The Prospecting Professor

Word of Mouth Works Both Ways

Since the 1940s, RoperASW has tracked and cataloged Influential Americans (IA's). IA's number about 21 million, and they can drive and shape public opinion all all types of consumer products and services.

IA's are inveterate communicators, and avid social networkers. They entertain friends at home, go out to clubs, write, telephone or email a family member...and are four times as likely to join a club or civic organization.

Others trust IA's to give advice...these folks are two, three, four times as likely to be sought out for their opinion on a particular product or service...than the average person. In fact, making a good impression on just one Influential American can create six brand-loyal customers!

Conversely, Influentials hold high standards for quality and performance, and will definitely take action if they are disappointed. They tend to complain more readily...and are even more likely to "bad-mouth" you, and your products, if they feel they have been wronged.

Who are the Influential Americans? Here are the eleven markers, and traits that let you know you are dealing with a person whose opinion carries inordinate influence. They:

1. Write or call politicians.
2. Attend political rallies, speeches, protests.
3. Go to school meetings.
4. Hold, or run, for office.
5. Work as a political volunteer.
6. Serve on a committee for a local organization.
7. Write a letter to the editor, or call in to radio talk shows.
8. Make speeches.
9. Write an article for a magazine or newspaper.
10. Been active in groups that attempt to influence public policies.
11. Serve as an officer for a club or organization.

If you have an existing client or prospect who engages in three or more of the above activities, you are working with an Influential American.

The lesson in all of this? If you have Influential Americans as clients who become your Raving Fans,  you could reap referrals well beyond their immediate buying power. Conversely, if you alienate the IA's with poor quality, or service...watch out!

Hell hath no fury as an Influential American scorned.

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.

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."

Trends in Trust & Estate Law

In Charles Dickens' Bleak House, the Jarndyce family seem to wait forever to inherit the assets from the settlement of their ancestor's estate...in a dispute that remains in court for so long that the legal costs consume the family fortune. Presumably this fictional case of Jarndyce and Jarndyce is Dickens' fancy...and not representative of the reality for  trusts and estates lawyers today.

Trust and estate (T&E) practice is not for everyone. Many of the young attorneys today are more attracted to the "sexier" fields of corporate practice, intellectual property, etc. Also, there is the money thing. Relative to other attorneys in the larger firms, T&E lawyers do not have the billable hours...and therefore don't make the big bucks. On the other side of the coin, a T&E lawyer today is on the cusp of the generational shift of trillions of dollars in assets. With relatively few young people drawn to this practice, there will be a stream of business over the next decade or so.

Trends in T&E law:

• Complexity. T&E law has gotten more complicated, with a continually growing tax content.
• Foreign exposure. Many wealthy foreign individuals want to have a home, and significant assets, in the U.S. International estate practice is growing accordingly.
• Litigiousness. High divorce rates. Second and third marriages. Kids and step-moms and step-dads. A lot of will contests.
• Elder care. With many persons living into their 90's, power of attorney, living wills, and health proxies are a lot of what T&E work is these days.
• Repeal of the estate tax. Although this is not likely, if it does occur less estate-tax business will be offset by increases in tax-related issues.

T&E law is an intellectually demanding practice. Most T&E attorneys have a very close relationship with their clients,as they tend to discuss many critical and sensitive issues together. Although it is pretty much a recession-proof line of work, there is always a continual scramble for new clients. Moreover, few T&E lawyers have clients who are on the Forbes 400 list. Their clients are upper middle class...with a house or two, some stocks, and a pension.

One of the ways that a T&E lawyer is expected to cultivate new clients is to build networks with financial planners, accountants, insurance salesmen, trust officers, and stockbrokers. At the same time, the field is much more competitive...with accountants and financial service firms all fighting for a piece of the estate-planning business.

For financial advisors, building networks with good T&E lawyers makes complete sense. Yet, it is not a given that all sides will benefit in equal fashion. Savvy financial advisors should find ways to build win-win reciprocal relationships.

