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As a financial advisor, one of your most important jobs is filling your business with paying clients. But that doesn’t work if your clients and prospects abandon you because you made mistakes you don’t even know about.

If you really want a horde of clients that pay you what you deserve, you need to avoid 3 grave mistakes that make (potential) clients make a 180-degree turn and pay your competitors instead.

In this episode, you’ll find out which 3 mistakes they are and how you avoid them so you attract clients and keep them for the long-term.

Ready to become a financial advisor clients love? Listen now!

Show highlights include:

  • The one question you should answer to get better results for less work. (4:56)
  • Why new advisors with a small book of business have the advantage in the client-game. (7:19)
  • How to educate your clients so they work with you perfectly. (11:13)
  • Why 34% of clients fire their financial advisors. (15:47)

If you’re looking for a way to set more appointments with qualified prospects, sign up for James’ brand new webinar about how financial advisors can get more clients with email marketing.

Go to TheAdvisorCoach.com/webinar to register today.

Ready to learn even more about becoming the successful financial advisor you know you can be? Check out these resources:




Read Full Transcript

You're listening to Financial Advisor Marketing, the best show on the planet for financial advisors who want to get more clients without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal. James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.

James: Alright. Another week, another episode. Welcome to the show, fam. I call you my "fam" f-a-m because it stands for financial advisor marketer, and you are all, I hope, financial advisor marketers who are interested in growing your business. If you are, you're in the right place and I plan on helping you quite a bit today. First, as always, I want to start off the show with a little story, with a little lesson attached because even if you don’t get anything from the meat and potatoes of this show, you can get something from the story at the beginning. [0:01:04.6]

Jonathan: How nice.

James: On with the story. Yeah, so kind of me to open with a little story, a little ditty, a little yarn. I have a small amount of money and it may be a lot to some people. It may be small to some of the people listening to this show. But I have what I consider to be a small amount of money invested with a lending club and this is like blasphemy for some advisors. Right? And if you haven’t heard of them, it's LendingClub.com and they do peer-to-peer lending, which it's where you lend to people starting a business, like consolidating their credit card debt, doing home improvements, all that stuff. I categorize this as risky. This is just "fun money" because there's default risk…

Jonathan: A casino…

James: Yeah, yeah, just like fun money/rainy day - if it works, it works. If it doesn’t , it doesn’t. That's why I only have a small amount of money in there, but I was doing my research before investing and a bunch of notes because that's what they're called. [0:02:00.3]

You're basically investing in notes for different people and people were complaining about how they were getting very low returns. They were only getting 2-5% a year and what was happening was that even though they were investing in these notes, people weren’t repaying the loans. So if someone…if you're lending money to someone to do home improvements, that person just runs off and doesn’t repay it and that means the return just isn't there. And by the way, I'm not giving you investment advice whatsoever. I'm not telling you to invest in Lending Club. I'm just sharing my own experience. But what I found out was that these people were letting Lending Club do the automated investing thing. It's where Lending Club would automatically research and find people who wanted the money and just lend it to them. It was all done automatically. It was just reinvested and reinvested and reinvested and the thing that I was doing different was that I was filtering all of my investments. I was being very strict. I didn't let them do it automatically. I did it all myself. I would filter with a high credit score - I wanted a high credit score. If you didn't have a 700, you weren’t getting money from me. I wanted no delinquencies. I wanted a long history of income. I had a bunch of other criteria and I only invested in notes that met those strict standards and at the time of this writing, I am getting an 11% return. [0:03:13.4]

Jonathan: Nice.

James: Again, no investment advice. I'm not telling you to do it because you're probably not going to get 11%, so don’t listen to me. Right? But I'm treading on thin ice here, Jonathan.

Jonathan: A point a month almost. I like it.

James: Oooh, 11% - let me get on that. No, don’t do that. But anyway, 11% is not out of this world, but it's decent compared to what everyone else said they were getting on Lending Club. Could I have put my money in a better place? Sure. But there were a lot worse places I could have put my money. I'm just sharing my experience, but it goes to show, the lesson here is that sometimes it pays to do a little legwork. A lot of people automatically default to the easiest thing and it ends up hurting them. In this case, the easiest thing for me to do was just sign in for automatic investing, let Lending Club do the work and me invest everything, but it wouldn’t have been as effective. [0:04:07.4]

The same idea applies to financial advisors and their marketing. It may be a little bit more difficult to do that market research. It may be more difficult to set up an opt-in page and set up that email auto responder, but it's worth it. Don’t always look for the easy way to do stuff. Instead, ask yourself if there's a better, more profitable way because I don’t know about, Jonathan, but I don’t mind putting in a little bit more effort as long as that effort is going to be rewarded.

