6 Common Financial Advisor Sales Mistakes

If you’re closing less than 60% of your prospects (and we’re not talking referrals), you’re probably making one of these six common financial advisor sales mistakes.

Maybe you enjoy selling and maybe you don’t. But as a financial advisor, selling should make up a gigantic portion of your job. That’s true whether you’re in a Wirehouse, an RIA, or working with a large bank or an independent broker/dealer.

Right off the bat, we need to be clear about what selling is.

Selling is the process of increasing your prospect’s desire for your financial products or services to the point that they are willing to go through the pain of change. In other words, we are not pushing timeshares or used cars.

Because selling is such a major part of your job, it’s critical that you avoid the most common sales mistakes that many financial advisors make when it comes to business development.

We’ve been coaching financial professionals to improve their sales skills for over 40 years. The following sales mistakes are not the only ones out there, but they are some of the most common.

We’ve seen them time and time again… and we’ve also seen how avoiding these mistakes can dramatically boost your closing ratio.

So, without further ado, let’s start with:

SALES MISTAKE #1: Pitching before you have established trust.

One of the biggest mistakes financial advisors can make is pitching their services before establishing trust with their prospects. Trust is the cornerstone of any successful sales relationship, especially in the financial services industry.

Without it, even the most compelling pitch, brimming with benefits, coupled with a long list of your certifications… is still unlikely to close new business.

The Importance of Trust in the Financial Advisor Sales Process

“People buy from people they trust and they trust people they like.”
– Garrison Wynn, Author & Consultant

This is a fundamental principle of sales.

In financial advising, where clients entrust their wealth and future to your expertise, trust becomes even more critical. A prospect’s willingness to engage with you hinges on their belief that you have their best interests at heart. As a CFP, trust is an absolute must. Without trust, your efforts to persuade them about the merits of your financial planning services are likely to fall flat.

Building Trust: The First Step in the Financial Advisor Sales Process

Establishing trust takes time and often requires more than one meeting. Here’s how you can lay a strong foundation of trust with your prospects:

1. Focus on the Relationship, Not the Pitch: Your initial meetings should be all about building a relationship, not selling your services. Use this time to get to know them, understand their needs, and be genuinely interested in their family, financial goals, and concerns. This approach helps you create a REAL connection and demonstrates that you value them as individuals, not just potential clients.
2. Gather Information: Ask open-ended questions to gather detailed information about their financial situation, goals, fears, and aspirations. This not only provides you with the necessary insights to tailor your advice but also shows the potential client that you are committed to understanding and addressing their unique situation. Questions might include:
   1. “What are the most important financial goals you have right now?”
   1. “When you think about your future, what are the main concerns that come to mind?”
   1. “Could you share a bit about your family and any financial ties they may have to you?”
3. Listen Actively: Active listening is key to building trust. Pay close attention to what your prospect says, take notes, and ask follow-up questions to dive deeper. Show empathy and understanding. This helps the prospect feel heard and valued, building that “Trusted-Advisor Identity.”
4. Share Testimonials: Sharing your experiences and success stories can help build credibility and trust. Talk about similar clients you’ve helped and the outcomes they’ve achieved with your help. Be sure that these stories are relevant to the prospect’s situation and demonstrate your ability to address their specific needs.
5. Be Transparent and Honest: Transparency and honesty are critical to building trust. Be upfront about what you can and cannot do. If there are risks or uncertainties associated with your recommendations, discuss them openly. This honesty can differentiate you from other advisors just looking to make the sale and can help you build a strong foundation of trust.

When to Pitch: The Right Timing

Only pitch your services when you TRULY understand their unique situation and how you can help the potential client overcome obstacles.

SALES MISTAKE #2: Talking to the Prospect About Investments Before Profiling the Prospect and Their Family

A common mistake that financial professionals make is diving into investment discussions before thoroughly understanding the prospect and their family’s unique needs and circumstances. This misstep can kill your sales. Let’s explore why this is a critical mistake and how to avoid it.

The Need for Personalized Financial Advice

The primary reason a prospect seeks out a financial advisor, instead of using a robo-advisor or simply relying on Google, is for personalized financial advice.