Networking with Trust and Estate Attorneys

Are you looking for the premiere networking event for trust and estate attorneys? Start making your plans for the Fontainebleu Resort in Miami, January 9-13, 2006.

One of the most important conferences for trust and estate (T&E) circles is the Heckerling Institute on Estate Planning "see link". Each year more than 2000 T&E professionals gather to schmooze and build their own reputation at this event. You can bet that if a T&E attorney is worth his/her salt, they'll be here.

There's a cost, of course...$850 for the event itself + travel, lodging and entertainment. So what! This keeps out the idle gawkers and riff-raff.

The truth is that T&E attorneys want to build their reputation as much as anyone. The Heckerling conference is one of the recognized vehicles to do this.

I'll have more on how to network with T&E attorneys in the coming weeks. Stay tuned.

Accountant Shortage

Within the last few years, the demand for accounting talent has skyrocketed...or so says this interesting article from Reuters. "see link"

Three years ago, an accountant with 5 years experience who worked in the NYC area for a large accounting firm, might expect an annual salary of $65,000. Today, salaries are closer to $90,000. What's happened?

• Sarbanes-Oxley, responsible for a strict set of corporate guidelines, could also be termed the CPA Full Employment Act of 2002. Cautious corporate managers and audit firms are scouring the market for the best accounting talent, in an effort to keep their books in order, and out of the eyes of vigilant regulators.
• According to  the AICPA, the American Institute of Certified Public Accountants, the total number of accounting graduates is down more than 12% from ten years ago.
• Accountant burn-out. On-the-job stress from longer hours and grueling audits has caused one in five U.S. accountants to leave the fast track...for the relatively sedate world of consulting or part-time work.

Are accountants one of your "centers-of-influence?" Have they been difficult to reach lately? Here's a possible reason for it. Why don't you call up your favorite CPA one of these days and buy them a drink...caffeine or alcohol-based? Or...you could send them a sympathy card.

Speaking of CPAs as centers-on-influence, let me point you in the direction of www.horsesmouth.com, which has recently assembled a great new resource. They have assembled a publication entitled, Automatic Referrals, a 200-page piece on how to master a referral strategy. Chapter 9 is devoted to building the CPA connection, "Automatic Referral Allies - Landing Strategic Partners." One of the points that Horsesmouth brings up is the importance of matching your interests along with prospective CPAs. For example, if you are targeting small business owners who have 10-25 employees, you need to find CPAs who specialize in this area too. It wouldn't make sense for you to establish strategic partnerships with CPAs who focus on audits for large regional banks. In other words, do your due diligence first...and you won't waste time building alliances where there is not a fit.

If your referral strategy is non-existent or broken, you should consider Automatic Referrals. This is a resource that bears The Prospecting Professor's Seal of Approval.

Realtors: The New Rock Stars

Did you catch this article in the NY Times on Monday, "Middleman Now Rich Man in Real Estate Boom"? Summarizing, the piece describes how the fortunes of realtors have risen in tandem with real estate values. According to Steve Murray, editor of Real Trends, last year realtors in the U.S. collected $61.1 billion in commissions, up 43% from the amount garnered in 2000.

At the same time, not all realtors make "rock star" income. Less than a third make in excess of the median U.S. household income of around $43,000. This is principally due to the oversupply of brokers. In Westchester County, NY...where the Times article is focused...there are 9,701 licensed agents, up 23 % since 2000. Last year in Westchester County, only 6,157 homes were sold...which likely means that some agents sold no homes during the year.

Prestige worse than stockbrokers. At the same time, the "prestige" of being a realtor still stinks. In a Harris poll last year, survey participants were asked which professions had the most prestige. Professions that were deemed to be "very great" in prestige were: scientists-52%, doctors-52%, firemen-48%, teachers-48%, military officers-47%, nurses-44%, police officers-40%, clergy-32%, business executives-19%, lawyers-17%, union leaders-16%, actors-16%, bankers-15%, journalists-14%, actors-10%, stockbrokers-10%, realtors-5%.

