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Prospecting Tips for Financial Advisors

Customer conversations

prospecting financial advisors


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Financial advisors are approaching a critical juncture. A confluence of factors has intensified the already considerable challenges of the job, prompting advisors to rethink how they will prospect to build their client base.

These factors are three-fold:

  1. Technological innovation has introduced competitive alternatives to traditional in-person consultation. The rise of digital-only offerings has circumvented the connection between financial advisors and clients, accelerating a trend toward fee compression in which more products and services are expected at near-zero costs.
  2. Economic factors, namely volatility, have renewed anxiety among investors. The pandemic, increasing globalization, and geopolitical tensions have all contributed to a pervasive sense of rising uncertainty.
  3. The breadth and depth of available financial solutions have introduced heightened complexity into the client’s world. These clients, representing different risk tolerances, time horizons, and incomes, struggle to tie these products together into a cohesive solution designed to meet their individual needs.

While each of these characteristics presents significant challenges, they also represent opportunities for financial advisors who are equipped to use open dialogue and collaboration to connect with prospects.

Here, we offer prospecting tips to empower financial advisors to position themselves for success.

Understand the Range of Needs

The same body of research from PwC determined that “when it comes to life’s big financial planning decisions, people want empathy that machines can’t provide.” This finding is becoming apparent in the context of clients who seek solutions to the kinds of sophisticated financial needs that emerge later in life. Consider that the use of fintech solutions drops dramatically after the age of 44, according to a study from Ernst & Young. In fact, approximately 88% of those who are the age of 45 or older do not use fintech solutions.

This finding is important because additional data from Gallup shows that Americans aged 65 and older are among the few that have not seen their stock ownership levels drop since the 2008 financial crash. In contrast, those within the 18-64 age range have all seen their stock ownership shrink to varying degrees.

Simply, fintech adoption appears consolidated among those with fewer assets and basic needs. Those, however, with more assets and more complex circumstances are still in need of individualized financial solutions.

Connecting with this demographic means understanding their range of needs in three ways:

1. Engage in Active Listening During Prospecting Conversations

One of the financial advisor’s most powerful tools is not a program or piece of technology — it is active listening.

When someone engages in active listening, they are focused on the other person’s words. They are making a concerted effort to understand the other person and respond in a meaningful way. Customers who receive active listening are more likely to enter into a business relationship with the financial advisor

2. Foster Self Awareness

Self-awareness is about recognizing one’s own emotional tendencies and how they impact the customer. By recognizing these tendencies, a financial advisor can manage them. Moreover, self-awareness changes the financial advisor’s mindset by focusing them on how well they are meeting the client’s needs. As a result, they ask more and better questions, which illuminate otherwise overlooked needs. Self-awareness gives the financial advisor an accurate, honest read on how well they are addressing the client’s challenges and what more they can do to handle the full scope of their needs.

3. Avoid Anchoring

The anchoring bias is a reliance on too little information. Succumbing to this bias can lead a financial advisor to jump to a solution without a complete understanding of the problem. One might make assumptions based on the client’s communication style or age. In doing so, it becomes easy to falsely assume that the customer is not interested in a broader solution. Uprooting anchors means having an open mindset in which all solutions, even new ones, are on the table when attempting to solve a challenge. The solution is to ask more questions and listen to the responses. In doing so, the financial advisor creates a dimensional picture of the needs

Address the Client’s Emotions

Personal finances and emotions are inextricably linked. Research published in the Journal of Consumer Research determined that “financial well-being is a key predictor of overall well-being and comparable in magnitude to the combined effect of other life domains (job satisfaction, physical health assessment, and relationship support satisfaction).

Recent circumstances have made financial well-being more tenuous. The pandemic has had an outsized influence on perceptions of risk and expectations for the future. A recent survey conducted by the National Financial Educators Council shows that over one quarter of respondents believe that the spread of COVID-19 has had a “very negative impact” on their personal finances. While equities recently enjoyed their longest bull run in history lasting more than a decade, today’s market is characterized by muted returns and increased volatility. This low performance and uncertainty have made investors less optimistic.

Meanwhile, recent decades have been characterized by eroding trust among investors. Upheavals like the global financial crisis have made investors more reticent to seek the assistance of an advisor. However, those advisors who are able to foster meaningful relationships with clients see considerable rewards. Research from Deloitte shows that investment managers who build a deep level of trust with their client “command a 19 percent fee premium relative to competitors.

This finding should alert financial advisors to the crucial task of trust-building, which happens in three ways:

1. Adopt the Role of a Trusted Advisor

A trusted advisor has a set of skills that go beyond an in-depth understanding of the solution’s capabilities. Many financial advisors do not ascend to this status. Many are classified as either a technical expert or a product provider.

A technical expert is largely a resource for information. They might enjoy strong relationships with customers, but these relationships are limited to specific products or specialized technical needs. A product provider has less of a connection with the customer than a technical expert. They are often welcomed on the strength of the company they work for or a product name.

A trusted advisor does all of the things the product provider and the technical expert don’t do. They are more than the product they sell — they are a strategic partner who can see the customer’s big picture. They see how and why the solution fits, what the capabilities mean for long-term success, and how it can be implemented in the best possible way.

