The Prospecting Professor

Centers of Influence

From Day One, most financial advisors are taught to network with accountants and attorneys...in order to utilize their "center of influence" quality. There are two problems with this advice.

Firstly, many advisors are attempting to do this already, therefore this is hardly an innovative networking technique. Because of the popularity of this approach, accountants and attorneys are always being solicited by financial advisors who seek to initiate a referral relationship. This has created a population of jaded, picked-over CPAs and JDs.

There's a second point, and this is less-discussed. Many attorneys and accountants are NOT very good networkers. By their nature and training, these professions can tend to attract and retain individuals who are: analytical, detached, introverted and reflective. These are not qualities that lend themselves easily to building relationships, and networks. Said another way, many attorneys and accountants could benefit MORE from the networks of financial salespeople, as opposed to the other way around.

As a comparison, Keith Ferrazzi, the author of "Never Eat Alone" discusses some professions where there are a large percentage of "super-connectors," individuals who maintain contact with hundreds and thousands of people. He believes that the following professions are chock-full of persons who are much more naturally inclined to have built-in networks: restaurateurs, executive recruiters, lobbyists, fundraisers, PR professionals, politicians, and journalists.

In fact, "super-connectors" occur in all walks of life...not just the stereotypical professions. One of the most connected persons I know is the couple (two people) who own the local coffee shop and bakery. They seem to know everyone in the neighborhood...and my network pales in comparison to theirs. If I were on the retail end of the financial advisory business, I could do far worse than to get on their good side.

The Virtual Handshake

Question: Is it possible to provide a book review if you haven't read the book? Answer: Why not? I'm a member of a book club, and there have been many occasions where the various participants engage in loud, opinionated discussions regarding a book that hasn't been read. What's the difference?

I haven't read The Virtual Handshake: Opening Doors and Closing Deals Online yet. However, I intend to very soon. The concept looks especially intriguing. Here's the website and blog..."The Virtual Handshake."

The two authors met online themselves...in a Yahoo! group. David Teten is CEO of Nitron Advisor, a research firm that provides hedge funds, private equity funds, venture capitalists and other professional investors with direct access to front-line industry experts. Scott Allen is an information technology executive and leading expert on building business relationships online.

Teten and Allen begin by identifying seven keys necessary for developing and sustaining successful network relationships. They are:

1. Your character
2. Your competence
3. The relevance of the people in your network
4. The strength of your relationships
5. The quality and quantity of the information you have to offer
6. The number of  people you know
7. The diversity of your network

According to the authors, each of  these networking keys is improved or boosted when a professional uses social software to nurture and develop their online network of interpersonal relationships. Social software is identified as blogs, personal web sites, listservs, and other communication tools used in building a network.

This all looks good, doesn't it?

Note to self: Read The Virtual Handshake. Comment again...when I can speak with direct knowledge and experience.

Have a great weekend!

Inside a Lawyer's Head

Larry Richard earned his J.D. from the University of Pennsylvania, and his Ph.D. in Psychology from Temple. He is also one of the leading experts on lawyer's personalities, having tested over 25,000 lawyers over the course of his professional career.

In analyzing lawyer personalities, he employs the Caliper Profile, which has been used to measure 18 different personality traits. Dr. Richard has identified six different distinctive traits that distinguish lawyers:

1. Skepticism. 90% of lawyers are skeptical, compared to 50% of the general public. Lawyers are hired because of their proclivity to question everything...data, people, situations, etc. The lawyer's mindset is, "Oh yeah? Prove it."
2. Autonomy. 89% of lawyers have this trait, vs. 50% for the general public. Lawyers are autonomous and somewhat contrary. When one attempts to influence lawyers with a hard sell, there will be a natural reaction against that. The best way to overcome autonomy resistance is to let that person have input in what they're going to do. Participation leads to commitment.
3. Sociability. Only 7% of lawyers have it, vs. 50% of the public. This is the ability to initiate new emotional connections, being interested in disclosing one's inner life, and remembering  the details of the inner lives of others. Most attorneys would rather discus sports, current events, or the Alito hearings...as opposed to discussing anything personal.
4. Abstract Reasoning. 82% of lawyers have this, compared to 50% for the general public. Lawyers like solving problems, facing challenges, and stimulating their brains.
5. Urgency. 71% of attorneys have a sense of urgency, vs. 50% of the general public. This is a need for closure and a desire to have things brought to a head. The downside of urgency is that lawyers are often not very good at inter-personal communications. Touchy-feely is sacrificed for efficiency.
6. Resilience. Surprisingly, lawyers are less resilient than the general public...30% vs. 50%. Their are highly sensitive to criticism, and have a low tolerance for rejection.

