It’s been said in the real estate business, the best time to pick up properties is after a disaster. The Savings and Loan Crisis of the 1980’s put lots of distressed properties on the market. There were deals to be had.
The coronavirus pandemic and the lockdown that followed was a major shock to the financial system. At one point the stock market was down about 30% in a short period of time. Many investors will be evaluating how their advisors performed. It was their “stress test.” Not everyone received good grades.
Why Would a Client Leave Their Advisor?
Focusing on the pandemic, lets consider six reasons:
1. They have no advisor. They went it alone. They used a robo advisor. They traded online for free. They were once heard saying: “Investing is easy. Anyone can do it. What do I need you for?”
2. Their advisor never called. They see a name on their statements. No one called, sent a personal e-mail or a text written by a human.
3. Their advisor called once. The lockdown has lasted about three months so far. They heard once, early on. That was it.
4. Their advisor called, but offered no guidance. People expect advice from an advisor. Theirs called but didn’t share any research or suggest taking any action. “I’m here if you need me.”
5. Their advisor argued with them. Maybe the client deserved it. The client told the advisor “You should have seen this coming.” The advisor said “You knew what you were getting into.” There have been no more phone calls. Perhaps you don’t want this one.
6. Their advisor only sent generic e-mails and texts. It’s like those TV commercials service companies have been running. “We are committed to helping you get through this crisis.” The unspoken part is “But you need to contact us, because we won’t be contacting you.”
7. Their advisor doesn’t return calls. The client reached out, Maybe they got an assistant. Maybe just voicemail. They never got a return call.
8.Their advisor quit. Retired might fit into this category too. They decided: “This is enough. I’m outta here.”
Getting People to Talk About Their Advisor
Lets assume everyone you want as a client already works with someone. How do you find out if they passed the “stress test?” There are lots of ways.
1. Setting a standard. They’ve told you they have an advisor. You are glad to hear it. “2020 has been a difficult year for the market. If your advisor:
- Is there when you need them.
- Returns calls promptly.
- Answers your questions
These days, that’s about as good as it gets.”
Why: You have set un unbelievably low bar! If they say: My advisor does none of that” you have an opening.
2. The periodic reviews. Everyone wants (or thinks they wants) a scorecard. “During this volatile time in the market, we try to talk with each client at least monthly and let them know where they stand. When was the last time you heard from your advisor?”
Why: You are bringing up accountability. Has their advisor stood behind their advice? Defended it?
3. The assumption. Ideal with friends. “The reason I’ve never brought up business is because I assume you work with an advisor already. They probably take great care of you and give you good service. Most successful people have that type of relationship with their advisor.” Stop talking.
Why: Everyone wants to feel like they are an important client. You’ve set a bar.
4. Room for improvement. “You already work with an advisor. I assume you are happy with the relationship. Let me know if you think there’s room for improvement.”
Why: You were respectful. You’ve established yourself as the alternative.
The pandemic presents some unexpected opportunities to add clients. Get people talking about their advisor. Draw them out.