The Prospecting Professor

"Send me something in the mail"...NOT!

Back in the 1980's...the sales book that many stockbrokers had on their shelf was, The Art of Selling Intangibles, by LeRoy Gross.(Note: Some of us remember when "stockbroker" was not a pejorative term...before the age of "registered representative", "financial consultant", "wealth manager", etc., etc.) First published in 1985, The Art of Selling Intangibles was chock full of practical selling tips...and held an esteemed position in every stockbroker's library of selling resources.

Today...many of LeRoy Gross' ideas are still relevant. Reading my dog-eared copy the other day, I came across one nugget...regarding the appropriate response to a prospect who says, "Send me something in the mail"...a phrase that a prospect will use after patiently listening over the telephone to a sales presentation from a financial advisor. In Mr. Gross'  20-year-old view, sending "something in the mail" is a worthless exercise...an activity that contributes to the advisors delusion that they are actually moving forward in the sales process.

Of course, Mr. Gross's opinion is till valid today. "Send me something in the mail"  is still little more than a brush-off, a convenient vehicle that a sneaky prospect will use to get a salesperson off the phone and out of their hair...without actually having to say the word "No". The real corrosive effect, from the advisor's perspective, is that the advisor remains under the illusion that this person is a bonafide prospect worthy of time and attention...as opposed to a non-prospect who simply lacks the heart/forthrightness to end the discussion.

Here's a wacky thought. The next time that a prospect says, "Send me something in the mail", you respond, "Sure...in fact, I'll send the information special delivery My only request is that you be there at the exact time that the mail is delivered. When does your mail arrive tomorrow? 10 am? Great! You'll get it 10 am tomorrow."

Then...you show up at the prospect's office at 10 am sharp...with the information in your hand...and a postage stamp on your forehead.

See...I told you it was a wacky thought!

On Vacation

The Prospecting Professor is on vacation...and will return, rested and ready, on August 31st.

Stocks vs. Real Estate

In a good article in the NY Times last Friday, the authors illuminate that although housing prices have done will recently, over longer term time periods, the equity markets have been significantly better. "In the Long Run, Sleep at Home and Invest in the Stock Market".

Since 1980, the average annual return for the S&P 500 is +10.2%...compared to a +7.7% rise in housing prices in New York, or a +6.7% increase in Los Angeles.

However, many investors are completely fixated on the returns of the past five years. While the S&P 500 is down 2.7%...housing prices are up 12% and 15.5%, in New York and Los Angeles, respectively.

Yet, when comparing the returns of equities to housing prices, it is often an apples and oranges comparison.Stocks are more volatile, and their price changes can be viewed daily. Moreover, real estate is typically a leveraged investment...which means that the effect of real estate's recent upturn, has been exacerbated.

The other obvious difference is that, if housing prices soften, you'll still have a roof overhead. One can't live in their portfolio.

The Power of Negative Thinking

Are you sick of smiley faces? Do you hate it when someone tells you to, "Look on the bright side"? Have you had your fill of the Tyranny of the Positive Attitude?

In America...especially in the sales profession...it's tough to be a pessimist. For years we have been fed a diet of unrelenting positivity that prescribes cheerfulness and optimism as a formula for success, resilience and good health...and equates negativity with failure, vulnerability and general unhappiness.

Here's the deal. This Bliss Thing may be taken too far. While positive thinking has its advantages, a little whining now and then is not such a bad thing. Pessimism, in some circumstances, may have its place. Moreover, the unrelieved pressure to be upbeat may gloss over individual needs and differences, and may make some people feel worse, not better. The trouble with forced optimism is that it tends to engender guilt and even greater anxiety. To quash the negative feelings, people self-medicate by drinking, smoking, or eating too much.

Here's the other relevant point...at least for financial advisors. You know how, over time, financial advisors tend to attract clients who think and act like them? Well...about 25% of the US population are pessimists, and will have a natural predilection to view the world Sunny Side Down. If every advisor out there is constantly cheerful and upbeat...who's going to work with the Oscar the Grouches of the world?

Julie K. Norem, a Wellesley College professor and author of "The Positive Power of Negative Thinking," has a term for the Sad Sacks among us...Defensive Pessimists.

Defensive pessimism is a coping strategy, where an individual sets unrealistically low expectations...and then play through the possible outcomes of a situation, and analyze all of the terrible things that could happen and tend to prepare for the worst. While optimists are more likely to be shaken up when things go wrong, defensive pessimists haven't had their basic assumptions broken and prepare for the worst.

