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By David Miller

What is the proper etiquette on addressing the issue of a referral that is not a good fit?

What if that referral comes from a favored client?

Great questions for sure, and ones that we are asked on a regular basis. Let’s first separate this issue from the instance of a referral from a favored client’s close family member that is a non-fit for our practice.
Clearly, there are instances where we take it on the chin for our best clients, and this is a classic. Our recommendation for these instances, whereby a AAA client would like us to work with their grandchildren, sons, daughters etc., is that you simply say: “I would be happy to.” It should be considered an extension of client service, and something that you reserve for only your best clients. Period.

All that said, what about a referral from a favored client that does not fall into that ‘close family member’ category?
This is actually an issue that is easily addressed, and it should be addressed upfront, and as soon as possible, with your preferred clients.

The phraseology is as follows, positioned within the advisor’s existing Introduction Process. If you don’t currently have an Introduction Process, you can make use of the one below:

Bob, as one of my preferred clients, I want you to know that over the course of our relationship, you may encounter someone you know who is expressing uncertainty about the economy, or perhaps they have questions about a critical financial event they are going through, maybe they are dissatisfied with their existing advisor.

So should you ever run into that situation Bob, and if that person is important to you, well then they are important to me. I will always make the time to meet with the people that are important to my best clients. I can act as a sounding board for them, and although I must stress that there is no guarantee that the person will be a good fit for me, that is irrelevant. I will still always make the time to meet with them.

If it is not a good fit for me, or for them, I will do everything in my power to point them in a direction that is beneficial to them.

Any questions?

You will notice that as part of the Introduction Process above, we address the issue of a potential non-fit in a forthright and transparent manner. We tell the client it may happen, and if it does, we will still try to help them.
We achieve the same result with our favored client regardless of whether it is a fit or not. We did exactly what we said we would do, and the only caveat we gave to the client about meeting with someone they know, is that they be important to that person.

That last fact by the way is also a key point. Getting a stream of predictable referrals is hard enough without burdening your clients with the précise criteria that you are looking for in a potential client. Forget all that, and just make it easy for your clients: Just keep repeating the above Introduction Process at every face-to-face meeting with your best clients.

Their only task is to be on the lookout for people that are important to them that may need assistance, and you have already covered the fact that it will not always be a good fit, but you will take the time to meet with them anyway.
That is simply how you conduct yourself with your best clients, and that message will come through loud and clear.
For questions and comments join the Pareto Systems Group on LinkedIn and participate in the discussion.

Take action:
Visit our new and improved website at www.paretoplatform.com and watch the video describing the Pareto Platform powered by Microsoft Dynamics CRM.

By David Miller

Consider the following:

One of your best clients comes into the office for an appointment. You are just finishing up with another issue, so she sits down in your reception area and is visibly excited. This particular client is usually very conservative and doesn’t typically show her emotions. Hopefully your receptionist engages her in a conversation something like this:
“Dorothy, you look extremely well today. Is there something exciting happening in your life?”
Dorothy responds: “Well, I am just so excited. I just got news that my grandson has been accepted into the college of his choice. It has always been a bit of a question mark as far as to what he would do or even if he would ever do anything. So this is quite exciting for everyone in the family.”

In all likelihood, your receptionist will congratulate your client and will be genuinely excited for her. The conversation may carry on until she is eventually ushered into your office for your meeting.
One of two possibilities can now take place. First, your receptionist can go back to work and forget about what just transpired. The second possibility is that she can take the time to record Dorothy’s big news in your CRM and make a note to talk to you about this after the client leaves.

Situations like this are golden opportunities that the best advisors crave to hear about. If this were your office, and Dorothy was your client, you might have uncovered this same information during your meeting, but let’s say you didn’t. Everyone on your team has to be aware of the importance of these “Moments of Truth” whether it is a death in the family, a marriage, graduation, a birth in the family or any other event that is important to your client. These are huge opportunities to make an impression and really show your client, through your actions, that you are paying attention to them and their lives.

So what do you do now? You and your staff have recognized the importance of this event. You have shared your excitement with Dorothy. She has left your office feeling better than she has in years. You can almost see her walking on air as she leaves the office. Is that enough? We don’t think it is. This is where you have to use your creativity and come up with an idea for a gift and a card to mark the occasion.

You don’t have to spend a lot of money but you do have to keep in mind the relevance of the gift, the quality and the shelf life. You want to send them something to mark the occasion that will be cherished and valued for a long period of time. Each and every time they see the gift they will recall who gave it to them and under what circumstances it was given. Some advisors see this as some kind of trickery or ploy to get the client to owe you one. Once you have honored a client in this way you will realize that you get as much out of it as the client. It feels good to pay attention to people and recognize their milestones.

