Volume 8, Issue 10
The Wealth Counselor (for Clients)
Identifying Hidden Financial Risks Creates Sales Demand
The world changes; clients’ circumstances change; motivations and interests change. As these changes occur—often gradually—“hidden” risks emerge that can significantly deteriorate future wealth if left unattended. By “hidden” risks, we mean exposures of which the client or potential client is likely to be unaware. Identifying hidden risks in an education-based marketing program delivers an important service to your marketplace and, with this knowledge, provides you with a gateway to meaningful conversations about the added value you can deliver to prospective clients.
Most Practitioners Require “Demand Pull” Marketing to Increase Growth
The two basic types of sales circumstances are “Demand Push” and “Demand Pull.” The Demand Push client is a prospective client who has already identified the need for a financial plan and investment solution and is conducting due diligence to hire a practitioner. You’re hearing from a Demand Push client when you receive a web inquiry, a referral, or a phone call. Your market presence (local search access, professional connections, active client referrals, and website clarity) activates this demand. A strong market presence will increase the regularity of inquiries from Demand Push clients. For some financial professionals, Demand Push marketing and word-of-mouth activity produces growth sufficient to meet the firm’s revenue objectives.
Demand Pull marketing is education based. You, as the practitioner, operate in an educational mode, illustrating your prospect’s needs that exist but are unrecognized either at a basic level or in a matter of degree. You identify these needs and motivate the prospect to act by providing education opportunities.
What you need to know: For the vast majority of financial professionals, achieving the desired revenue growth trajectory requires an ongoing, proactive marketing and sales effort to fuel demand. The key challenge in this common scenario is accessing a market of prospective clients with an educational message that drives action where little or no energy existed before.
Inertia Is a Force to Overcome
Inertia is a powerful force to overcome in today’s marketplace. You find inaction with this sentiment: “I already have a plan or program.” Indeed, the financial planning industry fosters this inertia by treating the planning phase as a discrete, infrequent step; the industry emphasizes the initial investment program deployed to execute the financial plan.
In fact, for most investors—and often unbeknownst to them—legal issues, tax issues, demographics, life stages, interests, anxieties, and aspirations change with regularity, and often altogether.
What you need to know: Treating a plan or program statically in the face of a changing world and uncertain future is a sleeping pill . . . not far from the frog that passively rests in the pot of warming, and soon to boil, water.
Fear Is a Real and Important Motivator Leading to Positive Outcomes
Fear is a high-impact investment force. Fear creates emotional memory that acts as a joint force to inertia or complacency. We see this today in investor caution borne from the 2008 financial crisis (similar to the financial behaviors of the Depression-era generation).
But fear can also be an important driver of good outcomes. Fear-induced motivation is an education opportunity for your Demand Pull marketing strategy.
Over time, a client’s circumstances, needs, and aspirations deviate from what they were when the client’s financial and investment plans were first constructed. The more time that transpires, and thus the greater the changes in the environment, the more likely hidden risks reside in the client’s plan.
What you need to know: Just as a doctor diagnoses bad eating habits as a likely indicator of future health risks, so too can you diagnose hidden financial risks as threats to the prospect’s or client’s need for financial comfort, confidence, and purpose. Activating “fear” of these hidden risks produces demand to have additional consultations with you.
Identifying Hidden Financial Risks Opens Doors to Added Value
The chart below lists some financial circumstances that pose hidden risks. Your educational efforts to identify and illustrate hidden risks (i.e., a Demand Pull approach) offer an important service to the prospective client, just as the doctor’s advice to correct poor health behaviors can add years of life if followed. (For your existing clients, diligence in monitoring changes to the client’s circumstances, needs, and aspirations—thus avoiding hidden risks—attaches to the fiduciary standard, strengthens the advisor-client bond and increases your client-referral prospects.)
Actions to Consider:
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