High quality prospects want someone who understands their individual goals, fears, and circumstances and who can tailor advice specifically to their needs. If you start talking about investments before understanding these personal aspects, you risk coming off as generic and impersonal — no better than a Google search.

The Importance of Profiling

Profiling a prospect involves gathering detailed information about their financial situation, goals, family dynamics, and personal values. Especially for a CFP, this step is crucial for several reasons:

1. Understanding Goals and Aspirations: Each prospect has unique financial goals, whether it’s saving for retirement, funding their children’s education, buying a home, or traveling the world. By understanding these goals, you can tailor your recommendations and value proposition to align with what they truly care about.
2. Identifying Fears and Concerns: When making financial decisions, people are often guided by their own fears and worries. For instance, a potential client might be anxious about market fluctuations, healthcare expenses during retirement, or ensuring their family’s financial security. By profiling clients, you can pinpoint these concerns and provide tailored advice that directly addresses their specific needs.
3. Family Dynamics and Needs: It’s crucial to grasp the intricacies of a prospect’s family dynamics and needs. This involves understanding their dependents, spouse, and any specific financial obligations tied to family members. For instance, they might be supporting elderly parents or caring for a child with special needs. These factors play a significant role in shaping their financial planning journey.
4. Creating a Connection: By taking the time to profile a prospect, you demonstrate a genuine interest in their well-being. This not only helps in building rapport but also lays a strong foundation of trust—a cornerstone for any successful advisor-client relationship.

SALES MISTAKE #3: Preparing an unreadable proposal.

Over the past dozen years or so, selling has become much more complex for financial advisors. Gone are the days when you could simply sell a product to get your foot in the door.

Today, regulations and evolving client expectations have drastically changed the sales process, requiring financial planners to propose comprehensive recommendations for entire portfolios.

The Shift to Comprehensive Proposals

In the past, financial advisors could focus on selling individual financial products. This approach was straightforward and often sufficient to begin a relationship with a client.

However, today’s high-net-worth individuals demand more. They expect holistic financial planning that addresses their entire financial situation, from retirement planning to wealth management.

This shift means that financial advisors must now provide detailed, comprehensive proposals. These solutions are often generated by sophisticated programs developed by financial firms and portfolio management software providers. And while these tools can create thorough and technically accurate proposal templates, they also tend to produce documents that are lengthy and filled with jargon.

A Real-World Example of a Proposal Nightmare

We were once asked by a client to review one of these complex proposals. The document was 37 pages long and included 12 pages of disclosures. It was filled with terms that even we had to look up, as they weren’t included in the glossary. To a client, especially one who is only marginally financially literate, this proposal was incomprehensible.

Consider what happens when clients or prospects encounter terms like “Inverse/Short U.S. Dollar ETF,” “Secular Return Estimate,” or the dreaded “Monte Carlo Target Zone Model.” These terms can be confusing and intimidating, leading to frustration and disengagement. When faced with such complexity, prospects are likely to shut down, and the sale is effectively dead.

The Importance of Simplicity and Clarity

The key takeaway here is the importance of simplicity and clarity in your proposals. To improve your chances of closing a sale, your proposal must be:

1. Simple: Avoid unnecessary complexity. Focus on the essential information that the client needs to understand your recommendations.
2. Readable: Use plain English and clear language. Your goal is to communicate effectively, not to impress with technical jargon.
3. Concise: While thoroughness is important, brevity can be powerful. Aim to present your recommendations in a way that is easy to digest.

SALES MISTAKE #4: Assuming Your Prospect has any degree of financial literacy.

One of the most pervasive mistakes financial planners and advisors make is assuming that their prospects have a certain level of financial literacy. This assumption can lead to miscommunication, confusion, and ultimately, lost sales. Let’s break this down.

Imagine you’re discussing investment strategies with a potential client and you casually drop terms like “Monte Carlo Target Zone Model” or “Secular Return Estimate.” To you, these terms are second nature; you understand them inside and out. But to your prospect, they might as well be in a foreign language.

Here’s the problem: When prospects encounter financial jargon they don’t understand, they feel intimidated and overwhelmed. This leads to a breakdown in communication, as they might be too embarrassed to ask for clarification. Worse, they might tune out entirely, missing key information that could convince them to work with you. This is a crucial aspect to consider in the financial advisor sales process.

