It takes time to reassure hesitant prospects. Here’s one way to help them overcome their reservations.

Susan Daley, CFA
Associate portfolio manager at PWL Capital in Waterloo, Ont.

houseHouseholds: Her team—she works alongside portfolio manager Graham Westmacott—serves approximately 65 households.

client type iconClient type: Professionals. They work together on clients’ portfolios, but Daley primarily meets with younger clients, while Westmacott focuses on retirees. There’s no asset minimum.

client type iconCommunication strategy: An e-newsletter 1x/month, performance reports 2x/year, as well as quarterly performance updates. For meetings, appointments are set once or twice per year, per client, or as requested.

HER CHALLENGE: Occasionally dealing with skeptical prospects who question her team’s value and services.


Overcoming her challenge

Skeptical clients are typically those who are wary of the financial industry as a whole (even if they’ve never had an advisor), says Daley.

And many young investors fall into this category. “These types of investors are more aware of the issues in the industry than in the past,” she says. That’s likely because “issues around fees and reporting are becoming more prominent in the media, and there’s more research done by industry organizations.” Plus, CRM2 changes are prompting more discussions about the industry.

Instead of trying to bring these types of prospects on as clients from the get-go, Daley recommends offering consulting services. In the last few years, she’s worked with a 30 year old who works in the tech industry. He was wary of signing on, she says, because “he’d done a lot of reading online [about] the financial industry. He was uneasy about jumping in 100%, knowing that most advisors charge relatively high fees.” And he wasn’t sure how these fees were charged.
System 1 in action

She and Westmacott suggested a consulting arrangement, where they worked on and presented a full financial plan that this client could follow with or without their help. They met with him twice and then scheduled a follow-up consultation a year later—the process spanned nearly two years.

Daley notes most young prospects will come on full-time clients, with the normal onboarding process taking one to two months. But consulting arrangements are a good second option.

And, the fees for consulting are similar to normal advisor fees, she notes. “For new prospects, we do financial planning and come up with a portfolio. When their money comes [through], we implement the portfolio.

“With consulting, we charge a portion of the fee upfront and do the work. If the [client] decides to implement the plan himself, he pays the remainder of the fee. If he comes on board, we follow the usual onboarding process and reimburse the initial fee against their investment fees.”

This client appreciated the transparency of the fee structure during the consulting process. He also learned about their services and process, while not having the pressure of being a full-time client.

So their hard work paid off. He became comfortable with transferring his assets, and “he’s now a full-service investment management client,” says Daley.

Still, not all consulting clients will make this transition. So, you need to have disclaimers when offering such services—these help protect you if clients you’ve consulted choose to implement their financial plans without further guidance.

Daley also has these investors sign engagement letters that outline, in more detail, how the consulting process works and how return assumptions are calculated. “If [someone’s] a one-off client, we clarify that they can’t just take their plan and assume that for the next 20 years, everything will work out as they expect.”

What she has learned

With skeptical prospects, strike a balance between transparency and efficiency. Says Daley, “Some clients see a stack of paperwork and [become] concerned.” For instance, one young prospect declined to work with her and Westmacott because “he said he wasn’t sure what he was signing on for” due to the volume and complexity of the documents.

And that’s why she doesn’t send paperwork ahead of time. Instead, during initial client meetings, she goes through paperwork in detail and leaves time for questions. She also focuses on key points, including fees, and how she’ll build the client’s portfolio.

“If you give too much detail, [people] aren’t going to be engaged and may become confused about their needs and concerns. Take more time to explain things and focus on clients’ concerns.”