Why all my clients are angels from heaven?

My wife asked me how long I’ve been doing financial planning. I told her it is coming to 11 years. Goodness, 11 years! This is my longest job!

Over the 11 years, I have seen clients from all walks of life. Some clients are angels from heaven while some clients are from hell. But with experience comes wisdom in choosing my clients so that I will avoid accidently getting clients from hell. As a result, all my clients are angels from heaven.

Here are some tips for fellow financial advisers on how to avoid getting clients from hell.

Unable to provide information

When a prospect is unable to provide information, it is actually a red flag. Generally, I do not accept prospects who cannot provide me with information in order to avoid trouble. There are a few reasons why there is trouble.

When prospects are unable to provide information, it could be due to the fact that they are not comfortable with me. This means there is a trust issue. That is to say that they do not trust me. If they do not trust me, it implies they think or suspect I could be a bad person. If they think I am a bad person, it means they will make a complaint for the slightest error.

But if you think about it, if a prospect does not trust me, why do they want to approach me for advice? It is illogical, isn’t it? This could imply that they are irrational decision makers. Irrational decision makers are clients from hell.

But a prospect who is unable to provide information could genuinely be unable to provide information because his or her financial situation is in a quite messy. I have more compassion for such a prospect. Nevertheless, I will not accept such case anyway as it is against the law to provide any form of product recommendation without having considered the prospect’s financial situation. If the prospect is unable to provide information, it is impossible to understand the prospect’s financial situation. Since I have no intention to cut short my professional financial planning career, it is better not to accept such a case.

Become ‘cold’ too fast

A typical prospect would initially express interest in the service or product. Subsequently, the prospect’s interest would start to get less interested. For some, they eventually become totally disinterested. This is the usual customer’s behavior. In this industry, there is a term for the various stage of interests. When a prospect is initially very interested, we call this stage as ‘hot’. When they become not interested, we call this stage as ‘cold’. When we say, the prospect is getting colder, it means the prospect is getting less interested.

Normally the financial adviser would quickly ‘strike’ when the iron is hot. This means to quickly follow-up and meet the prospect as soon as possible because the closing rate decreases rapidly when the client gets colder.

Due to my hectic schedule, I find it very hard to meet prospects at the moment’s notice. Usually I can only schedule an appointment a few weeks later. As a result, about 8/10 will eventually become disinterested due to them becoming ‘cold’ over the time period. This turns out to be a blessing in disguise because the remaining 2/10 are prospects from heaven since they are genuinely looking for financial advice. Frankly speaking, this is one of the most effective way to filter out genuine clients and non-genuine clients. The 8/10 who becomes totally cold were probably prospects who were not genuine in the first place. This simple filtering process of not meeting the prospect immediately is really a time saver because I get to deal with prospects who are 100% genuine.

Ask for quotes over email

When a person whom I have never met ask for product quotes over email, it is likely not a genuine case.

(Product quotes means to ask for the benefit illustration for insurance. Product quotes also include the portfolio descriptions, charges and fees for investments.)

There are two reasons.

The first reason is because the request is done when the person is in the ‘hot’ stage. If I provide the quotes, I am engaging the prospect during the ‘hot’ stage. Since there is 8/10 chance that the prospect is not genuine, there is 8/10 chance that the effort would be wasted. For those who are not in the industry may not understand that generating quotes has become a chore because products these days are very hard to compare.

The second reason is because a prospect who request product quotes over email is effectively focusing on the wrong thing. It is like a patient who wants to know the details of a drug without wanting to find out what illness he is suffering from. Thus, I will ask such prospects to meet me for financial planning. If they do not wish to meet for financial planning, at least I know I have avoided having to work for prospects who are not genuine.

So far in 11 years, I do not recall having successfully sold a product just by providing quotations over emails.

Keep on haggle over cost/fees/commissions

I expect all prospects to be conscious over the cost of products they buy. In fact, it is my duty to ensure the products I recommend is value for money.

Yet, when prospects keep on haggling over cost, it is likely they are the type that focus on the trees but missed the forest. Typically, such prospects would keep on talking about getting commissions rebates, vouchers, free gifts and fee reduction. I dislike such prospects because they treat the relationship like a business deal. They are likely to be troublemakers because they are buying the products due to the fee reduction or commission rebates and I could end up being accused of inducement by compliance. I also feel very unhappy with such prospects because of the fact that their focus is to haggle over cost, it means they do not see much value in my service. If that is the case, it is better for them not to engage me in the first place.

I am particularly vulnerable to such a situation because my fees are too transparent. Prospects can actually see how much I earn. When they haggle over my fees, I take it personally as an attack against my livelihood. Can you imagine your boss bargaining with you on your salary and asking you for a salary rebate? Moreover, I would feel I have been penalized for being too transparent.

I normally would nicely reject such prospects. Armed with one decade of experience, I know how to reject a prospect without them knowing they have been rejected. I will make sure their ego will not be hurt.

Do not wish to pay fee for advice

When a person refuses to pay for advice, it is likely not a genuine case. My fees are published on this website. But for some very strange reason, once in a while I will receive emails and calls from people who wants to seek my advice but do not wish to pay for it. I guess they are trying their luck to get free advice.

I charge fees for all financial planning cases as I believe I am entitled to be remunerated for the work done. If a prospect refuses to pay a fee for advice, it implies that the prospect does not value the advisory work done. It also means that the same prospect is unlikely to see any value in the product recommended. Hence, the same prospect who refuses to pay for advice is also the same prospect who will not buy any product.

It is this reason why the closing rate for financial advisers and insurance agents who do not charge a fee is extremely low. They have to use advance selling methods in order to increase their success rate. Some of these advance selling methods sometimes results in misselling.

Conclusions

Here is a summary for financial advisers:

Do not accept clients who refuse to provide the information you requested as they are not genuine.
Do not be too quick to follow-up. Let your prospects ‘cool’ down. Prospects who become totally cold over time are not genuine and hence you will save your time by avoiding them.
Do not bother to provide quotations to individuals you have never met because they are not genuine.
Drop clients who keep on haggling over cost/fees. If the prospect asks for rebates, it is confirmed he is a client born in hell.
Do not provide any free advice as those who do not want to pay for work done are not genuine.

By the way, the tips in this article is also known as the funneling process. Go figure.