A retro approach to attracting wealthy clients

Almost every adviser struggles with the challenge of reaching out to prospects who are wealthier and potentially more lucrative than current clients.

Almost every adviser struggles with the challenge of reaching out to prospects who are wealthier and potentially more lucrative than current clients.
Ideally, satisfied clients would “refer up” their wealthier friends and associates to their adviser.
“But people are not comfortable referring up,” said Alex Panas, a certified financial planner at Parsippany, N.J.-based Summit Financial Resources Inc., which manages more than $2 billion.
“They don’t believe that the person in the higher place needs help; they assume wealthier people already have their planning and investments in place,” he said.
To reach their wealthier target prospects — physicians, business owners and Wall Streeters having either a net worth of at least $4 million, investible assets of at least $300,000 or income of at least $500,000 a year — several advisers at Summit use a marketing technique that would seem to have gone the way of fixed commissions: cold calling.
“My targets don’t go to seminars, don’t respond to direct mail and don’t answer e-mail, which is why we have to call people at work and ask for an appointment,” said Mr. Panas, who says he didn’t believe that cold calling was effective in reaching affluent investors until he joined Summit and saw others using it successfully.
Making the calls
After disappointing results from using telemarketing firms, Mr. Panas now seeks experienced cold-callers through ads in a local newspaper. Working six to seven hours a day, telemarketers earn $12 to $15 an hour, plus a bonus when appointments are kept or an account closes, and make about 200 calls.
The calls typically result in conversations with 10 to 15 people a day, which yield 10 to 15 adviser appointments a month and a conversion rate of between 10% and 15% — or one to two new wealthier clients a month.
Mr. Panas spends about $2,500 a month on telemarketing, not including telephone or list costs, which total another few hundred dollars.
He does not use list brokers, because he has found that the contact information they provide is not as current or as detailed as that from Short Hills, N.J.-based D&B Corp.
Calls are placed to prospects’ place of business, where recipients are accustomed to cold calling, he said.
“Since the person knows it is a cold call, we use a very direct script: ‘I know you don’t know our firm, but you may be a great candidate for our services,’” said Mr. Panas, who acknowledged that getting past gatekeepers and voice mail requires both skill and luck.
The caller then explains that Summit’s clients are like the prospect being contacted, and that Summit helps them with financial planning.
The caller asks for a 20-minute meeting, either face to face or via a web conference call.
“The people we call understand what we do and the need for it,” Mr. Panas said. “They usually have done some planning, but in a very piecemeal way.”
Other methods
Of course, not every adviser may choose to begin a cold-calling program, which should be consistent to foster success.
In that case, encouraging clients to refer up can be accomplished in other ways.
First, the adviser can reduce a client’s perceived risk in making referrals.
Clients may not make referrals because they worry about looking bad or being blamed if the prospect doesn’t like the adviser or if the adviser does something wrong.
Reduce client anxiety and risk by simply reducing the stakes.
Rather than ask for a direct referral, ask for information about prospects — family life, hobbies, community and philanthropic interests — that could lead to a connection. Your client may feel comfortable allowing you to send your newsletter or some research to the prospect with an appropriate note, for example.
Alternatively, your client might welcome an opportunity to spend time with the prospect.
Create such an opportunity by inviting both to play golf, hear an industry speaker or attend a community event.
Ask clients to invite desirable prospects to client appreciation events, where their impression of you will be positively reinforced by other attendees.
Working with clients to upgrade their referrals requires discipline and patience but can lead to more-affluent clients.
Libby Dubick is president of Dubick & Associates Ltd., a New York firm that helps advisers and financial services firms identify and develop distribution and marketing opportunities. She may be reached at [email protected].