Doing business with friends

Many assume their friends don’t want to do business with them because of complications if things don’t work out. Fact is, some actually prefer to have business relationships with friends.

Read: Friends without money can add to your book

Instead of making assumptions, find out where your friends stand by giving them an opportunity to say Yes or No.

Here are some reasons why friends do business with friends:

• Trust – It takes a long time to earn, and you have it. Some of your friends may have already decided they’d do business with you, but they’re not clients yet because you haven’t raised the possibility.

• Context – You know sensitive details about their lives that can impact their finances. It often takes months or years for a client to become comfortable enough with an advisor to share this information.

Read: 3 approaches to advising friends

• Personal Attention – They think you work from a list. You get a great stock idea and start calling clients, beginning with your largest and best. Because they’re friends they assume they’ll be closer to the top of the list, even if their assets are considerably lower. The use of managed money has changed how business is done today, but they still think you use a list.

• Known Quantity – They worry that if they walk into any financial services firm they could end up with an inexperienced advisor who may not be there in a month. But they know your personality, skills and demeanor.

• Objective Advice – True friends can tell each other what they need to hear. Your friends know you won’t sugar coat the message to avoid offending them.

• They Like You – People prefer to do business with people they like. You have many choices for haircuts, banking, buying flowers and getting morning coffee. Why do you return to certain places? You like the people (and they do a good job). People will go out of their way to do business with people they like, including paying more for the service.

Read: 5 (more) ways to turn friends into clients