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Prospecting Lehman's Way

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Wildly gyrating equity markets have hammered the S&P 500, causing the worst start to a year since 2009. Clients' nerves are frazzled as they have helplessly watched stocks head towards bear market territory.

But there's one silver lining in the cloud of turbulent markets for financial advisors: Prospecting for new accounts just got easier.

Advisors who've been through tough times before, recognize an opportunity when they see one. They know that difficult markets can be the best time to prospect for new accounts, because so many clients are suddenly up for grabs.

I first learned this as a young recruiter back in the 1980s. In those days, I was placing up-and-coming rookie brokers with Lehman Brothers. Lehman had a remarkably successful cold-calling boardroom.

Now, the old Lehman brokers weren't a bunch of Boy Scouts. In fact their sales tactics could sometimes  be way over the top. But the firm was unsurpassed in training rookies how to build huge businesses.

Lehman had even perfected a technique using junior advisors, who would make the initial cold call to uncover warm leads they would later pass on to their senior counterparts.


Recruits aspiring to join Lehman were often asked the same question, "What's the first thing you do when stocks go down?"

What did Lehman want to hear? "You call your clients."

Lehman insisted that brokers call clients whose stocks were down so they could offer reassurance and keep the accounts. They also recognized the value of prospecting in difficult markets.

This is the time that clients most need their advisor's reassurance and guidance. Prospects are more likely to be open to another opinion on their portfolios when things go awry.

So why not reach out to prospects when times are tough, especially those who may be underserved by another advisor? Understandably, many advisors are fatigued and mentally strained by the additional client service that these turbulent periods require.

Advisors who haven’t already made the extra effort to call anxious clients will likely lose some of those accounts. Their loss could be your gain.

In tough times, advisors have told me they find that clients tend to be more open to changing advisory relationships. Things can change dramatically without warning. One day markets are performing reasonably well and client relationships seem solid, even unshakeable.

Then suddenly markets plummet markets, dismaying clients who then become distressed and full of questions. That's the opportunity advisors want to seize for prospecting opportunities.

FDR famously reminded Americans during his first inaugural address that the only thing they had to fear was fear itself. When the bear starts pulling the market lower, clients get scared. Addressing those fears provides avenues for bolstering relationships with current clients and for bringing in new ones. Those advisors who can manage to both service their existing book and dedicate time to prospecting for new accounts can reap big gains.

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