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“Let me think about it.” How many times have you heard that from a client? You feel the suggestion is in their best interest. They do not see any reason to make an immediate decision. How can you move this up higher on their priority list?
1. The time deadline. This is the most obvious approach. Accountants know tax returns need to be filed by a certain date. Real estate agents know an offer to buy a property might be good for a certain number of days or there is a window of days during which any inspections must be done. Advisors know retirement plan contributions need to go in my a certain date and mandatory distributions must come out by a certain date.
Logic: The deadline for RMDs is December 31st.
2. Limited number available. If you do not act, someone else will. An obvious example is an IPO. You were allocated a certain number of shares. It is in high demand. You are offering some to this client first, if they don’t take it, you need to call the next person on your list. You need to get your allocations accounted for today or the shares are taken back and redistributed.
Logic: The client can take advantage of the shares offered now, or they can buy them in the secondary market later on at whatever the market price will be.
3. First come, first served. You are planning to increase your clientele by a certain number of new relationships. The number is small because you do not want to strain your service model. You are calling your best clients first, seeking referrals.
Logic: I’ve done a business plan for 2023. I think I will be able to add five new relationships similar to yours to my practice. Before I add them in the usual way, is there anyone you would like to recommend being one of those five new relationships?
4. When will this opportunity happen again? Interest rates move in cycles. So does the stock market. Unfortunately, no one knows the length or amplitude of the upcoming cycle. Interest rates have been rising. We do not know how long this trend will continue. We should act.
Logic: We have not seen rates at the 4% level since 2006. That was about 15 years ago. We do not know if rates will go higher or how long they will stay at this level before they decline again. We should take advantage of this opportunity.
5. Market conditions are ideal. You have seen the stock market declining. When you look beneath the hood of the broad indexes, you have seen some sectors strengthening or suffering less while others decline. You think these represent the sectors that would do well in the next economic cycle.
Logic: While the overall market may be declining, all the stocks in the S&P 500 are not down by the same amount. Some sectors are bucking the trend. Let us take advantage of this opportunity.
6. An opportunity others may be missing. When the stock market declines, many investors want to go to cash or stay on the sidelines. There are tax consequences connected with going to cash. Your client owns good stocks with sound finances and strong management.
Logic: We bought this stock for the right reasons. Their business plan, management team and financial situation has not changed, but the price is down because others are selling. This represents an opportunity others may be missing.
Clients might like to see a string of green traffic lights ahead of them before they step on the accelerator. You need to let them know the rights might change as they progress from block to block, but they need to take action.