Jonathan: I enjoy it. I look forward to it.

James: You should and rightfully so. A lot of people go through life trying to put one unit of effort into everything and get one unit of reward. I would rather put in five units, five times the work, and get 20 times the reward. I really want you to think about that. is there any place in your business where you can do a little bit of extra work and get a bigger, disproportionate reward? Something to think about. [0:05:06.9]

Now, on to the show. Today's episode is titled "Three Stupid, Stupid Mistakes That Can Cost You Clients" because I want you to start thinking about how much client attrition is costing you. We talked about this in the last episode, and according to PriceMetrix, financial advisors lose about 5-10% of their clients every single year, on average, and households with more than $100,000 in assets, they are even worse because they have a 13% chance of leaving their financial advisors (oh, and that's per year). If you listened to the last episode, you already know this, but for the people who are new or who just, for whatever reason, decided to not listen to last week's episode, it means if you're a financial advisor, it is your duty to stand guard against your clients leaving you. I mean, I… imagine losing 13% of your income...

Jonathan: No, thanks.

James: …every 365 days. Yeah, it would hurt. I mean, if you're a financial advisor and you make $90,000/year, which is the average, that represents $11,000 in lost income and that's a normal year. [0:06:11.3]

It could get much worse and keeping your clients, it's a lot cheaper than going out and getting new ones. In fact, the Harvard Business Review, the Ivy League school here, Harvard Business, reports that acquiring a new client is anywhere from 5-25 times more expensive than retaining an existing client. That means if you lose a client, your actual loss is much higher than that 13% figure I just gave you, because you've got to go out and get a new client, and that involves your time, your energy and other resources. Make sure you pay attention to this episode. If you're a financial advisor with a large book of business, this could easily be the most profitable podcast episode you've ever heard, easily, not even close. So pay attention. [0:07:03.2]

Now, the stupidest mistake financial advisors make which costs them clients is not communicating enough. The fact that this is the biggest problem, it's actually great news. This is a good thing because it's the easiest one to address. If you're a brand new advisor and you've got a small book of business, you've got absolutely no excuse. But as a seasoned financial advisor with tons of clients and a big business, you can only allocate so much of your time to your clients and a lot of times what advisors will do is just allocate more of their time to the higher end clients, the top 10%, top 20% and just hope, cross their fingers that the rest of them stay with them. But hope is not a strategy and I don’t, I can't cash a check signed hope.

Jonathan: Spread the love.

James: You have got to spread it around. You've got to communicate. You can't cash that check if it's signed with hope. And another thing, by the way, I want to throw this in here. This is not really related to the podcast. The bank doesn’t give you a bonus if you worked hard for your money, does it, Jonathan? [0:08:03.8]

Jonathan: Nope.

James: You take your check to the bank. It's true. I was thinking about this this morning. You take your check to the bank. It's $1000 check. You take it to the bank and they give you $1050 and you're oh, what's this bonus for? It's, "Oh, because you worked extra hard for this."

Jonathan: It's because you sweat extra.

James: That's your sweat equity money. And they don’t deduct anything if the money came easily to you, do they?

Jonathan: No.

James: If it was effortless, they don’t take anything away. They don’t knock it down to $950 just because it was easier for you or you leveraged a talent or an existing asset. They don’t do that. Money is money, y'all. Listen up. What's the solution to this communication problem? You either have to trim your client base, which could be the best option actually. I mean, depending on the financial advisor, it could be the best thing they ever did. You've got to automate the process, which is what I would help with or they hire someone. [0:09:01.6]

Now, I personally would just get rid of anyone who's unprofitable and do automation first before I hire someone. I mean, a lot of people think that my email marketing product, which is Appointments On Autopilot, which is TheAdvisorCoach.com/appointments, a lot of people think that can only be used for setting appointments with prospects, but you have to realize that the ideas within that can also be applied to keeping in touch with your clients. You could literally go and set up an email auto responder loaded with touch points that you send to your clients. You could have a client only list. The auto responder just reaches out to them, letting them know everything's okay. If you have any updates, if anything's changed in your business, if you're going to be closed, you can set up the auto responder to broadcast emails. You could have it go directly to your clients. Now that's not going to solve all of your problem, but it should make sure that you're communicating more often and while we're talking about not communicating enough... [0:09:54.1]

Hey, financial advisors, if you're looking for a way to set more appointments with qualified prospects, I invite you to sign up for James' brand new webinar about how financial advisors can get more clients with email marketing. Go to TheAdvisorCoach.com/webinar to register today. On this webinar, you'll discover why email marketing is able to generate upwards of 4400% ROI for smart financial advisors, three fatal mistakes nearly all financial advisors make with their emails, and the proven three-step process for converting prospects into booked appointments using email. All you have to do is head on over to TheAdvisorCoach.com/webinar and register today.

