If you are like most agents, you hate prospecting even though you know you have to do it if you want to stay in business. Your best bet for overcoming this hurdle is to understand why you hate prospecting and seek out client-acquisition methods you truly enjoy.
When Mark Badami, a Long Island CFP, got into insurance and investments in 1994, he quickly found he had something in common with other advisors: He hated prospecting. He tried cold-calling. Hated it. Asking for referrals. Hated it. Late-night prospecting. Hated it.
“I would stay up prospecting until 10 at night,” says Badami, a NAIFA-Long Island (N.Y.) member. “I’d call people during dinner and get hung up on. I hated it—with a capital H.”
In desperation, Badami turned to … golf. A man can do a lot of networking while hiking from hole to hole. But Badami found himself talking to just two or three people in the space of an afternoon. Usually, they turned out to be people who were also prowling for prospects—or who weren’t interested in business and just wanted to play golf. Also, he points out, “My golf game was horrible.”
Steinberg’s business is so good that her community-service outreach has become her sole prospecting method.
Care to take a guess at how many advisors share Badami’s distaste for prospecting? Half of all advisors? Three-quarters? Try at least 95 percent. “Only 3 to 5 percent of all salespeople don’t have any problems doing it,” says Bill Grimes, president of Bill Grimes and Associates, a sales training, assessment and consulting firm in Oklahoma City. Grimes’ company has performed detailed individual assessments of thousands of sales professionals nationwide. Undiluted hatred of prospecting stretches “across the board in every industry,” he says. “It’s banks. It’s CPA shops. It’s brokers. Even power company sales reps, who are selling energy to people who have to have it and can’t buy it anywhere else. It’s like shooting fish in a barrel and even they hate it.”
Obviously, not prospecting isn’t an option, since zero new business can someday translate into no business at all. So, how can you overcome your loathing for this essential function? The answer is two-fold: Come to terms with the fears that underlie the loathing (below) and find high-yield prospecting methods that you actually enjoy.
Badami went the latter route. “I had just closed my first big pension case at a decent-size machine shop in Long Island, and the shareholders really loved me. They were very happy with the work I’d done for them,” he says. A colleague with experience in a prospecting technique called reverse demographics, a method of generating business-to-business referrals through warm meetings with satisfied clients, made a suggestion. “Since these guys really like you, why don’t you get a list of all the machine shops on Long Island?” he said.
The idea was that if the first machine-shop partners liked Badami so much, they might recommend him to their buddies in the industry. Badami, having become gun-shy about asking for referrals, wasn’t so sure. Also, was the machine-shop industry a good place on which to center his practice?
Through Dun & Bradstreet (D&B), he came up with a list of 500 machine shops on Long Island. He also developed a list of questions for Vinnie, the president of the shop where he’d already closed the pension case. These include: What types of people are in this industry? What are their financial-services needs? Are these family people? What are their likes and dislikes? Are there any people on this list you know?
Then Badami scheduled a meeting with Vinnie, the president of the machine shop that loved him, and he came away with 74 referrals to other machine-shop owners on the D&B list. Of the 74, he scheduled 35 meetings. Those meetings yielded 15 clients, resulting in his first qualification for MDRT. (He’s now a perpetual Court of the Table producer.)
Before long, Badami was handling pension plans for one-quarter of Long Island’s 500 shops. Badami shares these keys to success in using reverse demographics as a prospecting tool:
- Select industries in which players know each other through competition, cooperation or common membership in associations. (On Long Island, machinists compete but also cooperate, taking advantage of each other’s specialties.)
- Choose at least three industries in which to network. That way, if one industry goes under, it won’t take you with it.
- Approach clients with whom you already enjoy a relationship built on trust.
“It’s really just sitting down and saying to the person, ‘I want to specialize in working with people just like you, so I need to pick your brain. I need to learn about these people and see how I can best serve them,’” Badami says. Once the client identifies prospects, he adds, ask him if you can use him as a character reference.
Reverse prospecting worked so well “that I had to stop doing it,” Badami says. “I actually got so busy that I couldn’t keep up with the work.”
Barbara Steinberg is piling up work fast in New Jersey through a prospecting method tied to providing a community service. Steinberg’s firm, BLS Advisors, helps U.S. war veterans or their widows qualify for the Veteran’s Administration’s (VA) “improved pension benefit.” This presents a natural segue into discussing the focus of Steinberg’s practice: long-term care insurance (LTCI).
