Ever wonder why friends are reluctant to do business with other friends? Let’s look at five reasons.

1. Confidentiality

Confidentiality is high on the list. Can you keep your friends’ secrets? Friends often assume you add new clients by talking about how well current clients are doing. They don’t know you’re bound by confidentiality.

Is it a real obstacle? No. They’re making assumptions without evidence.

What’s the solution? While visiting an advisor in his office, I noticed a bookcase filled with neatly labelled financial plans, each with a code number. This was part of a strategy to turn friends into clients. When friends visited, they’d ask about the bookcase. He would explain, “We live in a small town. Everyone wants to know everyone else’s business.” He told them, “You will never see a binder or piece of paper with a client’s name in my office. If you become a client and we do business together, if a friend visits my office, she won’t see your name either.” It’s a low-key way to explain confidentiality.

2. Fear of poor returns

Friends are afraid you won’t deliver returns. But the risk is always on the downside. Success doesn’t strain a relationship; disappointment does.

Is it a real obstacle? No. In the case someone has to unwind the relationship, she doesn’t want to lose your friendship. Yet, you probably have many friends who started as clients.

What’s the solution? Provide an exit strategy. I used to explain to friends: “If you become my client and follow my advice, you should get a report card. If I’m doing a lousy job, fire me.” It sounds drastic, but clients appreciate that you hold yourself accountable (not responsible; that’s different).

Your face-to-face reviews are the report cards. Develop a blended index to benchmark clients’ performance. When they see you’re acting in their best interests, they’ll hold on, even in difficult markets.

3. You don’t ask

You have a wealthy uncle who’s never approached you. You assume he don’t want to do business with family members. Turns out, he thinks “keeping it in the family” is the ultimate in confidentiality, and doesn’t mind paying fees and commissions to a relative. But since you’ve never asked, your uncle assumes you have a problem doing business with family members.

Is it a real obstacle? No. It’s all in your head.

What’s the solution? Everyone should have the opportunity to say no. If you politely ask about business and relatives decline, that’s fine. But don’t decide for them. The conversations are as simple as asking if they already work with a financial advisor. If they say yes, ask if they’re satisfied. What do they like best? Is there room for improvement?

4. You don’t explain you’re growing

Do your friends know you’re adding clients? Advisors often talk about how busy we are and complain about lack of sales support. Your friends may assume it would be an imposition to ask for your help.

Is it a real obstacle? No. You’ve never indicated you want more clients.

What’s the solution? If you’re an established, busy advisor, you’ve probably done a business plan and transferred some smaller relationships. Your plan indicates a target number of new relationships you would like to add. Tell your friends you’re planning to add a certain number of new relationships to your practice this year, and this is keeping you busy. They might volunteer to be one of those new relationships.

5. Hesitance to leave

Everyone you want as a client is probably someone else’s client already. Inertia keeps many clients with their current advisors even if they don’t measure up.

Is it a real obstacle? No. They think everyone has one financial advisor: They have one auto mechanic, one barber and one dentist. Why not one advisor?

What’s the solution? “The Millionaire’s Advisor” by Russ Alan Prince and Brett Van Bortel says on average, wealthy people have three financial advisors. When prospects explain they already have an advisor, say, “I expected that. Successful people usually have multiple advisory relationships. You’re obviously successful – How many do you have?” Then offer to become one of them.