Vonnegut: Tales From the Dark Side of Prospecting

Real Advice from Wealth Managers
July 24, 2015
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July 24, 2015

Industry veterans tell of an adviser who used his cat, while another frequented funerals

Whatever happened to all the cowboy stockbrokers who relied on chutzpah and grit to lasso clients? Their stories made us laugh even as we cringed at the shameless antics.

Like Prospector Cat: Years ago, a broker drove to posh neighborhoods and released his cat to roam the streets. Its collar ID said, “Call this number if you find me.”

Inevitably, a good Samaritan with deep pockets would comfort the stray and contact the owner at work. The stockbroker feigned relief, gushed gratitude, and began the steady push for a new account.

His compliance department sometimes got nervous about his technique, according to an industry executive who remembers him. Relax, the broker would say. “My cat has a Series 7.”
A true story, the executive insists, although he doesn’t want his name attached to it.

Then there was “Richard,” the Funeral Crasher. Pam Krueger, the creator of MoneyTrack on PBS and co-founder of a service that matches up clients and advisers called WealthRamp, says the broker scanned local obituaries and attended funeral services for “super wealthy” patriarchs. Whether he knew them or not.

He worked grief-stricken rooms and paid especial attention to widows, sisters, and adult daughters. “The guy was like a piranha on the women,” according to Ms. Krueger.

Cowboy stockbrokers like Richard are vanishing, though. Slowly, steadily, they are losing the war to technology, to teams that employ hard-core business skills and harvest the deeply personal information that is available on the Internet.

“Prospecting with a fintech tool is not nearly as fun as the old days, but it is a helluva lot smarter and more efficient,” says April Rudin. Her firm specializes in branding and communication strategies for the financial-services industry.

Companies that curate online information and create customized reports on prospects or clients, such as Wealth-X and WealthEngine, “can help you plan and pinpoint targets,” she adds. Ms. Krueger also stresses the importance of the Internet, but from a different perspective: “The really successful prospectors know how to use their own websites to sell themselves personally.”

Technology is one reason cowboy stockbrokers are disappearing. Another is the surging dependence on referrals. Zany tactics aren’t necessary to grow a business. And, if anything, they are a liability with existing clients.

“Most advisers grow 80% of their business through referrals,” says John Anderson, a managing director at SEI Investments .
He suggests they can do even more, citing a study that showed only 16% of clients actually remember being asked for a referral in the past 12 months.

Ed Friedman, the director of strategic relationships at Dynasty Financial Partners, says client dossiers, which include known associates and board affiliations, have changed the way advisers ask for referrals.

The old way: Advisers used carefully engineered, open-ended requests. “I’m always looking to add clients like you. Who do you know that I could be of service to?” This approach put clients on the spot and often yielded no referrals.

Mr. Friedman says advisers can now put together a list of, say, 10 names and mention them to clients. Today’s open-ended phrase is, “How would somebody like me go about meeting them?” Cowboys are also disappearing because of the shift from product to process sales. The cycles are longer and dependent on proven expertise in clearly defined market niches.

More skill. Less serendipity.

Mitch Martin is the chief executive of Stonebridge Investment Counsel, a registered investment adviser that offers family-office services to celebrity clients, primarily professional athletes. Stonebridge emphasizes behavioral coaching for young athletes, who experience sudden wealth. Which, to me, sounds like a long lead-time and lots of education before the first revenue event.
“We create a vision for life that extends beyond sports,” says Mr. Martin, adding that Stonebridge helps clients make tough decisions

about their career earnings. How much money should they allocate to current lifestyle, savings, charity, and their parents and family?
Can you imagine Prospector Cat’s two-legged partner competing against his company?

Let’s go one step further. If you can’t define your unique expertise, maybe you are Prospector Cat. These days, the cowboys are loping off into the sunset. But they aren’t completely gone. Recently, I ran across a two-man team that offers an “educational course for adults” about finance at a New Jersey university. The school’s name appears big and bold on the marketing material and seems to legitimize the course fee of $69. What is so unusual?

Students are paying to be prospected by instructors, who offer one-on- one meetings. “This will be your chance to ask specific questions about your personal situation.”

But like Prospector Cat’s partner and the Funeral Crasher, the Jersey Boys are starting a relationship under false pretenses. And at the end of the day, that is never a winning strategy.

Mr. Anderson advises anyone building his or her practice: “Do your business. Do it right. You’ll get the referrals.”

Giddy up, Cowboy.

Norb Vonnegut built his wealth management career in New York City, and now is an author who writes thrillers about financial malfeasance, and he can be found at norbvonnegut.com. Or write him at norbert.vonnegut@dowjones.com.

2 Comments

  1. quest bars says:

    You really make it seem so easy with your presentation but I find this topic to be really something
    that I think I would never understand. It seems too complicated
    and very broad for me. I am looking forward for your next
    post, I will try to get the hang of it!

    • Profile photo of Pam Krueger Pam Krueger says:

      Hi,

      I’ll be adding some short videos to the site, plus begin working on MoneyTrack season 4. Check out our youtube.com/moneytracktv channel for some good, simple explainers. Let me know if you have any specific questions about how to find, vet and connect with qualified financial advisors. Thanks! Pam

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