Prospect Red Flags Financial Advisors Shouldn’t Ignore
Almost every financial advisor starts in the same place—with a lot of time on their hands and not many clients. That’s when the criteria for selecting which prospects to work with is at its broadest—essentially, anyone willing to pay me anything.
It’s not until your business expands, reaching the point when you’re servicing 50 or more randomly chosen clients, that your time starts to become much more valuable. Eventually, you reach your capacity for new clients, and your revenue stops growing. Worse, you’re not enjoying your work as much as you hoped.
That’s when you realize it shouldn’t be about the number of new clients you take on; it should be about the quality. It’s about saying ‘no’ to prospects who don’t meet your criteria for the type of client you want to work with, which isn’t easy if you’re still chasing growth. But ultimately, saying no to prospects who are not a solid fit is good for you and them.
Here are some major prospect red flags warning you to move on.
#1. They don’t fit your client persona
We’ve discussed the importance of developing a client persona to be able to target, identify, and attract your ideal client. Having a detailed client persona is like wearing blinders to keep you focused solely on finding the type of clients you want to work with.
A client persona details your ideal clients by their background, career, financial status, planning needs, interests, goals, challenges, and preferences. It’s essentially a composite of your best clients—the ones you want to replicate over and over again.
With every prospect you target, you have the opportunity to do a deep dive to determine how well they match up with your client persona. They may not hit on every factor, but if they don’t match up with most, you should consider saying no.
#2. Your personalities don’t fit
We’ve all worked with people we don’t like. They were probably among our first clients. But now life is too short, and your time is too valuable to exert yourself on people who rub you the wrong way (or vice versa).
It’s not always easy to flesh out disqualifying personality traits when first meeting a prospect. Still, it’s critical to have a system in place to get to know who they are—especially their attitudes, beliefs, and values about money and financial advice. A prospect who doesn’t align with your values, investment philosophy, fee structure, or general way of doing business should be easy to spot as not ideal. It would be a courtesy to them to part ways respectfully.
#3. They’re too investment-focused
Some people are intently focused on investment returns, never satisfied with anything less than consistent market-beating performances. You’re in the business to help your clients achieve their financial goals, not to constantly beat the markets. You have no control over the market performance, but clients who expect top returns will still hold you responsible when they aren’t achieved. Prospects who want to focus solely on investment returns want a stock picker, not a financial advisor. This is an easy one. Just say no.
#4. They only tell you half the story
Some prospects may seem ideal until you sit down to get to know them. In the initial meeting, it’s your job to learn as much as possible about the prospect, including their family and financial circumstances, goals, values, and beliefs about money. That’s also an opportunity to build rapport and a personal connection with the prospect so you both can determine if you’d be a good match.
However, if you sense a prospect is holding back, not wanting “to go there” with a particular topic, or not being forthcoming with personal information, you must find out why or prepare to move on. It could be that you failed to build a personal connection, and the prospect can’t trust you with the information. Or the prospect is just not a trusting person. Or they don’t want to share the whole story for whatever reason.
If you do everything you can to establish trust and reassure the prospect that the only way you can help them is through mutual honesty and transparency, and they are still reluctant to share information, it’s time to move on.
The better you become at identifying and saying no to incompatible prospects, the more time and energy you’ll have to track down your ideal clients. The same goes for any existing clients who don’t fit your profile. The more you can winnow your book of business down to clients matching your client persona, the healthier your business and happier you will be.
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