A question from a financial advisors' standpoint...Are realtors good investment prospects? Although it is dangerous to make sweeping generalizations, in many cases realtors are less than ideal investment prospects...for these reasons:

• Like many sales professionals (financial advisors included), realtors seem to have high spending needs. The realtor mentioned in the aforementioned NY Times article is a case in point. This 51 year-old realtor has 9 vehicles...a white Bentley Arnage, four Mercedes, two Jaguars, and two Range Rovers. He also owns 28 pairs of Alain Mikli eyeglasses, that are color-coordinated with his wardrobe. (I've never even heard of "Alain Mikli eyeglasses.")
• Realtors like to invest in real estate. Many investors like to stick with what they know, and realtors are no exception. Given the relative performance of real estate versus equities over the past four years, this tendency would be doubly true today.
• Many realtors are part-timers. For every realtor who is truly a "rock star", and selling 25+ houses per year...there are ten who sell just a handful, or none.

Of course, there must be some realtors out there who are terrific investment prospects. Some may have the prescience to want to take some of their real estate winnings off the table, and look to diversify their holdings. Others may want to look at some of the investment solutions that would have particular appeal to their circumstance, e.g. the Solo 401(k).

In the words of Mark Twain, "All generalizations are false, including this one."

Networking with Attorneys

"Two roads diverged in a wood, and I -- I took the one less traveled by, and that has made all the difference."...Robert Frost

My experience has been that financial advisors who take the sales/marketing road "less traveled by" have a greater chance of success...in a shorter period of time. The following idea is in this vein.

The natural career arc for attorneys in private practice is...new associate...senior associate...and then considered for partnership in 6-8 years. When networking with attorneys, most financial advisors want to target the senior partners. Given the realities of the situation, i.e. the internal/external demands placed upon high-visibility partners, this may or may not be a realistic objective for the financial advisor. Contrarily, why not travel the less-worn pathway by targeting the newer associate?

During the first few years after law school, new associates learn how to transfer the theory of law school into the practice of law. One of the principal learned skill sets is how to generate new business...a skill that is not necessarily addressed in law school.

However, new associates need to learn how to crawl before they walk. This means learning to deliver exceptional service to their #1 clients...the partners of their firm. As such, here is an example of the career advice that they are encouraged to follow:

• View partners as the primary client.
• Be available to them and willing to pitch in when needed for a big project or case.
• Use the partners to "practice" relationship building skills.
• Take a partner to lunch and learn more about his/her practice.
• Never miss a deadline.
• Focus on your "client" and do all you can to meet their goals and expectations.
• Never let a partner down. 2nd chances aren't likely.

As you might infer, new associates, especially those at the top law firms, are under a lot of pressure. Here is where the opportunities for financial advisors comes into play. However, it entails getting a clear understanding of the needs/concerns of the new associate...and how you (the advisor) can help.

As the new associate serves their #1 natural internal constituency, they will undertake additional activities that create a foundation for the launch of their career. During these years, they will be finding and building their A-level group of  contacts...the people who will grow to become important clients, and referral sources. The networks that the new associate builds will, most likely, be an outgrowth of their developing interests within the practice of law.

For example, technology lawyers will need contacts that can help a small company turn into a big company in a hurry. Their non-lawyer network will be: CPAs, software developers, programmers, venture capitalists, commercial bankers, entrepreneurs, and management consultants.

Associates interested in a family law practice will want to target an affluent demographic.  They might become active in the arts, or join a board of directors for the symphony or theatre. They'll take lessons from a golf pro and join one of the prestigious clubs. They will also cultivate relationships with: psychologists, marriage counselors, clergy, insurance agents, and lawyers/professionals who also serve an upscale clientele.

Actionable Idea! Sit down with an associate and find out where there natural networks are, and how they plan to build them. If there is a commonality of interest, explore how you can work together. More specifically, offer to invite the associate to networking events that you (the financial advisor) have created...that help further their career. Better yet, if you are aware of an event where the associate could invite their partner/mentor, and look good in the partners eyes...that's a WIN for all involved.