Make your entire staff aware of “moments of truth”. Create a process for recording information in the CRM to increase everyone’s understanding of your clients. Also have a process for staff members to communicate to you about these “moments of truth” and empower them to use their creativity in helping you to come up with ideas to mark these occasions.

For questions and comments join the Pareto Systems Group on LinkedIn and participate in the discussion.

BY Pam Derringer
PUBLISHED: April 15, 2010

A 10-year-old Canadian financial consulting firm has converted its customized CRM software to the Microsoft Dynamics CRM platform and will be demonstrating it later this month at Convergence.
British Columbia-based Pareto Systems, whose SaaS software is tailored to the specific client needs of financial advisers, expects to officially launch the new Dynamics CRM-based Pareto Platform on May 1.
The software initially will be available as a service for $95 a month but an on-premise application also is planned, according to co-CEO David Miller, who noted that most of Pareto’s business is with U.S. firms.
The Dynamics conversion is expected to help Pareto’s customers, who will benefit from faster global response times on Microsoft servers. And when Dynamics CRM 5 goes to the cloud, Pareto’s customers will, too, said Pareto CTO Cody Shiloff.
“The Microsoft network. That’s the key,” Shiloff said. “Microsoft has servers all over the world and the best Internet connections available. And when Dynamics CRM 5 comes out, Pareto users can simply migrate to the cloud. We’ll reach more people with this.”
But Pareto, a $5 million, private consultancy in western Canada, also should get a boost from the affiliation, broadening its profile and global reach by becoming part of the Microsoft family.

How it got started

Miller, who has been assisting financial advisers for 20 years, said Pareto decided to create its own software seven years ago after evaluating existing CRM products, including Dynamics, and realizing that none of them met the specialized needs of financial advisers.
“Most CRMs don’t focus on the areas needed for advisers,” Miller said. “You need to zero in on what advisers want to accomplish. We know what they want. And we know they aren’t very tech savvy.”
The Pareto Platform doesn’t attempt to acquire or evaluate financial data, which advisers already have from other sources, Miller added. What it does instead is create a computerized framework to help advisers develop and maintain a close personal relationship with all their clients while ensuring that the most important clients are at the top of the radar screen, he said.

Focus on the client

Miller believes that Pareto’s most critical differentiator is its automated calendar, which schedules recurring contact events for multiple clients at the click of a button. The calendar inputs events according to personalized data and a service matrix, which classifies clients according to size, he said. For example, an adviser can designate specific activities such as a letter, an e-mail, a phone call or a meeting for all clients in particular classification and they all will be plotted to the calendar simultaneously, he said.
In addition, Pareto’s ability to categorize customers ensures that the needs of the most important clients remain uppermost in the adviser’s mind, which is critical because the top 20% of an adviser’s clients typically generate 80% of the revenue, he said.
Pareto’s conversion to Dynamics was no quick fix. Pareto’s proprietary database and code were written in Java and C to run on Linux and Unix machines, according to Shiloff. Everything was rewritten in C sharp and added on top of the Dynamics CRM code base, with six or seven additional levels of objects to automate the calendar and add the service matrix and link everything together in a logical way, he explained.

Kudos from a customer

Mark Lamkin, president of Louisville, Ky.-based Lamkin Wealth Services and a member of the $2.79 billion LPL Financial network, said his 9-year-old practice started off with GoldMine CRM software but he “hated it.”
“GoldMine was cumbersome and big and it wasn’t tailored to us,” he said.
After evaluating other products and meeting Pareto co-founder Duncan MacPherson, Lamkin switched to Pareto.
“It was a perfect fit and just what I needed to build my practice,” Lamkin said. “And it was a heck of a lot easier to run.”
Several features are particularly helpful, including the calendar which highlights the day’s scheduled client follow-ups in a specific color. In addition, the software saves and retrieves notes from prior client conversations, which is critical for compliance records, he said.
The bottom line: Pareto’s system, including its best practices, training and templates have given Lamkin the ideas and the framework to grow the business to $130 million in client funds, despite an often-turbulent financial climate, Lamkin said.

As for the coming switch to the Dynamics CRM base, Lamkin said he is “cautiously optimistic” about the change and will be happy as long as it integrates successfully with his Microsoft e-mail and his Blackberry.
The conversion to the Microsoft should broaden Pareto’s appeal to prospective customers, he added.
“This will automatically open doors and give Pareto instant credibility,” Lamkin said. “Professionals are far more likely to look at it.”

Actionable Tip of the Week

Recently, we received a call from one of our coaching clients who was rather excited about something he had just experienced. We had been working with him on his process for conducting an initial meeting with prospective clients, and his breakthrough had come from insisting on having all of the prospective client’s assets as a prerequisite to working together. In the past, if a client had come to him with a tempting enough amount of investible assets, he took the client, and this was regardless of whether or not the client had additional assets with another advisor.