Here's another interesting point. A University of Pennsylvania study found that, faced with normal, later-in-life issues, such as illness and loss...optimistic study participants (ages 64-94), were found to have higher levels of depressive symptoms than the pessimistic subjects. When we are older, negative events, such as the loss of a spouse, are permanent. A pessimistic reaction based upon a realistic acceptance of end-of-life issues is appropriate...while being optimistic in this situation would be unrealistic and maladaptive.

In sum, the virtues of negativity may have been overlooked. If a dour countenance is your normal expression, don't fight it. In fact, as a financial advisor, you could build your entire practice around Constructive Negativity...and seek the many investors who share your perspective.

Your Personal Productivity

Most all of us could be more productive. Yet I was surprised to see, in a recent survey, how much time is wasted during the course of a day. In a survey done by Salary.com, the average US worker admitted to goofing around for as much as 2.09 hours per 8-hour workday. "here's the link" That's more than 25% of the day wasted...and this is what they admitted to. Could be even higher I think.

The top time-waster, far and away, was getting lost on the Internet...44.7% of those surveyed 'fessed up to this distraction. Gabbing with co-workers was #2...23.4% raised their hand for this one. Here's the Top Ten list:

1. Surfing Internet...44.7%
2. Socializing...23.4%
3. Conducting personal business...8.8%
4. Spacing out...3.9%
5. Running errands off-premises...3.1%
6. Personal phone calls...2.3%
7. Applying for other jobs...1.3%
8. Planning personal events...1.0%
9. Arriving late/leaving early...1.3%
10. Other...12.5%

Many of us were/are attracted to the financial advisory business because of the flexibility and freedom that it offers...in contrast to relative confinement of corporate cubicle life for example. With this freedom, comes a need to be accountable...to ourselves.

It's easy to get distracted. However, I find that I can shake myself out of the distraction-of-the moment by asking the simple question:

• What's the best use of my time right now?

Effective time management comes down to a number of factors, including the ability to Focus on the Mission, and Prioritizing Projects...yet I find that this simple question centers me, and brings me back to what needs to be done at the moment.

Industry Immersion

Bill Nicklin is the founder Horsesmouth, www.horsesmouth.com, the online Sales Prospecting and Best Practice resource for financial advisors. Nicklin is also a successful producing advisor. Over the past 30 years, he has generated in excess of $50 million in fees and commissions.

For those of you who subscribe to Horsesmouth, and are familiar with Nicklin's frequent observations, you will know that he overwhelmingly endorses Industry Immersion as the means for financial advisors to build relationships.

He writes about Industry Immersion again this morning in a piece entitled, "Seeking HNW Clients? Industry Immersion is the Answer."

For what it's worth, The Prospecting Professor wholeheartedly endorses Industry Immersion as a vehicle to build a stellar client list. There are two reasons for this:

1. It is different, and distinctive. For whatever reason, not many advisors do this today. The industry seems to be moving to a generalist, all-things-to-all-people, asset-gathering model. Advisors who practice Industry Immersion go against the grain. I think this is good.
2. It works. Industry Immersion is interesting for the advisor because, presumably, because they are pursuing an avenue that engages their attention. Moreover, Industry Immersion makes connections with affluent investors...which is the name of the game.

Action Step: Below I attach a link to Bill Nicklin's article on Industry Immersion. Go to the article...read it thoroughly...and also click on every hot-link in the piece (there are eight of them). This way, you will have a library of nine articles that will give you the foundation of how to build a practice using Industry Immersion.

By the way, Horsesmouth is a paid-subscription service. If you are not a member you will need to join. You may do so by taking advantage of their 30-day trial offer.

(In the interest of full disclosure, I have been a past contributor to Horsesmouth myself. However, there is not a financially remunerative contract that exists between The Prospecting Professor and Horsesmouth. My recommendation to join Horsesmouth is due to the fact that I believe that it is the single best resource for financial advisors who want to build a thriving advisory practice.)

Seeking HNW Clients? Industry Immersion Is the Answer
http://www.horsesmouth.com/linkpo/76929_18.htm
Not only will you meet many high-net-worth prospects through industry immersion, you’ll also anchor yourself to a community of individuals who will fully rely on your knowledge, insight, and expertise. New business will develop naturally as a result.