The cautionary note about this networking approach is the time horizon. It is unlikely to reap much in the way of AUM overnight. However, the seeds that you sow early in your career...will bear fruit many years into the future.

Centers of Influence: Rolex Technicians

Don't you think that CPAs and attorneys get tired of always being referred to as 'centers of influence'? I sure do.

It strikes me that there are a number of other professions/trades who could be effective 'centers of influence'...and they certainly wouldn't have the shabby, dog-eared appearance of the usual 'centers of influence' subjects.

How about Rolex technicians and/or qualified watchmakers?

Some background. There is a shortage of qualified watchmakers to service the growing number of fine and complicated watches owned by Americans. This shortage is exacerbated by the impending retirement of up to one-half of the existing watchmakers in this country.

Americans are buying more expensive watches than can be serviced. Imports of high-end mechanical watches are up 145% in the past decade...while imports of high-end quartz analog watches are up 127%. With average retail prices exceeding $1000, this suggests a growing demand for service and repair ahead.

Need for training. A recent survey conducted by the American Watchmakers-Clockmakers Institute shows that only 35% of watchmakers have obtained their training from a formal watchmaking school. Only 35% of this group were certified as master watchmakers. Moreover, there has been a 75% decline in the number of watchmaking schools since 1975...there are now only 11 full-time schools in the U.S. In recent years, the total number of graduates has been well less than 100 per year...and watch industry estimates that it will take four to six times that many graduates each year to replace the watchmakers who retire...or die. The situation is so dire that the Rolex company has pledged $10 million to the St. Paul Technical Institute, in a race to train an upcoming generation of technicians.

An aging workforce. In the next 10-20 years, 50% of the watchmaking workforce are expected to be gone. The average age is now 46 years old, and only 7% are less than 25.

With an estimated 30-35 million high-end mechanical and quartz analog watches in circulation in the U.S...and a watchmaking workforce of 5000, half of whom will be gone in a few years...with fewer than 100 new graduates each year...it isn't hard to envision a significant supply-demand disparity.

Marketing Thoughts.

• Check out the American Watchmakers-Clock makers Institute website, www.awci.com The referral directory will lead you to the watchmakers in your area.
• If you are in the area, come to the AWCI annual meeting in Minneapolis...August 4-7, 2005.

Back to the center of influence thought, a certified master watchmaker may not have the same cachet as say, the top estate planning attorney in your area...but wouldn't you like to have his/her list of everyone who comes in to get their Rolex serviced?

Influential Americans

Since the 1940s, RoperASW (formerly Roper Polls) has tracked and cataloged Influential Americans. Influential Americans (IA's) number about 21 million...7.5% of the population. IA's drive and shape public opinion on all types of consumer products and services...and are much more likely to be asked for their advice on investing and insurance than the typical person. Last year, more than one-third (35%) of IA's were asked how to invest. One-half of this group gave investment recommendations to an average of four households. Doing the math...IA's made 13 million investing recommendations last year.

Who are the Influential Americans? Here are eleven markers. Influential Americans are more likely to:

1. Write or call politicians on the local, state or national level.
2. Attend a political rally, speech, or protest.
3. Attend a public meeting on school matters.
4. Hold or run for political office.
5. Worked as a volunteer for a political party.
6. Served on a committee for a local organization.
7. Served as an officer for a club or organization.
8. Written a letter to the editor, or called in to a radio talk show.
9. Made a speech.
10. Written an article for a magazine or newspaper.
11. Been an active member of any group that tries to influence public policy/government.

Profile your existing clients and prospects for their opinion leadership potential. If they answer YES to three or more of the questions above, you are talking to an Influential American.

Many advisors (too many in my view) spend considerable effort courting the traditional Centers of Influence...CPAs and attorneys...in hopes of garnering new client referrals. However, Centers of Influence inhabit all walks of life. To the extent that an advisor is connected to persons that fit the parameters of an Influential American, this may be a more fertile field to cultivate for new client sources.