11 Prospecting Mistakes to Avoid

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11 Prospecting Mistakes to Avoid

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Life Health > Running Your Business > Prospecting

11 Prospecting Mistakes to Avoid

By Bryce Sanders

Slideshow November 02, 2023 at 11:13 AM Share & Print

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Sales is not an easy profession. If it were, everyone would be doing it.

When you look at experienced and successful people in the office, you might think, “They had it easy” or “Things were different when they got started.” Everyone must build up a clientele, and that takes lots of effort.

Every firm has a sales process. The number of steps might differ, but they all start with a name at one end and a new client at the other. The stages in between the name and client mileposts are when the name turns into a prospect.

Learn to avoid the common mistakes leading to lost business. Here are 11 potential pitfalls.

Bryce Sanders

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

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11 Prospecting Mistakes to Avoid

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1. Selling Before Gathering Information
I heard this explained well in the following story: Imagine going to the doctor and taking a seat in the office. Before you get to say a word, the doctor says: “I heard about this new drug. It’s supposed to be great. Here’s a bottle. Give it a try.” You would be upset because the doctor did not bother to learn about your symptoms before immediately pushing a product. The doctor does not know anything about your pain, symptoms or allergies.

Mistake: Starting by selling.

Instead: Gather information. Learn about the prospect’s needs and past investing history.

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2. Not Gathering Enough Data
You met with the prospect and gathered information. The plan is to produce a financial plan followed by a proposal that you will present. This includes a retirement plan analysis.

Mistake: You did not ask about outside sources of retirement income like annuities, defined benefit pensions or assets held in 401(k) plans. You call with lots more questions, and the prospect feels you are not thorough.

Instead: Work from a checklist. A doctor would ask about previous surgeries and drug allergies, even if this was unrelated to your current health issue.

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3. Not Involving a Partner in Making Decisions
Many accounts are held in a joint tenancy with rights of survivorship format. This means that although the advisor knows the main decision-maker in the relationship, the other party has a voice too.

Mistake: By neglecting the spouse, the advisor can make an enemy, someone who can make the decision-maker’s home life uncomfortable. That could cost the relationship.

Instead: Present to both parties. Involve both in the conversation, even if one prefers to be the silent partner. It’s a sign of respect and can gain you an ally.

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4. Presenting Too Many Alternatives
The prospect says: “I received this windfall and I want to get income.” The advisor talks about corporate, municipal and government bonds, and utility stocks, explaining that each is available in mutual fund, bond fund or managed money format. Let’s not forget certificates of deposit or annuities. Finally, the advisor asks: “Which one do you want?”

Mistake: Faced with so many choices, the prospect says: “I don’t know. Let me think about it.”

Instead: The prospect wants a recommendation, sifting through the options and presenting one, best idea. It is good to have a backup in case the prospect raises an issue.

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5. Not Explaining Fees and Commissions
The advisor either says there are no fees when the fees are built into the price or neglects to bring them up. The prospects know they must be paying something, but they have no idea.

Mistake: You would never hire a contractor who does not give you an estimate of costs beforehand. Some advisors think “The client knows we do not work for free, so I don’t have to explain it.” You do.

Instead: I would include: “You need to understand how the firm makes money.” I would then explain what-if scenarios, like “What if … you bought today and sold tomorrow..” (and the market value did not change.)

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6. Not Asking for an Optimal Amount of Money
Prospecting involves art as well as science. If you have an account minimum of $500,000 and your prospect has $600,000 with a competitor, if that person becomes your client, someone needs to get fired. If you have a $500,000 minimum and the prospect has $5,000,000, raising $500,000 means taking a little bit away from a few money managers.

Mistake: Asking for an amount so large, it puts the prospect in an uncomfortable situation.

Instead: Learn how much is invested and where. Ask for an amount large enough to show what you can do, but small enough the prospect doesn’t need to seriously disrupt existing relationships.

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7. Not Asking for the Order
Expecting the prospect to say: “Stop talking. You have convinced me. Where do I sign?” That almost never happens. You must directly ask for the order.

Mistake: If you stop presenting and go silent, the prospect might fill the void and say: “Food for thought. I will get back to you.”

Instead: You need to specifically ask for the order. An example is, “What do you think? Can we proceed with the plan?” After the prospect agrees, you need to read back exactly what has been agreed to.

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8. Talking Yourself Out of the Order
You may have seen this happen before. The prospect is sold, but the advisor keeps talking. Either the additional comments from the advisor raise an objection or the prospect gets bored and wants to get out of there.

Mistake: The prospect gave signals about being ready to commit, but the advisor missed them.

Instead: Use trial closes like: “Does that make sense to you?” When you have presented the relevant information, ask for the order while the prospect is still engaged.

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9. Neglecting the Client After the Sale
You were incredibly attentive when the names were prospects. You called often. You sent them information through multiple channels. They became a client, and your high-touch approach stopped.

Mistake: Because the level of attention dramatically reduced, the new client feels your attentiveness was a sales trick.

Instead: You will be calling to confirm trades, because that is a rule. If cash has been sent to a money manager, call and confirm it has been received. Call again to explain what the confirms indicate. In other words, continue giving the prospect attention.

Credit: Adobe Stock

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10. Not Asking for a Referral
Prospects do not live in a vacuum. They know other people in similar economic circumstances, probably facing similar issues. If they are happy with your recommendation, they likely know other people looking for a similar solution.

Mistake: Overlooking a referral opportunity.

Instead: “Who else do you know that has (problem) and might be interested in (proposed solution)?”

Credit: Adobe Stock

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11. Not Following Up in a Timely Manner
Very few prospects work on your timetable. They might say: “Call me when my Treasury comes due.” Or “I get my bonus at the end of January.” You forget.

Mistake: You do not call. The client does something else with the money.

Instead: Keep records. Start calling a week before the time the client suggested. You may have competition.

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