Tip of the Week, July 7, 2010
It is one thing to be honest, and yet another thing altogether to be both honest and forthright.
I often use the example of when I first started in this industry. In those days, mutual funds had a 9% front-end load. Most advisors today would shudder at the prospect of having to tell their clients that they would lose 9% of their investment the moment they wrote that check.
As I honed my sales skills in those early days, I learned rather quickly that if you told the prospective client this unpleasant news at the end of your presentation, 90% of these people would politely (and some not so politely) run for the door never to be seen again.
I also discovered that if this news was the first thing you told people, as opposed to the last, 90% of those people did not consider it a negative aspect of doing business with you.
From that point on, when I had a prospective client come into my office, or I met them in their homes or offices, the first thing I would say is: “It is important to let you know that if and when you decide to do business with me, all your investments will be subjected to a front-end load of 9%. What this means is that if you write me a check for $100,000, the amount of $9,000 will be paid to the mutual fund company. A portion of that will go to the investment company I work for and a portion of that will go to me.”
I remember the first time I tried this; I stopped after that statement and waited for the usual request for me to leave the premises immediately. It was a bit like waiting for someone to pull the trigger of a gun. After a brief pause, which seemed like an eternity, the gentleman said: “Well, let’s see what kind of investments you’re talking about.”
I almost fell off my chair. Of course I had been taught to tell the truth but this was a new wrinkle in the formula–being both forthright and honest right up front.
There are many ways you can apply this simple principle. At Pareto we often talk about advisors taking more time off to enjoy their lives. Many advisors are reluctant to do this and when they do take time off, they are even more reluctant to tell their clients. Is it possible that if we communicated to our clients well in advance about our vacations they would be respectful and understanding of our needs as well as their own?
So we are now into July, 2010. Many of you have your holidays planned and for some of you they are imminent. How good a job have you done communicating this in a forthright and honest way to your clients, or perhaps even your staff?
Many of the advisors we have worked with over the years send out a letter at the beginning of the year outlining the holidays they will be taking. Some even discuss where they plan to go and what they will be doing. Some even include it as part of their newsletter. When they get back from their holidays they may even share some of the highlights of the vacation.
Clients appreciate this and some even get excited about your prospects for your time off. You may be going somewhere or doing something that is near and dear to their hearts. Or, they may have suggestions of particular activities or locations that they have enjoyed in their travels. Ironically, this can make you more interesting to your clients. Instead of your clients resenting your activities, they respect it and enjoy hearing about it. Of course this all depends on how forthright you were with them.
One last story to make my point; about 15 years ago, I listed a house with a real estate agent. The next week I called to talk to him about his plans to market the house. His assistant notified me that he had gone on holidays for two weeks. I was quite disappointed and put off by this discovery and asked her if perhaps it would have been reasonable for him to tell me this. She was non-apologetic.
Over the next couple of weeks, she called me several times to ask me if I was available to show the house to prospective purchasers. This was the proverbial salt in the wound. When he returned and I expressed my feelings he was indignant that it was his right to take holidays and had had them planned for months. Needless to say, he had completely missed my point about simply communicating more effectively to his clients. Fortunately I had listed the property for only 3 months. When he asked to renew the listing, I literally laughed out loud.
How differently could have that relationship evolved if he had been forthright? If he had explained that he had a vacation planned when I met with him for the first time, how would I have reacted? When he returned from his holidays, I am sure I would have had a conversation about his trip and not about his lack of communication skills. The property sold a few weeks later. He lost about $25,000 and any chance of a recommendation of his services.
If you haven’t been forthright about your summer vacation, consider how you can put a process in place to better communicate to your clients about your next holiday. You will be surprised how much they appreciate it.
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