From a financial advisor's perspective, these six characteristics show the dramatic personality differences that can exist between lawyers...and salespeople. Whereas persons in the sales profession are generally: creative, enthusiastic, extroverted and interactive...many attorneys are analytical, detached, introverted and reflective.

Of course, it can be dangerous to make assumptions about individuals. Not all lawyers will share the traits outlined above. In the words of Mark Twain, "All generalizations are false...including this one."

Rainmaking

George Catlin (1796-1872), was a self-taught artist who gave up the legal profession to devote his career to painting Native Americans in their native land. "Rainmaking Among the Mandan", depicted at left, came from his studies of the Mandan Indians during the 1830s.

In modern times, "Rainmakers" are super-networker, law firm partners, who contribute to their firm's success by building relationships in the industry, and within their community. In the February issue of Partner's Report, a trade journal for the legal profession, the 10 Rules of Networking are outlined.

1. Establish networking goals. Create a Most Wanted list of 12-15 clients who could make an impact upon your business. Collect ideas, referrals, and support.
2. Prospect proactively. Research the prospective clients on your list using industry lead services, company reports/newsletters, the Internet, inquiries at industry events, etc. Find out who the decision makers are and what they like to do, lifestyles, long-term goals.
3. Prospect and qualify leads. Collect business cards from everyone you meet. Make a note on the back about the contact and what you want to remember about that person, or firm. Evaluate each contact. Figure out how you can help them, and what they can add to your own network.
4. Work the market. Join professional associations, industry groups, alumni associations, and civic organizations. To maximize contacts, join a committee and become active by writing, speaking, teaching or mentoring. Develop an "infomercial" that quickly summarizes your firm, and your own experience.
5. Give more than you take. Add value to bring in value.
6. Stay in touch with those already in your database. Scan the news for reasons to call, send out your firm's newsletter, special-interest articles, or notes acknowledging personal milestones and achievements. Contact at least quarterly.
7. Take 15 minutes. Making just two cold calls daily to people not in your database adds up to 500 new contacts per year.
8. Maintain a positive attitude. Develop an end game, and focus on that.
9. Follow up! Follow up! Follow up! You need to follow up each contact with a personal note or brief phone call within 10 days of the initial meeting. It often takes 5-6 contacts or touches to develop any level of trust.
10. Let others know what you're doing. Issue a monthly report that summarizes your networking efforts.

Lastly, contrary to popular wisdom, effective "rainmakers" are made...not born. Even if you are not a natural born schmoozer, you have the basic skills needed to build a network, and profit from these contacts.

Gold!

On January 24, 1848, James W. Marshall discovered gold on the property of Johann A. Sutter near Coloma, California. Marshall was overseeing construction of a sawmill on the American River.

(I have a personal affection...and connection...to the California Gold Rush. In 1849, my great-great-grandfather, Samuel Gilmore, boarded a clipper ship in Baltimore and embarked on the journey to California. He never made it to the gold fields...he became a band director in San Francisco.)

It took nearly one year before the rest of the country got wind of the strike. Previous claims of gold had proven disappointing, and Marshall's find was met with skepticism at first. Then, in December of 1848, President James Polk validated the discovery with this announcement:

"The accounts of the abundance of gold in that territory are of such extraordinary character as would scarcely command belief were they not corroborated by authentic reports of officers in the public service."

Polk's words were a confirmation...and a call to action...that created the first gold rush in modern times. Farmers left plows standing in their fields, merchants left their shops, and soldiers left their posts. (Note: the image of The Prospecting Professor is from a 1849 cartoon that depicted the unprepared, greenhorn-state, of those who rushed west to stake their claim.)

Nearly 100,000 people arrived in the Golden State in 1849. By 1865, $750 million in gold had been clawed from the hills and stream beds of California...equivalent to more than $16 billion in inflation-adjusted dollars.

