How expected benefits influence a purchase is a function of frequency and price. A purchase that is highly routine and at a low price (gasoline, for example) happens with little thought; both the buyer and seller know what benefits the buyer receives for the price paid.
Financial and wealth management services represent a dynamic at the other extreme, in which the purchase evaluation is infrequent, unfamiliar and high risk. These factors often derail a prospect from hiring the needed services and, consequently, stalling receipt of highly valuable benefits: financial and emotional security.
Few people would disagree about the life improvement gained from comprehensive financial planning, yet the majority of the market does without a plan or acknowledge that a current plan needs improvement. If financial planning’s benefits are understood, why do people remain on the sideline?
When dealing with unfamiliarity and big consequences, consumer psychology leads people to believe that the risk of doing nothing is more comfortable than the risk of making a mistake. This is consumer inertia. A practitioner who understands this force and works to counteract it accelerates sales conversions.
Overcome Inertia While Owning the Evaluation Process
Selling intangible services is difficult because you lack the ability to prove your “sales” words through a product demonstration, as can be done with a tangible product. This is why word-of-mouth recommendations are so powerful to a prospect evaluating professional services practitioners; the prospect uses others’ experience as a way to validate that what is being sold will actually be delivered.
Even with this base, the prospect still must undertake an evaluation and ultimately conclude: “This practitioner is/isn’t someone I believe will value me as a client and meet my needs, anxieties, and aspirations.” The problem is few prospects approach the evaluation confidently, thus eliminating from the start the needed force to overcome inertia.
Given little structure, you can fill this void with a due diligence guidebook and, in so doing, own the evaluation process.
A Due Diligence Guidebook for Evaluating Practitioners
You understand due diligence given the many times you’ve researched and evaluated financial and investment products. By taking your experience and assembling a packaged guidebook, you provide a useful pre-sale tool to your prospects while simultaneously producing an evaluation structure consistent with the benefit package your services deliver. An effective guidebook includes the following sections:
Section 1: Due diligence question inventory. Provide specific questions to ask during a practitioner interview/evaluation according to these categories:
- The firm’s characteristics and resources
- The services the firm does and does not offer
- The practitioner’s capabilities and expertise and his or her ability to deliver the expected results
- The planning process and sample output
- The plan’s execution and monitoring approach
- The services’ costs and fees
Section 2: Your answers to the due diligence questions. Repeat the question inventory, but provide your answers in a column to the right or in a row below. This allows you to persuasively position you and your firm to the questions themselves, while also setting a standard that competing practitioners must meet.
Section 3: Essential evaluation documents. Provide important documents to review, such as your Form ADV, a planning process diagram, your monitoring processes and so forth. By taking this initiative, your prospect will be inclined to have other practitioners provide similar documentation, yet it will be known that you took leadership in being prepared and transparent.
Section 4: Identify the benefit inventory. As noted above, every purchase brings benefits to the buyer. With uncommon services such as financial and wealth management, prospects vaguely understand these benefits and the top-of-mind list is incomplete. Provide a worksheet with the expected benefits your services and solutions provide for clients. (Note: you’ll have different lists based on segments such as retirees, business owners, high net worth, etc.)
At this early evaluation stage, use case studies/stories as a proxy to show how benefits accrue to your solutions and methods. Then, when your solution is more fully formed based on what you’ve learned from the prospect, you can document the expected benefits with greater precision in a formal proposal.
Giving a due diligence guidebook allows you to preemptively position your firm in a positive light while also communicating two important messages:
1) You know how to conduct due diligence.
2) You welcome the scrutiny such a process provides.
These messages of expertise and confidence connect directly to any prospect’s hiring criteria.
President, Wealth Planning Consulting Inc.
Princeton Junction, New Jersey