One common sales tactic for financial advisors is to offer prospective clients a free (or low-cost) financial plan to demonstrate the advisor’s expertise and to let the prospect ‘test drive’ the advisor’s services. However, creating these pre-commitment strategies and plans can take up a significant amount of an advisor’s time and there is no guarantee that the prospect will actually decide to become a client (in which case the advisor’s work would have generated little or no revenue). Further, when combined with the work the advisor does for current clients, the ‘extra’ work of creating free plans for prospects can easily lead to advisor burnout. However, by asking prospects a series of screening questions to assess whether they might be a good fit for the firm, and by emphasizing the value of the process and implementation of financial planning, advisors can better determine whether preparing an up-front plan for them is likely to end up being a profitable tactic.
Advisors can start by determining whether a prospect might be a good candidate for an up-front financial plan with a series of questions that ask whether they can meet the firm’s asset and/or fee minimums (to screen out prospects who will clearly not be a fit), how ready the prospect feels to get started, and whether the prospect is willing to follow through with the advisor’s onboarding and data-gathering processes. These questions can help the advisor confirm that the prospect would be a suitable client and will be able to meet the advisor’s timelines (so that the creation of the up-front plan does not drag on for weeks or longer). Once an up-front plan is created, focusing on the value of plan implementation and the ongoing financial planning process can increase the likelihood that the prospect will decide to engage as a client. As while the free plan may demonstrate the advisor’s expertise and knowledge of the prospect’s situation, the course of action that the advisor takes with the prospect (after they sign on as a new client!) to implement the plan as part of an ongoing relationship is even more valuable than the plan itself.
Ultimately, the key point is that while the preparation of free or low-cost plans for prospective clients can be a useful sales tactic, advisors who don’t have a process in place to assess prospect suitability and to showcase the true value of the planning relationships can suffer from burnout, preparing plans for prospects who are unlikely to become full-time clients. But by implementing simple steps to formalize a screening process and have conversations to emphasize the value of the long-term financial planning process and plan implementation offered to clients who have a relationship with the firm, advisors can improve their rate of converting prospects into clients, spend less time preparing free plans for the wrong prospects, and even enjoy a potential boost to their own overall well-being!
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