A fervor gripped the nation. Discussions of gold could be heard at nearly every kitchen table in the country. The nation's collective greed built to a fever pitch...leading to some incredible get-rich claims. In some of the eastern papers, ads were run promoting a special salve. All one did was rub the salve over one's body...climb to the top of a mountain...and roll down while all the gold stuck to you. The ad made the further claim of guaranteeing that, by the time you got to the bottom of the hill, you'd have enough gold to live happily ever after. Two types of salve were available: one for gold, and one for silver.

Of course, few of the adventurers and risk-takers realized their dreams of Croesus-like wealth. James Marshall, who started it all, was never lucky enough to strike it rich. A very stubborn man, he continued to look for gold...and slowly his mind gave away, until he came to believe that he was the rightful owner of all of the gold in California. Marshall died in complete poverty in 1885, in a small cabin not far from the site of his original discovery.

The Death of Interruptive Marketing

Interruptive marketing is the process of interrupting prospective clients from whatever they are doing at the moment...to get their attention in order to begin/further a sales relationship.

Salespeople have practiced interruptive marketing for years. During the mid-1800s, tinkers and peddlers went from town-to-town knocking on doors...selling household goods, lightning rods, books, etc. In 1906, Alfred C. Fuller started a company that made door-to-door selling acceptable, as his hard-working sales force became a cultural icon. In the 1980s, telemarketing became the favored form of interruptive marketing...more than $100 billion worth of goods and services were sold by telemarketers in 2002.

Interrupting marketing was effective because it rewarded tactics that many Americans embraced:

• Hard work
• Doggedness
• Persistence

In 2006, the effectiveness of many forms of interruptive marketing is declining rapidly.

1. With more than 110 million phone numbers on the FTC's Do-Not-Call list, the heyday of the telemarketer is long gone.
2. Direct mail effectiveness is greatly reduced. Our mailboxes are too full with junk, to take much notice of anything of value.

In short, irritating prospective clients is out. Salespeople must find other methods to engage a prospect's interest. I'll have more on alternative approaches...in future posts.

Niche Focus: Debt Collection Agencies

Given the economic outlook, the future is promising for credit and collection professionals. Consider these trends:

• Higher interest rates
• Slowing economic growth
• High energy prices
• A wave of upward  rate adjustments for mortgages
• A cooling housing market

All of this points to continued stress on consumers' disposable income. As long as the economy doesn't go completely into the tank, i.e. recession, this looks to be a propitious environment for debt collection professionals.

The national association for this industry is the American Collectors Association, www.acainternational.org. On this website, you can read "Collector" magazine, their monthly trade publication. The feature article in the January 2006 issue is on "skiptracing"...which is the art/science of gathering information that locates people. As you might imagine, in the debt collection business, skiptracing is a necessary tool.

Also available on the ACA website is a member directory, where one can locate members of the association by geography, company name, or member type.

Going into 2006, one of the "hot button" issues for collection professionals is data security. Given the number of high-profile data security breaches recently, consumers have a heightened awareness of this issue. Our legislators have responded in kind...at the moment, Congress is considering 13 different bills on data security.

Inherited Clients

The other day I received a call from an advisor who I have worked with over the years...who has become a good friend. He wanted to share a success story with regard to an inherited account.

For financial advisors, inherited accounts can be a boon...or a bane. On the one hand they have a existing relationship with your firm...and a vested interest in speaking with you.On the other hand, inherited accounts often have a "history." Additionally, if the inherited client has a relatively small account with the firm, they are also pre-judged by advisors as "worthy-of-time" or "unworthy-of-time." Pre-judging inherited clients can be a mistake...because it assumes that prior financial advisors were thorough and effective in identifying and garnering the majority of the clients' assets. Here's an instructive tale.

My advisor-friend had inherited an account that most advisors would consider to be minuscule, given that the market value was less than $10,000. Nonetheless, the advisor has a habit of meeting all of his clients face-to-face, inherited or not, minuscule or not.  Over a period of many months, the advisor attempted to secure a meeting...to little avail. Each time that the advisor called to suggest a visit, he was met with a gruff, mono-syllabic, "No."

