Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
April 08, 2021 at 11:15 AM
“It’s my way or the highway.” That’s not likely to turn prospects into clients very often. “Let me explain how I work with clients” is a softer approach.
Like clothing, one size rarely fits all. Use a simple question to draw them out, then determine where you want to take the conversation.
Here’s the question: When it comes to day-to-day portfolio management, how involved do you want to be?
They might have an immediate answer or they would ask: “What do you mean?” That opens the discussion. Here are 10 common ways your prospects might want to approach investing.
1. Total outsourcing, lots of assets.
They don’t want to think about it. They either don’t watch the financial news or they want to know someone else is minding the store. Extreme examples might be an airline pilot or a cardiac surgeon.
Approach: They are a total managed money client. Your contact with them might be for portfolio rebalancing during quarterly or periodic reviews. Robo-advisors could fit here, too. Mutual funds that cover all major asset classes might fit too. Balanced funds should fit into this category.
Your level of involvement is medium. Their level of involvement is low.
2. Total outsourcing, less assets or adding monthly.
They don’t have lots accumulated, but their cash flow is substantial. Between monthly contributions and their annual bonus, they have the ability to build up their asset base over time.
Approach: The portfolio might be structured to own a series of mutual funds or other investments that could be added to automatically, similar to they way their car payment is debited each month to their checking account. Another approach is to agree on an amount and have a conversation each month, determining where the money will be allocated.
Your level of involvement is medium. Their level of involvement is medium.
3. Big-picture collaborative approach.
They don’t want to worry about it, but they do want to be brought into the decision-making process. Put another way, they want to hear from you. This is the traditional type of client relationship going back decades. Individual stocks aren’t that important to them.
Approach: This likely involves managed money. It would involve asset-based pricing. The advisor would build a portfolio of ETFs and mutual funds in addition to separately managed accounts. Periodic reviews would focus on progress to goals, performance vs. indexes and rebalancing.
Your level of involvement is medium. Their level of involvement is medium.
4. The blended approach.
This client also wants to hear from you. They like the idea of someone else driving the bus, but they like the thrill of owning individual stocks. In many cases they are happy leaving those choices to you, but they want to make the final decision.
Approach: Managed money is a good fit for the bigger building blocks, but a certain amount of money is invested in individual stocks. This is done through a fee based account, establishing costs up front. Together, those designated funds build into a portfolio. You call with ideas and suggest changes. Except for the managed money portion, discretion isn’t involved.
Your level of involvement is medium. Their level of involvement is medium.
5. The stock trader.
They love stocks! They might or might not do their own research. They don’t like the concept of managed money. They want to make the ultimate decision. They aren’t necessarily frequent traders. They understand buy and hold.
Approach: It’s all about stocks — your ideas or their ideas. You need to stay on top of things. You also need to draw a line between solicited and unsolicited trades. You keep them updated regarding stocks where your firm has an opinion. For those obscure stocks they find, they are on their own.
