Originally published on Advisor Perspectives, October 10, 2017
LinkedIn has become an effective site for communicating between advisors, prospects, and centers of influence. My recent experience illustrated how advisors should respond to inquiries from a LinkedIn contact.
I recently posted this inquiry on LinkedIn:
A reader with $5M in assets made this inquiry. He has a financial planner, a C.P.A and a trusts and estates lawyer. He wants to invest all his assets in a Dimensional core fund. He doesn’t want any other services. He asks: “What’s a reasonable fee to pay solely for access to Dimensional funds?” What would you tell him and what firm, if any, would you recommend to him?
I was stunned at the amount of interest this post generated. When I last checked, it had more than 5,470 views. My typical post has fewer than 100.
I subsequently clarified my requirements to indicate the advisor and the planner would work jointly to determine asset allocation, rebalancing, fund selection and tax-efficient investing and withdrawals.
Let’s review some of the more negative responses. There are valuable lessons to be learned from them.
The negative responses
I received comments from a small number of advisors (fewer than 30). A few of them were negative, questioning the process implemented by the prospect and noting how difficult it would be for the advisor to be effective in the scenario noted.
These comments were not unreasonable, given the limited information provided in my initial post. Advisors have every right to do business with whomever they wish, on whatever terms suit them.
Yet, I still think there are lessons to be learned here.
Cultivate centers of influence
Most advisors seek to cultivate “centers of influence” – repeat sources of referral business, such as accountants and lawyers.
I write books and have a strong social-media following. Periodically, I receive inquiries from readers looking for recommendations for an investment advisor. As such, I should be considered a center of influence.
If you don’t know me and are looking for an opportunity to start a relationship, you could use this inquiry as a way to do so. Some advisors did. They suggested alternatives that might be suitable for this prospect. They didn’t lecture or raise issues about the nature of the inquiry.
However, no one adopted the approach that would have been the most direct and effective. Here’s a suggested response:
Dan, do you have some time to talk about this prospect? I would like to learn more details. If I can’t help him, maybe I can recommend someone who can.
In fairness, a few advisors did reach out to me and some made very helpful suggestions in their comments.
Here’s the takeaway: If you have an opportunity to make a positive impression on a center of influence, take it.
A critical component of the Solin Process℠ is asking questions. Whenever you are in a situation involving a prospect, your default mindset should always be: What questions can I ask?
Think about my inquiry. It’s missing critical details like his age, what he does (or did) for a living, how much he has in assets to invest, whether he is single, married or widowed, why he went the route of seeing a financial planner first before consulting with an investment advisor and many more.
Would your response have been different if you knew he was a frugal mega-millionaire or a retired person with modest assets?
What if your initial reaction was to ask me if I knew the answers to these questions, or indicate you would like to be put in touch with the client directly?
Among the advisors I’ve met, the biggest barrier to success in gathering more assets is their inability to set aside their agenda and focus solely on that of the prospect.
The lessons of eliciting information by asking questions and listening intently to the responses can have a profound impact on your business.