However, this advisor is nothing, if not persistent. Finally, the stars aligned one day, and the advisor was able to secure a meeting. Face-to-face and in his element, the client was much less gruff and considerably more open. During the course of the conversation, the client casually wondered if the advisor had any thoughts on how to maximize the income of a trust account where the client was the sole beneficiary. The client wondered aloud if the $500 per month from this account was the best that could be done.

A question or two from the advisor encouraged the client to reach into his files and pull out the most recent statement for his trust account. It revealed an account with a market value of $2,000,000. Notably, and most glaringly, the fees paid to the trust company exceeded the $6000 annually paid to the client.

This exchange would have never occurred if the advisor had stayed in his office, and not made the effort to drive for an hour to meet this client to chat in the comfort of his own surroundings. Moreover, the advisor had not made assumptions about the client...pre-judging the clients financial wherewithal based upon erroneous information.

Speaking of inherited clients, there is a very good article on this subject in today's Horsesmouth. This is a subscription-only service that serves the financial advisor community. In my view, Horsesmouth is a resource that pays for itself many times over. Here's the link to the article...

Reassure Inherited Clients 
http://www.horsesmouth.com/linkpo/66772_18.htm
When colleagues leave the business you might find yourself with some new names in your book. Here's how to act quickly to ensure they'll stay with you.

Cold Calling Corporate Executives and Managers

  With more than 110 million phone numbers signed up for the Do Not Call list, fewer financial advisors are "cold calling" residences...and with good reason. Studies have shown the individuals who fit the profile of a prospective investor-client, have been among the first to take their names out of circulation.

As a consequence, those financial advisors who are still in the cold calling business, are calling prospects at their place of work. This has created a problematic scenario.

Consider the circumstance...from the reality of a person who works for a typical large corporate bureaucracy.

• With downsizing, corporations are "lean and mean." Managers and executives are doing the work of 2-3 people. Everyone has too much to do...and too little time.
• Imagine yourself as a corporate decision-maker. It's 10:00 a.m., and you have just emerged from your second meeting of the morning. There's a bright yellow Post-It on your phone from your boss...asking you for a status report on the big project that is behind schedule. You log onto your email, and you see that there are 37 new ones. To make things even worse, you check your voicemail and you have 16 unread messages.

What's the likelihood that this harried corporate executive will read your unsolicited cold call...let alone return it? Is it any wonder that you don't get call-backs from your generic, plain-vanilla voicemail message?

Put yourself in the place of the person that you have just cold-called. If you were the previously-described hypothetical executive...would you waste your valuable time to see you?

If not, you need to re-think your approach...and consider these points while you do this:

• Corporate decision-makers want to hear from sellers who can help them achieve THEIR goals and objectives.
• To capture their attention, focus on the DIFFERENCE that your product or service would make in their lives.
• Get to the point.
• Be professional.
• Finally, remember that a switch to you...means more work for them. They won't do this if there is no perceived value.

In the sales business, you never go wrong by putting yourself in the shoes of your prospects.

Ben Franklin: Networker

Today, January 17th, is the birth anniversary of Benjamin Franklin. I'll spare you the well-worn stories about Franklin inventing bifocals, or his experiments with electricity. What I would like to discuss is Franklin's creation of the "Junto Society."

In 1727, Franklin convinced 12 of his friends to form a club dedicated to mutual improvement. Meeting one night a week, this group of young men discussed the topics of the day. The group lasted for 40 years...and eventually became the nucleus of the American Philosophical Society.

Junto (pronounced who-n-toe), was a private forum for discussion. One of the functions of the group was to brainstorm publicly beneficial ideas. The members of the Junto were drawn from diverse occupations and backgrounds, but they all shared a spirit of inquiry and a desire to improve themselves, their community, and to help others. Among the original members were printers, surveyors, a cabinetmaker, a cobbler, a clerk, and a merchant. Most of the group was older than Franklin, yet he was clearly the leader.

The Junto's Friday evening meetings were organized around a series of questions that Franklin devised, covering a range of intellectual, personal, business, and community topics. These questions were used as a springboard for discussion and community action. In fact, through the Junto Society, Franklin promoted concepts such as: libraries, volunteer fire departments, public hospitals, police departments, paved streets, and the University of Pennsylvania.

One of the other interesting aspects of the Junto Society is that the members recommended books, shopkeepers, and even friends to each other...much like the various networking groups that have sprung up over the past few years.