Cold Calling Still Works for Advisors: Study
Cold callingis the second most frequent way financial advisors land new clients, behind referrals from family and friends, according to research by Spectrem Group. Spectrem’s study, Advisor Relationships and Changing Advice Requirements, found that at least 10% of all investors connected with the financial advisor with whom they currently work because the advisor made first contact.
Approximately 50% of client relationships begin with a referral from a friend or family member of the investor. These referrals most often come more from business associates or a personal friend than from a parent.
“There was a time when financial providers frowned on cold calling, but that is no longer the case,’’ said Spectrem president George H. Walper Jr., in a statement. “Thanks to the Internet, financial advisors can find investors who might be in the market for a new or better financial advisor. While cold calling might seem like an irritant to some people, to others it shows ambition, and some high net worth investors are likely to find that appealing.’’
Among ultra high net worth investors (those with a net worth between $5 million and $25 million), cold calling (11%) topped seminars (6%), general advertisements (3%), advertisements in financial publications (3%) and websites that provide detailed information on advisors (2%). Read on for more insights into how well cold calling works.
Cold Calling Challenges
Spectrem points out that the challenge of cold calling is appealing to what investors want in the very short time there is to grab their attention during a phone call or in an e-mail. Its research shows that investors value honesty and trustworthiness, responsiveness to requests, and performance of investments against the stock market average. But none of these traits can be demonstrated in a cold call.
To help overcome this, Spectrem suggests that advisors who cold call should understand why investors switch advisors and play to those tendencies. According to Spectrem, the top reason investors switch advisors is because the advisor was not proactive in contacting them. “Reaching an investor by phone to introduce yourself, and knowing a little bit about that investor from a basic information search, might be an indication to the investor that you are not afraid to pick up the phone to maintain contact as well as establish it in the first place,” Spectrem said.
Spectrem suggests the following for advisors who cold call:
- Advisors who are reluctant to cold call but still consider it a good idea need to convince themselves of its value and prepare to put their best foot forward if the call (or e-mail) is answered. “You have something of value to sell (your services and your firm’s resources), so be ready to sell it,” Spectrem said.
- Advisors should be prepared for an initial rejection but shouldn’t immediately give up. While prospects may be too busy at the moment, advisors can suggest that they call back if they reconsider or ask for a better time to call.
- Take the time to understand the art of cold calling or e-mailing by reading the many articles written about how to get your e-mails noticed and how to avoid immediate rejection.
- Advisors should also be prepared for a positive response and have a follow-up plan for the next meeting or phone call.
- If able, advisors should send some type of content to an investor prior to cold calling that demonstrates their expertise. This could include a blog or article that highlights the advisor’s approach to common financial planning and investment issues. It could help stop a prospect from immediately hanging up or deleting an e-mail.
Advisors who thought call calling was dead may want to reconsider. It is the second most common way to gain new clients following referrals.
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