James: Financial Advisor magazine conducted a study where they asked 1400 advisors to give the most common explanations clients gave for firing their previous advisor. Basically, the client would fire one advisor, come on board with another one and the advisor would ask, "Hey, why'd you fire that last guy or girl?" 44% of the clients, almost half, so pay attention - they said it was because their phone calls weren’t returned fast enough. [0:11:02.6]

Jonathan: Ouch.

James: Yeah, easy…but this good news. This is good news, Jonathan because it can be fixed. There are some things out there that can really be fixed or can't be fixed very easily. This is an easy fix. One of the solutions is to coach your clients on what to do and what to expect. I mean, you don’t want to eliminate phone calls completely because then you eliminate a communication channel and you do want to keep the communication channels open, but you do want to eliminate the clients who are calling you when they're having a panic attack after watching CNBC.

Jonathan: Nice.

James: You can do your clients a favor if you just call their cable company and like hey, you know, I'll slip you $100 if you just not send the CNBC signal to their house. Uhh. I mean, I know you're not in the financial services industry, Jonathan, but they, that's a real thing. That's a real problem. Clients who watch…

Jonathan: I believe it.

James: Jim Cramer, Mad Money, all of that, and I mean, not just Jim but man, these clients get wrapped up in the stuff. "Jim Cramer said I should buy medical marijuana ETFs I want to allocate 15% to these ETFs." [0:12:10.0]

Jonathan: Immediately.

James: Immediately. Immediately. It's just - no, you've got to keep them on course. You're just, "No. I've got you in this particular portfolio for this reason. We allocated it this way because you're two months away from retiring and you don’t want to put 99% of your portfolio into marijuana ETFs. It's not how it works, Mrs. Jones." But back to the phone call thing. As a rule of thumb, you want to strive to return phone calls in the same day. If you ever feel like you're in a situation where you have to give up your marketing and your prospecting time in order to return client calls, you have what detectives call "a clue" and that clue is to hire someone because you don’t want to give up your marketing and prospecting time. That is your highest value time. It's one of the best things that you can do. If you've got to choose or you feel like you have to choose between marketing, prospecting, and returning calls, you really want to think about hiring someone. [0:13:07.1]

Next up in the "Stupid Mistakes That Cost Financial Advisors Clients" is failing to understand the client's goals and objectives and that's why being a good listener is such an important skill. When you're meeting with your clients, you really got to dig deep into what they want. Don’t be afraid to ask questions. Get them to think. One of the things I really enjoy doing with Inner Circle members and podcast listeners - I can get you to think - think about this stuff because when it comes to your clients, a lot of times they might not even know what they want. It's up to you to help them draw that stuff out and after your meetings, what you want to do is you want to take a few minutes to just jot down some notes in your CRM - what did you talk about - what did they say? If your client talked about going to Paris in a few months, you probably want to bring that up at your next meeting - like, hey, how's that Paris trip, to show that you actually listen. Let's be honest with another, with … merely listening is not going to fix this problem. That's like a Band-Aid. [0:14:03.9]

What's going to fix this problem is making sure you're staying on top of their goals and objectives because things change and a lot of times, they won't volunteer that s tuff to you. They won't bring it up and that's why it's so frustrating. I get it. They're not going to think of you and call you and be like, "Oh, I'm switching careers." Some of them will, but the majority of them won't, or 'Hey, I'm planning on getting a divorce in the next month. What should I do to prepare?" They're not going to volunteer that stuff, which means that you're operating with old data, and they expect you to be a mind reader and operate with whatever they want now. That's another reason why taking notes and putting them into your CRM is so important because you can bring up stuff. You can be like, "Hey, I know that we had this on the horizon. Is this still a thing" or "Last time we met, you mentioned that this was important to you. Is this still important?" Get feedback and having a niche, my obligatory have a niche comment - I've got to, that I put in every episode - by the way, if you're interested in having a niche and I've got something for you that's coming in the next month or two. [0:15:09.7]

It's going to be really freaking cool. So, stay tuned. But having a niche makes everything easier. If you're fortunate enough to work with ultra high network clients, you probably notice a pattern of charity work and niches have patterns. That's something to keep an eye on. If charity work is important to them, then you want to bring it up. You're going to be a good listener. You're going to be on top of their issues - what's important to them - you want to make sure nothing has changed in regards to their charity work.