To avoid this mistake, follow these steps:

1. Know Your Audience: Start by assessing the financial literacy of your prospect. During your initial meeting, ask questions that help you gauge their understanding of financial concepts. For example, “How comfortable are you with investment terminology?” or “Have you worked with financial products before?”
2. Use Everyday Language: Once you have a sense of their financial literacy, tailor your language accordingly. Replace technical terms with simple, everyday language. Instead of saying “Monte Carlo Target Zone Model,” you could say, “a method to predict different outcomes for your investments.” Instead of “Secular Return Estimate,” try “long-term return prediction.”
3. Explain Jargon When Necessary: Sometimes, you’ll need to use technical terms. When this happens, take the time to explain what they mean in plain English. For instance, you could say, “The ‘Monte Carlo Target Zone Model’ is a tool we use to evaluate how your investments might perform in thousands of market scenarios. Think of it like a weather forecast for your finances.”
4. Use Analogies and Examples: Analogies can be a powerful tool for explaining complex financial concepts. For instance, comparing a diversified portfolio to a balanced diet can help high-net-worth individuals understand the importance of spreading risk. “Just like a balanced diet includes different food groups, a diversified portfolio includes different types of investments to ensure overall health.”
5. Check for Understanding: Throughout your conversation, pause regularly to check for understanding. Ask your prospect if they have any questions or if something isn’t clear. Encourage them to interrupt you if they don’t understand a term or concept. This ensures they stay engaged and informed.
6. Provide Written Materials: Supplement your verbal explanations with written materials. Use simple, easy-to-understand handouts that explain key concepts and terms. These can serve as a reference for your prospect to review later, reinforcing their understanding.
7. Leverage Visual Aids: Visual aids like charts, graphs, and infographics can help make complex information more digestible. When discussing a financial plan, use visuals on a whiteboard to illustrate key points. For example, a pie chart showing asset allocation can be more effective than a verbal explanation alone.

Bottom line: If you were to ask a good client to describe their portfolio and investments, what terms do they use?

Listen to the words they use and adopt your prospect’s language.

This not only ensures clarity but also builds rapport and trust. Using their terminology makes them feel understood and valued, which is essential for building strong client relationships.

Ensuring your language is clear and accessible is not just a nicety; it’s essential for effective financial advising and the discussions needed for complete wealth management. By avoiding jargon and making your explanations as clear as possible, you help prospects make informed decisions. This approach can significantly improve your closing rate and build a more robust client base.

Remember, the goal is to communicate in a way that makes your prospects feel comfortable and confident in their understanding. This is not about dumbing down your language, but about making complex concepts accessible. When your prospects feel informed and empowered, they’re more likely to trust you with their financial planning needs.

SALES MISTAKE #5: Failing to show a written set of recommendations.

An unreadable proposal is bad enough—but no written proposal at all might be even worse. A good proposal will come in two parts: the explanation of your methodology (again, don’t use jargon here) and your recommendations.

Why is a written proposal so important? Let’s delve into the benefits:

1. It Provides Tangible Value

When you hand a prospect a written proposal, you’re giving them something tangible to take away from the meeting. This physical document helps them feel that their time with you was well spent. It shows that you’ve put thought and effort into their specific situation, enhancing the perceived value of your financial advice. This is crucial in building trust and demonstrating your commitment to their financial planning needs.

2. It Facilitates Decision-Making

A written proposal gives your prospect something concrete to mull over and consider. It lays out your recommendations clearly, allowing them to review the information at their own pace. This can be especially helpful for high-net-worth individuals who may need time to consider their options carefully. By providing a clear, written set of recommendations, you’re making it easier for them to make an informed decision about your financial services.

3. It Clarifies Your Intentions

A well-crafted proposal helps the prospect understand exactly what you want them to do. It eliminates ambiguity and ensures that both you and the prospect are on the same page. This clarity is essential for moving the sales process forward. When prospects know exactly what actions you recommend and why, they are more likely to follow through.

