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Advisors seek to consolidate client relationships. We want to broaden and deepen them. Clients might think they have given you a certain amount of money and whatever changes you want to make means moving around, not adding to what they currently have at the firm. How can you ask for more money?
Seven Strategies for Asking
If you were to say: “I need more money” you might remind them of their teenager at home. Here are a few ways to approach the situation.
- The brilliant idea. You have done a great job for your client. They are happy. You’ve conducted a periodic portfolio review and are now introducing what you would like to do next. You explain your new idea, the next investment. Your client pickups up on your enthusiasm and says: “I like it, What should be sell?” Your response is “I like everything you already own. This idea needs fresh money.” You stop talking.
- Breakpoint pricing. Your client utilizes managed money. They are happy with the results. Perhaps they’ve brought up the fees, wondering about a discount. Maybe they didn’t bring up the fees. You explain how breakpoint pricing works and how fees are lower once you cross the threshold. You remind them how well they have done. You name the dollar amount required to cross the threshold.
- Rounding up. OK, maybe no one is doing bond swaps anymore, but some of us will remember those Munis that came in $ 5,000 face value denominations. If you were doing swap for a client (and sorted through the accrued interest numbers) you might have said “If we add (x) dollars we can round up to the next $ 5,000, increasing the face value.” There can be other reasons to round up today, like the earlier breakpoint example.
- Minimum entry points. Remember when managed money started at $ 100,000 per manager? The client might like the concept, but was talking about bringing over a smaller amount. You would make the case that type of investment has a certain minimum. You would also go further, explaining the concept of style and size investing, indicated you should really have several managers. Now you are talking about $ 300,000+.
- Bundling. You’ve seen the concept in insurance ads on TV. A banker explained the concept as “the more you do, the cheaper it gets.” Your client might get better pricing if they do business in more than one or two areas. If they don’t have a stick relationship elsewhere, that could be enough incentive to bring more business to you. Remember when banks gave away free toaster if you opened a new account? It worked then.
- Convenience. The persuasive argument when you are conducting a portfolio review including assets held elsewhere. You make the case how seeing the whole picture is a lot easier going forward if all the assets are held in one place. Their taxes are likely done by an accountant. You mention the large volume of paperwork they need to gather from different firms. They put it all into a large manila envelope, expecting their accountant to sort it all out. This has a cost, since the accountant bills by the hour.
- Maturing securities. Your client might have Treasury Bills or CDs held away. Returns have been pretty low. Although this might be their safe money, a full service firm might have other alternatives for them to consider consistent with their level of risk.
There are several logical reasons why clients should add more money and assets into their accounts.
Related: When Clients Want to Buy Something They Don’t Understand