2. Execute Better Preparation

Building trust starts with extraordinary preparation. This kind of preparation is not episodic — it is ongoing. With consistent preparation, a financial advisor is always ready to add value to an unexpected conversation with a customer. They can engage individuals with a level of detail that reflects a deep understanding of current issues. Doing so sets up the financial advisor to engage in a strategic dialogue. A strategic dialogue adds value by looking at the client’s objective from multiple angles.

Financial advisors can ease into these questions with a funnel approach. They begin with broad but informed questions, then they go deeper. Each successive question seeks more detail. Initially, questions center on long-term objectives. Then, questions move to challenges like factors standing in the client’s way.

3. Foster a Relationship of Openness

In a piece published in The Journal of Consumer Research, Harvard Professor Leslie K. John and others found that using less formality in asking for sensitive information yielded better results.

Financial advisors, therefore, should foster a relationship of openness rather than resort to formality. This idea does not mean taking a casual approach to the sale. Financial advisors still need to engage in plenty of preparation and follow-through. The takeaway from this research is that there is value in developing a relationship with a customer to a point where the conversation flows. Reaching this point requires the financial advisor to gain more self-awareness. That is, they must observe their presence and understand not only how they appear to themselves, but how they appear to clients.

Offer Simplified Solutions in Clear Language

Financial products are inherently complex. This complexity often places a burden on the client who must untangle technical language to understand the product. Therefore, financial advisors should communicate the value of the solution in clear terms free of jargon.

The value of this approach is clear from research that explores the use of technical vs. ordinary language. Researchers examined how people perceived an author’s credibility. Their results showed that “technical language use negatively affected authors’ integrity and the credibility.

Jargon and technical language will distract or overwhelm the listener. Clear, direct communication in accessible language is effective because it is honest and free of pretension. Finding this communication means being specific in observations. Doing so shows means demonstrating attentiveness to details. Moreover, specificity gives more direction to the conversation because the financial advisor and the client can address underlying challenges rather than vague, surface-level issues.

Keeping the message clear means doing three things:

1. Focus the Customer on What is Important

Clients want a solution that either addresses a problem or helps them accelerate toward a goal. When listening to a financial advisor, they are searching for that singular characteristic that speaks to their needs.

Effective financial advisors seize that opportunity by drawing the customer’s attention to the aspect of the solution that most directly addresses the client’s top priority or that highlights the solution’s key differentiator.

Stories are effective in this context because they represent a simplified template in which the financial advisor must edit their messaging to only the pieces that fit a narrative structure. Doing so helps keep the delivery tight. The absence of structure invites opportunities to “tack on” additional product features that distract from the core message.

2. Provide a Vision of What is Possible

Provide a clear example of how the solution will unfold. Technical details provide a blueprint, but a description provides the house. In these circumstances, the visual properties of a story are not only helpful, they’re necessary. Researchers have learned the power of this effect. Anthropologists studying approximately 300 people across 18 villages found that “camps with a greater proportion of skilled storytellers, were associated with increased levels of cooperation.”

Clients need the clarity that only a good story can provide. A lot of a client’s hesitation with moving forward stems from uncertainty surrounding outcomes. A fully formed narrative eases this discomfort. Consider a brief narrative citing how the solution successfully addressed another client’s needs.

3. Create a Plan to Move the Customer Forward

A client’s decision to partner with a financial advisor is a long process, and it’s getting longer. The availability of limitless information and conflicting data create confusion for the client. Financial advisors need a method for steering clients through the labyrinth.

The problem: over the past five years, their ability to do so has diminished, and sales productivity has fallen from 41 percent to 36 percent, according to research from Accenture. The same body of data concluded that 59 percent of sales professionals reported that “they have too many sales tools.

Falling productivity is not a resource problem — it’s a strategic one. Financial advisors need a smarter way to bring the customer through the buying process. They need a momentum methodology.

They need a way to:

    • Assess: Financial advisors must gauge their strengths, vulnerabilities, and gaps. They must know where they can add value above and beyond competitors, where they’re lacking, and what areas represent incomplete knowledge.
    • Strategize: Financial advisors need a strategy as much as clients do. A strategy helps make better decisions and builds the confidence that comes with being prepared.
    • Prepare: Strategy is nothing without execution. Strong execution comes from preparation. Too often, financial advisors take the strategic plan and reach out to the customer. In their enthusiasm to meet with the customer, they move ahead without proper preparation.
    • Engage: To advance the sale, every engagement must add value to the client. Engaging with the client requires dialogue and questioning skills. Financial advisors must also seek feedback from the client.
    Developing a modern approach to building a client base is more crucial than ever as financial advisors face multiple fronts. While technology, volatility, and complexity have left investors in a difficult position, these factors also have provided opportunities for financial advisors to show their unique value that is unmatched by even the most advanced alternatives.

    To fully leverage their consultative skills, financial advisors must take full measure of the client’s needs and understand every facet of their situation. Advisors must also remain mindful of the customer’s emotions in helping them navigate the sensitive topic of financial wellness. Finally, clients need simplified language that clearly articulates a path forward.

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