His philosophy was that he would always take the money that was on the table, and try to ‘chip away’ at the client’s resolve over time, eventually earning the right to have all of the assets down the road. Many of the advisors we work with adhere to this same approach. The fear of losing a ‘partial client’ outweighs the potential of the more lucrative stance of insisting on managing all the assets up front, and the vicious cycle continues. The clients call the shots, and it often turns into a ‘contest’ about which advisor’s investment returns are superior. Ironically, few will challenge this ill-conceived notion of diversity, even though the majority of advisors will state off the record that it is not in the client’s best interest to manage their money in this fashion.

This time was different. The potential client, who was a referral by the way, said that he would like to invest one-million dollars with the advisor, and announced that he had an additional million with another advisor, and that was what he was comfortable with. At this point in the meeting, the advisor stated the following:

I understand that many clients see safety and diversity from having their assets spread among two or more advisors; however, I respectfully disagree that this practice is in the client’s best interest, and I am not that kind of advisor.

For me to make educated decisions that will help clients achieve their goals and objectives in a reasonable amount of time, and to do the best job I can for a client, I need to have all the pieces of the puzzle, and that includes managing all of the assets.

When you have different advisors, making decisions independently on one client’s goals and objectives, it is my strong belief that the client is not being well-served.

All that said, I do understand where you are coming from; however, in order for a client to be a good fit for me, this is something I cannot compromise on, and the reason I cannot, is a reason that is all about the client. I will need to look after all the assets in order for us to work together.

What we find compelling about this approach and philosophy, is that it is in the client’s best interest. Does it benefit the advisor as well? Of course, but that is irrelevant to the larger picture. Almost everyone would agree that it would be craziness to have 2,3 or 4 dentists work on one set of teeth, so why the ‘advisor diversity’ when it comes to one set of goals and objectives? When advisors use the kind of language referenced above with a potential client, the potential client sees integrity in that advisor. They will contrast that stance with their prior experiences, and see other advisors who just ‘take the million’ as being less professional, and ultimately less attractive than the advisor with integrity.

Oh yes, and the excited phone call that we received from the advisor? He was calling to tell us that the prospective client had just called back and he and his wife were ‘all in’ and ‘looking forward to the relationship’.

For questions and comments join the Pareto Systems Group on LinkedIn and participate in the discussion.

Take action:
Visit our new and improved website at http://www.paretoplatform.com and watch the video describing the Pareto Platform powered by Microsoft Dynamics CRM.

By David Miller

Actionable Tip of the Week
A recurring question we are asked by many advisors is: “How do I tell prospective
clients about what my ‘minimum’ is?

This may sound like a rather straightforward question that deserves a straightforward answer, and it is. So consider two distinctive ways of answering this and the ramifications of each.
The way most people would respond is:

“For me to work with a client, the minimum assets I require are $500,000.” At this point, the advisor may then feel obligated to provide an explanation and they add something like; “or it simply is just not worth it to me.”
Regardless of whether or not they add the explanation, it is implied.
So whose needs is the advisor addressing? Is he talking to the client about their needs or is he talking to the client about his own needs? What images is he conjuring up and what is the greater message that he is sending? What the advisor is really saying is—It is all about me all the time and this is my primary concern.

We teach advisors that there are three primary people in anyone’s life — me, myself and I. So when a client hears an explanation like this, how do you think they react inside? What questions are they thinking about? In other words, “Will this guy put my concerns first in the relationship and can I trust him?” You have raised doubt in their minds. Is this ever a good thing when it relates to trust?

What’s the alternative?

Try using this phraseology instead:
“I have a number of criteria that I use to determine whether or not a potential client is a good fit for me, and one of those things, and it’s not the only thing, is assets.”
The solutions and services I provide to my clients are best suited for families / households with more than $500,000 in investable assets.”

In the first statement, you are setting yourself apart from everyone else your client has ever discussed this topic with. You are expressing thoughtfulness and care by being concerned that there is a fit between you and the potential client. You have also stated that you have a number of criteria to determine fit between you and the potential client, and investable assets is just one of those criteria.

So whose concerns have we addressed with the second statement? We have dealt with this subject of investable assets in a very straightforward manner, and at the same time we have made a bold statement about where our loyalties lie. With this approach, you are saying that if you took clients with less than your minimum, it would really be doing them a disservice, as the solutions and services you provide would not meet their needs. You are expressing integrity, honesty and trustworthiness. You are not raising any doubts and the client feels honored and privileged to work with someone who is concerned about, and who puts his clients first.

The next time you are asked the question about minimums, or in the event that you need to ask the question yourself, give this a try, and notice how people respond. They will have a new level of respect for you as an advisor.
For questions and comments join the Pareto Systems Group on LinkedIn and participate in the discussion.

Take action:
Visit our new and improved website at www.paretoplatform.com and watch the video describing the Pareto Platform powered by Microsoft Dynamics CRM.
“Let us know when you are ready for your ideal life.”