Home Run Questions

Jack Hubbard is the chairman of St.Meyer & Hubbard, a sales education firm based in Elgin, IL...that focuses on the banking industry. In the July/August issue of Commercial Lending Review, he discusses the sales prospecting process that he teaches to bankers as they interact with their prospects, primarily business owners.

His training closely follows the words of Dale Carnegie, "You can make more friends in two weeks by becoming interested in other people than you can in two years by trying to get other people interested in you."

In brief, here's a summary of what Hubbard teaches.

• Thought Starters. A thought starter is a precall email or fax that includes three to five high-payoff questions. Thought starters, sent immediately after the appointment is booked, begin the call several days before the banker leaves the office. The purpose is to create curiosity in the mind of the prospect.
• Never take sales literature on the first call.
• Take two pens that work...and a notepad. Consider writing the Home Run Questions along the margins...or at the top of the page.
• Bring plenty of business cards. At the end of the call, stop by the gatekeeper's desk and leave a card with them...thanking them for their assistance in booking the appointment.
• Bring a "leave behind"...not something about your firm. This could be an article about the business's industry, or a new sales book that can help the business owner grow revenues.
• Types of Questions. Been, Now, Headed (BNH). Mr. Hubbard thinks it imperative that the banker determines where the business has been, where it is now, and where it is headed. These questions uncover overt and latent needs. Issues and Implications...e.g. What are some of the issues that the business owner is facing? If the owner does, or doesn't, do something about these issues, what will be the consequences?
• Final Question. Towards the end of the call, Hubbard suggests inserting the following, "Before we talk about next steps, I'd like to ask the following. What, if anything, haven't we discussed about your personal or business situation that we should talk about now?" In most cases, the prospect will say something like, "I can't think of anything now." Yet, when they do respond to this one, it is most likely a key issue.

Hubbard sums up his sales prospecting process with the following aphorism, "The buyer has the answers, the seller has the questions." Good advice that would benefit us all!

Niche Focus: Machine Tool Industry

The machine tool industry is the backbone of American manufacturing. High-tech, computer-controlled machine tools, which are used to cut and shape metal and other materials, serve every manufacturing sector...and are often used as a barometer of the nation's economic health.

From January through May, the United States had $1.2 billion in machine tool sales, up 18% from the same period in 2004, according to a recent report from the American Machine Tool Distributors Association. The factors driving a rebound in machine tool sales are:

• Higher profits have allowed certain companies to invest in more capital equipment,
• There was a pent-up demand as the manufacturing industry under-invested during the miserable years of 2001-2003,
• Companies have realized that they need new technologies to stay competitive.

In parts of the country, the machine tool business is especially strong, and the upturn in business has made it difficult for the machine shops to keep pace with orders. In Arizona, many machine and tooling shops serve the defense industry, where orders have increased by 71% over the past three years. Another factor is the construction boom, which is pushing the production of windows, doors, and furniture. "We're all busy...it's a thriving market," says Ray Rubin, president of the Arizona Tooling & Machining Association.

A limiting factor for certain machine tool manufacturers is the lack of qualified workers. Employment in the industry hit its peak in 1998, and during the industry's downturn through 2003, workers who lost their jobs turned to other industries that were hiring, e.g. construction, services, and commercial trucking. They aren't enthusiastic about switching back to the career that dumped them.

The two national associations that serve the industry are:

• the American Machine Tool Distributors Assn., www.amtda.org,
• and the National Tooling and Machining Assn., www.ntma.org.

Financial advisors who are interested in building relationships within this niche are encouraged to learn more about industry trends and concerns through these, and other, resources.

Tulipmania, Crowd Psychology, and Low-Carb Diets

The most famous example of a speculative bubble is the "tulipmania" that struck Holland between 1634-1638. As the market reached a frenzied peak in early 1637, people mortgaged their homes and businesses in order to buy bulbs for resale at higher prices. The highest price bulbs sold for more than 3000 guilders...equivalent to the price of a large house. When the market  finally collapsed, many of the powerbrokers of Dutch society were ruined...almost overnight.

Investment history has been littered with the sad stories of market bubbles and manias. Consider:

• the Mississippi scheme that swept France in 1720,
• the South Sea Bubble that gripped England during the same years,
• the Stock Market mania and crash of the 1920's,
• the Dot.Com frenzy of the late 1990's,

Yesterday, I wrote about the Chapter 11 bankruptcy of Atkins Nutritionals, and the long history of dietary fads and trends. Although I am not a Behavioral Economist, I am struck with the parallels between the crowd psychology of market...and dietary...manias.

