear of premature
death are always iffy, especially when
you're talking about a boomer generation
that is convinced of its longevity and
vitality. Nevertheless, consider this a
hot button for this target market
because only about one in four
millionaire households has a current
estate plan. In addition, the boomer
generation shows signs of comprehending
the enormity of its responsibilities;
many boomers are coming to understand
that an event as random as an illness or
accident can completely destroy a
lifestyle built on borrowing. Without
adequate insurance in place, an
unexpected reversal in fortune could
result in dislocation and financial
trauma. Ask the question, “What would
happen if something happened to you?”
and consider your top client households.
Fear of
incapacity
Strategy: A risk-prevention audit
Disability is more common than
accidental death, but most affluent
households do not carry adequate
protection to maintain a lifestyle or a
business should the chief breadwinner be
unable to continue working. Even if an
executive were covered through a policy
at work, it is unlikely that the group
policy would provide the income most
affluent families require to meet
current living expenses. And the
likelihood of coverage for a nonworking
spouse is almost nil, although the lost
mobility of that person could be
devastating to the household. To address
the need, conduct a
risk-prevention/minimization “audit.”
Where are the family's primary risks?
What are the areas of each household's
greatest economic vulnerability? What
might happen if the household's income
producer(s) could not work?
What do I do
with new money?
Strategy: Develop a timing calendar.
Few affluent executives or business
owners earn their wealth through salary.
Most capture the bulk of their
compensation from performance bonuses or
profit sharing. Typically, these
prospects and clients use these lump-sum
payments to fund their investments. The
problem for the recipient is what to do
with a tidy lump sum once it is
received. Since the vast majority of
private and public companies pay bonuses
in the first three months of a new year,
you can work on this idea from January
through March with confidence that your
message will resonate somewhere.
Advertising, discussions with accountant
contacts, targeted letters to executives
suggesting a discussion about what to do
now in the markets all make sense
because of the likelihood of activity.
For your existing clients, do their
distributions occur quarterly or
annually? What are the formulas that
determine the payouts? Ultimately, hot
buttons are issues that create anxieties
because they need to be addressed. And
you can help.