“We have found that there’s a whole community that focuses on care for the elderly: home-health care providers, community relations people for assisted-living facilities, care coordinators and people representing nursing homes,” Steinberg says. “They benefit a tremendous amount from what we do with the VA benefit because the improved pension plan gives additional dollars to people who might not have the money to afford” certain types of elder care. “They’re very happy to work with us,” she says.
How much business can one firm drum up simply by contacting elderly war veterans or their widows? “I came up with 275,000 people from World War II alone and another 80,000 from Korea, and that’s just in New Jersey,” Steinberg says. To qualify for the VA’s improved pension benefit, “they just have to be over 65, have served in wartime and have high medical expenses.” BLS Advisors helps eligible candidates complete the necessary paperwork as a community service and then asks them about other financial concerns. In addition to LTCI needs, Steinberg and her team often find that seniors—such as the 85-year-olds she meets whose money is all in stocks—need their assets repositioned into safer holdings, such as annuities.
Steinberg’s business is so good that her community-service outreach has become her sole prospecting method. “I don’t buy lead cards, names or mailing lists,” she says. “I get invited by people who run assisted-living facilities to do seminars that they sponsor, and I could do two or three of those a week. Our phone rings off the hook all day.”
Serving middle America
Rocco Capuano, president and CEO of Senior Estate Advisors in York, Penn., has taken his prospecting among seniors in new directions by focusing on what he calls middle America. “A lot of advisors truly don’t want to deal with the average person; they want to keep going after elephants,” says Capuano, referring to the tendency of some producers to flock toward high-net-worth prospects, whom he calls “an over-targeted segment.” But middle America needs good financial advice as much as, or perhaps more than, the well-heeled classes. That’s why Capuano’s firm focuses on prospects whose estate values notch in between $400,000 and $800,000.
“That really changes the focus of prospecting,” he says. “We do seminars and direct mail, as all practices should be doing. But what we really focus on is the seasons in a senior’s life.”
Capuano has found that seniors receive so many direct mail pieces, including seminar invitations, that they no longer pay much attention to them. “But seniors do have their curiosity piqued several times during the year,” he says. One such season is the Medicare open-enrollment window, which lasts from Nov. 15 to March 31. During this period, Capuano runs newspaper ads that promise to show seniors how to use Medicare Part C to lower their Medicare premiums. The strategy results in a flood of warm call-ins, he says, and capitalizes on a time of year when seniors are already paying attention to a key issue—health care. That way, “we spend less energy on prospecting and get more results,” he says.
One warm call-in generated typical results: In November 2006, a senior named Harold, 78, and his wife, Margarite, 77, responded to one of Capuano’s ads and scheduled an appointment to discuss the Medicare savings issue. Capuano asked them a series of questions that led to a discussion of other health coverage and then to a conversation about asset protection.
During that first meeting, “we saved them over $3,000 in annual premium and showed them how to get better prescription coverage,” he says. Better coverage for less money? How good a start was that?
Meanwhile, Capuano didn’t fill out the Medicare paperwork at that first meeting. Instead, he delivered what he advertised: free advice. But the couple was intrigued and set an appointment for a second meeting a week later, to which they brought their financial statements. That led to a third meeting in which Capuano brought them onboard as full clients. “We went from using a Medicare Advantage advertising lead to gaining full estate- and financial-planning clients,” he says.
Capuano runs similar ads in conjunction with the tax season (“Learn how to disinherit the IRS”) and back-to-school season (“Learn how to fund your grandkids’ education”). His fourth prospecting season changes each year, but tends to dovetail with some emerging niche. In the iffy market years of the early 2000s, for example, Capuano ran ads with a hook for equity-indexed annuities (“Get market-linked financial growth without the downside”).
One upside to Capuano’s middle-America prospecting is that he often lands “upper-America” clients in the bargain. “Some high-net-worth individuals are pretty much tired of hearing from major companies,” he says. “We have found that if we build relationships with their friends, who are often on the upper end of the middle class, we get the [high-net-worth] clients through natural means.”
Lynn Vincent is a regular contributor to Advisor Today.