Components of an Effective Proposal

To make your proposal truly effective, it should include two key components:

1. Explanation of Your Methodology

This section should explain how you arrived at your recommendations. Avoid using technical jargon. Instead, use simple, clear language that the prospect can easily understand. Explain your process step-by-step, so they know exactly how you’ve analyzed their financial situation and developed your recommendations. This transparency helps build trust and demonstrates your thoroughness.

2. Clear Recommendations

This section should outline your specific recommendations and value proposition. Be concise and direct. Include actionable steps that the prospect can take to improve their financial situation. Make sure your recommendations align with their financial goals and address their specific needs. Providing clear, actionable advice is key to helping the prospect see the value in your services.

SALES MISTAKE #6: Talking too much when the prospect asks a question.

One of the most common mistakes salespeople make is talking too much, especially when a prospect asks a question. This can be detrimental to the sales process for several reasons. Let’s dive deeper into why this mistake is so critical and how you can avoid it.

The Problem with Talking Too Much

Many salespeople feel the need to provide exhaustive answers to every single question a prospect asks. They might even interrupt the prospect in their eagerness to share their knowledge.

However, this can overwhelm the prospect and derail the conversation completely. When you talk too much, you risk losing the prospect’s interest and missing out on crucial information that could help you close the sale.

Why Brevity is Key

When a prospect asks a question, it’s a positive sign. It indicates that they are engaged and interested in what you’re offering. However, it’s essential to handle their questions correctly to maintain this interest. Here’s how to do it effectively:

1. Pause and Think: When a prospect asks a question, take a moment to consider your response. This shows that you’re thoughtful and considerate. It also gives you time to structure your answer to be easily understood.
2. Be Brief and Concise: Aim to give the most straightforward and ”to the point” answer as possible. Avoid going into unnecessary detail or tangents. Your goal is to provide just enough information to satisfy the prospect’s curiosity and keep the conversation moving forward.
3. Encourage Further Questions: After giving your brief answer – SHUT UP. Allow the prospect to process what you’ve said. If they need more information, they will ask follow-up questions. This approach keeps the conversation dynamic and ensures that the prospect is driving the discussion based on their needs and interests.

The Benefits of Letting the Prospect Talk

1. Gathers Valuable Information: When you let the prospect talk, you gather valuable insights into their needs, concerns, and preferences. This information is crucial for tailoring your pitch and demonstrating how your financial services can meet their specific needs.
2. Builds Rapport and Trust: Listening more than you speak helps build rapport and trust. It shows that you value the prospect’s input and are genuinely interested in learning about them. People love to talk about themselves – so sit back and listen.
3. Identifies Objections Early: By encouraging the prospect to ask questions and share their thoughts and life story, you can identify potential objections early in the sales process. This allows you to address these concerns proactively and prevent them from becoming deal-breakers when the close date rolls around.

Improve your Sales Process with Bill Good Marketing

So, there you have it. Six common sales mistakes financial advisors often make.

Now, your task is simple.

Ask yourself: “Do I ever make any of these mistakes?”

If your answer is either YES or “I’m not sure,” then it’s time to take action. Read our guidebook on The Good Way to Sell.

Effective selling is a process. It’s a series of sales skills, steps, disciplines, tools, and techniques that you can apply to every client or prospect every single time. When done correctly, selling enables you to find out what high-net-worth individuals really want, offer the solution, and then move the sale through to a timely, profitable conclusion.

The Good Way to Sell is our process. Download it for free by clicking here.

By avoiding the sales mistakes listed above and implementing The Good Way to Sell, you will be well on your way to achieving the sort of sales success you’ve been looking for throughout your career. Effective financial advisor sales strategies require a combination of knowledge, empathy, and the right approach. With proper sales training programs and an understanding of the financial situation of your new clients, you can build stronger client relationships and a more robust book of business.

At Bill Good Marketing, our goal is to help financial advisors increase their AUM through a variety of marketing strategies. Whether it’s honing your sales process, getting more referrals, cold calling, or improving your social media presence on LinkedIn, we are here to help.

Take the next step towards improving your sales process and growing your client base. Partner with Bill Good Marketing and see the difference our comprehensive approach can make for your financial advising business. Let’s work together to turn your goals into reality and ensure your long-term success in the financial services industry.