Challenges: prospecting and paperwork

By Deanne Gage | November 13, 2006 | Last updated on November 13, 2006
6 min read

(November 2006) Why do advisors find prospecting and building their books of business to be such a challenge? For starters, there’s the problem of finding the time to actually do it. And prospecting can’t just be any old seminar or cold calling strategy, it’s got to be something that’s innovative, gets people’s attention and actually works.

Then, there’s the matter of building rapport with prospects and asking them for the business. If only it were that easy. Lynn Jasechko, an investment executive at Toronto-based ScotiaMcLeod Inc. has a hard time prospecting, partially because she always tells herself: “I wouldn’t give my own money toa stranger, so why should anyone give theirs to me?”

First realize no quick-fix solution exists. Finding the ideal clients and referrals can take years of development, but you can start by tapping into your interests. Six years ago, Erika Penner, a Richmond, B.C.-based financial planner, joined a dragon boat team — comprised of 20 retired and working women professionals. For months at a time she commits to paddling three times a week and enjoys the social aspect of the group.

After two years, Penner received a client through this group. “The more involved you are, the more people feel comfortable approaching you because they know you as a person,” she explains. “And because they feel comfortable and know what you do, they refer people to you. I do not solicit their business — it just comes naturally from being a member for many years.” Having a well-defined niche also helps. Penner’s practice, for example, focuses on women and divorce planning.

Eric Warden, a financial planner at Family Wealth Advisors Ltd. in Peterborough, Ont., attributes his successful prospecting to four specifics: newsletters, cultivating centres of influence, staying in touch with promising prospects, and providing superior service that prompts people to make referrals in the first place.

Warden started his newsletter back in the early 1990s. He saw it as a way to provide information to clients and to keep his face and name front and centre. In each issue he would write a personal commentary and feature articles from tax experts. For years he mailed out the publication without any apparent results. But then five years ago, two prospects he had given up hope doing business with called unexpectedly. “The accounts paid for more than a decade of sending the newsletter,” he said.

His first centre of influence was his own accountant, who helped Warden incorporate his business in 1998. They started having lunch, which led to exchanges of various articles of interest which they received from other professionals, including lawyers and association officials. One day, the accountant needed a second advisor opinion on her client’s insurance proposal. Warden’s analysis, which he forwarded to both the client and accountant, showed the client had more than sufficient personal disability coverage to cover lifestyle expenses and savings, but did not have the business overhead or personal life insurance to cover what he wanted.

“We ended up being paid for the report and placing the insurance for the gaps we uncovered,”Warden explains. “We disclosed that we would be paid commissions on the insurance in addition to the fees charged. This also led to an estate plan for the couple on a fee-for-service basis that included wills and powers of attorney for their children.”

Prior to 1995, Warden worked in the general insurance business. When he sold that operation and moved into financial planning and insurance, some of the previous clients didn’t follow him since it wasn’t their primary focus. But he stayed in touch by mailing his newsletter and visiting their businesses periodically. He would ask, in a low-key way, if any of the newsletter articles had been of interest. From time to time, a person would have a question and he would answer in general terms.

One day, a former client called and asked if Warden would be interested in handling his investments. “We met at one of his business sites and he outlined the situation.” The initial investment was $450,000 in 2002. “We provided quarterly updates and cautioned him against expecting too much in the way of returns because of his risk profile.” But rates of return stayed positive even during the turbulent times. Today, this client’s account is worth more than $1 million with additional investments and gains.

Timing has also been on the side of Wayne Pickney, a former educator turned-advisor who works with his son, Ryan, in Fort McMurray, Alta. Pickney’s dealer, Berkshire, had passed him some leads. One prospective couple — who only had $7,000 invested with Berkshire — recognized Pickney’s name since he used to be their son’s high school principal. Pickney learned the bulk of the couple’s investments were with another firm but their advisor had recently resigned, so they were looking for a new advisor. Ryan completed some retirement projections and gave some expertise on the couple’s company stock option plan. Soon, the couple started moving assets over to the Pickneys. The couple now has more than $1 million invested with them. “I made the right call at the perfect time and Ryan’s expertise resulted in us getting everything, including a significant last-to-die UL policy,” he notes.

Paper Alert If only prospecting were your lone challenge! The other significant issue for you is dealing with that sky-high mound of paperwork. Even though our survey respondents have access to 0.8 of an assistant on average, 25% identify administration as a challenge, up from 14% in 2005. So what gives?

“Clients often have immediate needs which my shared associate may not be able to get to in a timely manner,” explains Ed Bellamy, an investment advisor at Toronto-based RBC Investments. “And there’s a bit of comfort in knowing that if I do it, it’ll get done right.”

Donna Lee, a CFP with Prospera Credit Union in Abbotsford, B.C., notes that compliance and ethical conduct are also the advisor’s responsibility. [Those two items] fall on me and so I need to be involved in ensuring the administration and paperwork are kept at my standards,” she explains.

On top of that, many forms need to be completed by hand, reducing efficiencies. Also, more information is passed to the advisor than ever before. “We used to fax information to the back-office staff where it was processed electronically. Now we must process all transactions ourselves,” says Penner. “And when you work with many different suppliers, there is no consistency in paperwork and sometimes, in what they will or will not accept, and these situations often require involvement by the advisor. Software is also constantly being updated and changed.”

And it can be difficult switching gears from administration to serving clients. Penner has improved her paperwork flow by allocating specific days for each task — two days for servicing clients and two days split between administration and strategies for building the business. She learned the technique after working with well-known consultant Dan Sullivan.

It’s still not a perfect system, since Penner works around the clock to ensure paperwork moves to her parttime assistant.

“If I get busy with client meetings all day, I’ll be working that evening or first thing the next day to make sure I have stuff to give to her,” she explains.

Sandra Mews recommends using a Web-based contact management system to improve efficiency with client paperwork. “We use ours to allow updates wherever we are,” says Mews, a branch manager with Dundee Wealth Management in Sudbury, Ont. She adds that where possible, pre-fill out the basic information before clients come in.

Warden also finds paperwork to be a constant challenge. Customized client reports, that include their respective financial plans, especially take more time. But in situations where clients have fewer assets, he has developed a few standardized templates.

He also has a licensed assistant who fills out all paperwork for investments. “That leaves just signing for the client and me,” he says.

The bottom line is this: “If you are building a business, you have to be prepared to invest in it,” says Warden. “Investing in quality costs in the short term but pays off in the long run.”

Deanne N. Gage is the editor of Advisor’s Edge.

Deanne Gage