Prevent competitors from scooping your clients

You’re meeting a prospect over coffee and presenting compelling reasons why she should leave her advisor and transfer her account to you. In the next booth your competitor is having a similar conversation with your best client, asking him to jump ship.

Let’s look at several approaches your competition could use to snatch this valuable account.

Not wanted

Background: Major firms segment their client base. They want advisors to focus on opening and servicing larger accounts. They open customer service centers for smaller relationships and change the compensation plan.

Client fear: “My advisor will dump me because my account is too small.”

Competitor’s wording: “At (firm) accounts under $100,000 are being sent to a customer service desk. You don’t have a local broker anymore – I want to be your local broker.”

Your response #1: “I choose my own clients. We are together for the long term.”

Your Response #2: “This doesn’t apply to you – your account size is higher. Working with fewer clients allows me provide you with better service.”

Tainted research

Background: Having an award winning research team is a major advantage for big firms. How can smaller firms compete? By claiming the absence of a research department as a client benefit.

Client fear: The firm’s research is tainted because it also has investment and commercial banking relationships with the companies they evaluate.

Competitor’s wording: “Some large firms have a conflict of interest between investment banking and the research department. We use multiple sources of independent research to advise you.”

Your response #1: “Our research wins awards from the people who use it.”

Your response #2: “We also supply you with independent research.” Show how they can find it on your firm’s website.

Wide Range of Products

Background: Smaller firms need to offer a full product range to compete. Designing and launching their own products is costly, so they buy from outside providers.

Client fear: Advisors at large firms push in-house products and sell what they’re told.

Competitor’s wording: “We don’t push in-house products. We don’t have products of the month or other incentives like some large firms.”

Your response: “I use tools to sort through a universe of alternatives to find the best fit for each situation. No one has the best of everything.”

Longevity of Local Firm

Background: The financial service industry is cyclical. In tough times firms merge, branches close. In good times new competitors seek to establish a presence.

Client fear: The firm will close its local office and you will abandon him. .

Competitor’s wording: “Our bank has been part of the community for 50 years, and we’re now offering investment services for clients. We’re not testing a new market or pulling out of markets like some large firms.”

Your response: “Our relationship is between you, the firm and myself. Even if we moved offices we would still be working together. I’m a phone call away.”

Too expensive

Background: Big firms are assumed to have high overhead expenses. Newspapers report on the salaries and bonuses of industry senior management. Smaller firms don’t have the name recognition or presence.

Client fear: Clients of the major firms are being charged higher fees to cover the overhead costs of the parent company.

Competitor’s wording: “Someone has to pay for all those offices and big salaries. It’s you. We’re smaller so we can be more cost effective.”

Your response #1: “Large firms have economies of scale. We can develop new products, launch them and spread the administrative costs over a huge universe of investors buying them.”

Your response #2: “The costs you pay are public information. They are easy to check and compare with their costs.”

Too big

Background: Clients feel their situation is unique. Many firms have adopted a multi-step investment process based on financial planning and professional money management.

Client fear: He’s being squeezed into one of five standard models based on predetermined investment objectives.

Competitor’s wording: “That firm is for the little guy with basic needs who use their financial plan and buy mutual funds. You’re a sophisticated investor – you don’t want a cookie cutter approach.”

Your response: “We segment the market to give the best service we can. Smaller investors work with a customer service area. That’s not you. I’m an advisor who knows and understands your needs. Together we design and implement a plan to help you reach your goals.”