Finally, the third mistake that cost financial advisors clients is not setting the proper expectations. In that same Financial Advisor magazine study I mentioned earlier, 34% of clients say that they fired their advisor because the investment performance was poor. But it's not just investment performance. It's setting expectations. A lot of people look at the symptom and they don’t address the case. The symptom is poor investment performance and that's what they say it is but what it really is is that their expectations really weren’t set. [0:16:10.3]

So your fees, your communication, how your meetings will go, when they can call you, how they can interact with your business, all that stuff, you need to set those expectations. You need to manage them. Let's talk about just managing expectations when it comes to market returns, just because that's a popular topic. I get asked about that all the time. It's the financial advisor's job to stop clients from acting on emotion. Advisors take a lot of pride in creating financial plans for all types of markets, bullish and bearish, but not all clients know that. Clients, sometimes they make think, "Oh, I've got a financial advisor so I can get a better return" or "So I can make as much money as possible and just amass as much wealth as possible," but if we're in a down market, it's your job to keep cool and calm and basically say, "Look, we did this plan and I knew that this was going to happen someday. You know, markets don’t go up forever. They go up and down and up and down. You are going to be prepared for that." [0:17:06.7]

You don’t want to act nervous. You don’t want to act fearful because then the clients will get that from you. You've got to remain upbeat, enthusiastic, always have on your game face. This seems like such silly advice. I really don’t want to be on the show and saying, "Oh, be upbeat and be enthusiastic," but it makes a difference. It makes a difference when your clients are worried, when you have to talk them off that proverbial ledge, that's what they're looking for. They're looking for someone who has a certain expectation, a certain vibe, a certain air of cool and calm. When things are going wrong, we have a recession or a correction or a bear market or whatever, the financial advisor is "Don't worry - we planned for this - it's cool." And another thing is when it comes to setting expectations, you want to explain to your client…a lot of them won't come up to you and say, "Oh, I don't know how any of this works." They're just going to nod their heads, act like they know what you're talking about. Really explain how investing works. [0:18:09.2]

Be a teacher. Help them. It doesn’t matter if they've got millions of dollars. Just because they have millions of dollars doesn’t mean that they know what to do when it comes to investing. They might not have a clue what's going on. What's more is if you dig a little deeper, you'll find that most investors don’t want to take huge risks for those returns. They may say, "Yeah - I want to make a bunch of money and have high returns" or whatever, but they don’t want to take that risk. When you really dig deep about the risk and you talk to them about it, you realize they just want their money to be used efficiently. When you can make the case that what you're doing is the most efficient way to put their money to work over the long-term, they're more likely to stay with you because they now have that expectation rather than "Everything's going to hell in a hand basket. I don’t know what's going on. I'm worried. I watched CNBC and I'm just getting infected with all this nonsense." They're like, "Oh, my advisor has my money invested in the most efficient way, serving me the best way over the long-term. I'm going to be cool and I'm going to stay with this advisor. [0:19:09.4]

But overall, when it comes to the expectations things, it is important to set boundaries with your clients regarding both the level of service you provide and the type of service you provide because there's always going to be some clients who expect something for nothing or they don’t realize that you have to charge appropriately in order to do certain things. Have you ever heard of the term "scope creep," Jonathan, where people ask for more and more…

Jonathan: Oh, yeah.

James: …over time? Who…I mean, it's not just financial advisors. It's all types of businesses where they say, "Oh, can you do this, too? Can you do this? How about this?" And they don’t realize that every time they call you or message you, they're taking your time and time is money. They don’t mean anything by it. They don’t have ill intentions or anything, but you've got to set the expectations.

So let's take this thing home. I just want to go back over these three mistakes which cost financial advisors clients. They are: (1) Not communicating enough, (2) Failing to understand the client's goals and objectives. That's huge, (3) Not setting the proper expectations and then managing them accordingly. [0:20:17.6]

Jonathan: Boom. What's coming up next time?

James: Next week, I've got a little special treat. I actually have an interview with someone and I'm going to be talking about virtual assistants and how financial advisors can become more productive by hiring a virtual assistant.

Jonathan: How about that? Look at this guy. He's flipping the script on you. Alright. That is a wrap for another Financial Advisor Marketing. We will be back in your ear buds next time. Thanks for tuning in.

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