In this vein, I wonder if this wouldn't be a great topic for a seminar that explores the underpinnings of market...and dietary...manias; and provides common sense solutions to confused investors. Better yet, why not add the following list of invitees to your invitation list, and make it a celebration of the demise of Atkins Nutritionals?

• Potato farmers,
• Bakers,
• Pizza and pasta shops,
• Wheat growers,
• Fast-food franchisees,
• Fruit growers,
• and everyone else who is rejoicing upon the discredit of low-carb mania.

Just a wacky thought for a Friday in August. Have a great weekend!

Manias (Dietary...and otherwise)

Irony...thy name is Americans and their fixation on fat. Two-thirds of Americans are determined to be obese today...yet weight-loss manias have continued to hound Americans for the past 100+ years.

The most recent mania has been the low-carb craze, spawned by Dr. Robert C. Atkins. Last week, Atkins Nutritionals filed for Chapter 11 bankruptcy protection...and declared $301 million in assets and $325 million in liabilities. For the year, Atkins reported a $341 million loss...a stunning decline for a company that changed the face of the American food industry.

"Dr. Atkins' Diet Revolution," was first published in 1972, where weight-loss guru claimed that his diet prompted "ketosis," a metabolic state in which fat is burned more efficiently. Since then, his books have sold 20 million copies in more than 20 languages. Additionally, up to 17% of the US population admit to having tried a low-carb diet at some point. When Atkins was at it's peak, fast-food chain Carl's Jr. pushed their lettuce-wrapped Low Carb Six Dollar Burger, Kraft pitched  low-carb Oreos, and Frito-Lay jumped on the bandwagon with low-carb Doritos, Tostitos, and Cheetos.

The reversal-of-fortune of Atkins Nutritionals and low-carb diets has been precipitous. Some of this may be related to the apparent hypocrisy of Dr. Atkins' own physical condition. He died in April of 2003, following a nasty fall on the icy sidewalks of Manhattan. Subsequent to his death, a coroner's report revealed that he suffered from: obesity (258 lbs. at the time of his death), hypertension, and heart disease.

A Select History of Dieting in America. Dr. Atkins was hardly the first weight-loss guru in this country. He follows a long line of dietary proponents.

• In the 1830's, the Rev. Sylvester Graham, nicknamed "Dr. Sawdust", rails against gluttony, which he says leads to lust, constipation, and indigestion. His answer is a spartan diet of coarse, yeast-free brown bread (including the Graham cracker), vegetables and water.
• In the 1860's, London undertaker William Banting publishes "Letter on Corpulence," which becomes a bestseller by espousing a low-carbohydrate diet that consists of lean meat, dry toast, soft-boiled eggs and vegetables.
• Also in the 1860's, Dr. James Salisbury promotes a diet of hot water and minced meat patties (Salisbury steaks).
• 1876, Dr. John Harvey Kellogg, of the Battle Creek Sanatorium, begins his crusade for vegetarianism, pure foods, slow chewing, calorie counting, colon cleansing, and individualized diets. He invents granola and toasted flakes.
• In 1898, Horace Fletcher begins the slow-chewing movement. After he is denied life insurance because of his weight, Fletcher drops 40 lbs. through a strategy of chewing each mouthful to liquid before swallowing it. His diet is accompanied by the 'Slow Chew Anthem,'..."I choose to chew because I wish to do/The sort of thing that nature had in view."
• 1960's. Mead Johnson introduces Metrecal.
• 1961. Weight Watchers is formed.
• 1960's. Alcohol-friendly, low-carb regimens are touted with the publication of "The Drinking Man's Diet", and "Martinis and Whipped Cream."
• 1978. Herman Tarnower publishes the high-protein Scarsdale diet, of only 700 calories daily. He is killed by his lover in 1980.
• 1992. Atkins publishes a new book that promotes his low-carb, high-fat, high-protein approach, "Dr. Atkins New Diet Revolution."

Although I haven't built a very good case for it today, I find distinct similarities between the manias around dieting and food...and the manias and fads that continue to crop up in the investing world. At some point in the future, I would like to discuss this topic in greater depth.

Enough for today...though. Ciao!