It’s been said that people won’t buy what they don’t understand. Most confused prospects and clients won’t admit that they’re befuddled. Why? Because they don’t want to look foolish.
Planners who like to dazzle prospects and clients using industry specific terminology may be creating a real disconnect with them.
For these planners, learning the “language of the layman” isn’t so much about dumbing down their recommendations as it is about simplifying the message. Let’s take a look at some simple ways to make the translation.
The following is a step-by-step process to help you make a great connection.
Step 1: Help them Understand Why to Buy
Most planners want to begin an appointment by selling their recommendations because they are so adamant about what they are recommending. Unfortunately, people hate to be sold to but they love to buy. For them to want to buy, they have to understand why they need what you’re recommending. To get them to that place, you must first ask questions.
Some examples of questions that I’ve used while prospecting are around taking too much risk: Do you know what percentage of your portfolio is in stocks? Why do you have so much money in just a few companies? If the market pulls back, what happens to your portfolio? Since you are already retired, what do you think is the best course of action for you?
The natural rebuttal is, “We shouldn’t be taking that much risk.”
Step 2: Find out What They Know
In the aforementioned example, it doesn’t take a prospect very long to start understanding that there is a challenge. In this case, that they have a large percentage of their portfolio in just a few stocks and that they need to diversify. The next step is to find out what they know. The following are just a few examples of questions that I have used to find out what prospects know about mutual funds:
“Have you ever owned mutual funds? How long have you owned them? Has anyone ever explained to you what mutual funds are?”
I asked these questions of a couple in their late sixties. Although he knew what mutual funds were, she informed me that they have owned mutual funds for over 40 years and nobody has ever fully explained them to her.
Step 3: Tell Them a Story
The final step to speak layman’s language is to tell or share a story. Clients and prospects alike connect with a great story because they understand your products and services better when they can relate it to something that is familiar to them. The following illustrates my point:
A mutual fund portfolio is like a grocery bag. When you go to the grocery store, you buy products that you know that are made by companies that you are familiar with such as Coca- Cola, Kellogg’s and General Electric. If you bought a piece of these companies you would be buying a stock.
When you go to check out of the grocery store, the bagger puts your products into a grocery bag. A mutual fund portfolio is grocery bag of stocks and/or bonds.
What I have done is created the grocery cart or a portfolio of six mutual funds that complement each other and are right for someone who is retired. Each grocery bag, or mutual fund, will have two hundred or more positions.
Can you see why having a portfolio of six mutual funds made up of over 1,200 positions will reduce your risk?
Connection, Not Correction
After I told the preceding story, my client thanked me for taking the time to explain and both saw the value in reducing their risk. The reason why they bought my recommendations was because I did not try and correct them, rather I tried to connect with them to help them do what was in their best interests.
If you are ready to take your business to the next level, schedule a complimentary 30-minute coaching session me by emailing Melissa Denham, director of client servicing.
Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.