If you identified a need and saw a way you might help, would you walk away because you didn't like the person? You need a strategy. (Photo: Shutterstock)
“I only do business with people I like.” How advisors love to say that! But the reality is different. Newer advisors have numbers to hit. Good advisors rarely if ever leave money on the table. Put another way, if you identified a need and saw a way you might help, would you walk away because you didn't like the person? To help you help them, you need a strategy.
|Who are these frenemies, anyway?
According to the Merriam Webster dictionary, a frenemy is “One who pretends to be a friend but is actually an enemy.” In a Psychology Today article “What is a Frenemy?” the subtext explained “An evolutionary perspective on staying friends with those we can't stand.”
Let's think in practical terms about who in your life is a possible frenemy. Maybe you married their sister and got the in-laws as part of the package. They don't know why their sister married you. They suspect you are cheating. They think you steal money from client accounts to support your lavish lifestyle.
This does not look like a good prospect. There's some upside, but unlimited downside.
Yet you are becoming the family advisor. If you spot a need or they approach you with the attitude of “I guess I should do business with you. Everyone else does,” you need a strategy to address the situation.
|7 strategies for working with frenemies
Let's assume you already know the downside. Here are several ways to proceed:
1. Let sleeping dogs lie. If they haven't mentioned doing business with you, you could take the “do nothing” approach. You haven't identified any glaring need. They just glare at family holiday dinners.
Rationale: You might be walking away from business, but you are avoiding headaches.
2. Introduce the team. You might work alongside other advisors with a shared production number. You have a marketing brochure and a team web page. Your frenemy asks about investing, so you invite them to your office to meet the team. Maybe you bring the team along to their house. Sell the firm. They are a team client.
Rationale: The in-law might feel an obligation to do business, as a sign they are supportive. They don't like you, but they can rationalize being a client of the firm you work with. In meeting the team, they might bond with one of your partners. Then they are working “with you” but not directly with you.
3. Few moving parts. There's no team, it's just you, and you decide to approach the frenemy for business. Stick to plain vanilla products with few moving parts that perform as advertised. What could be simpler than a certificate of deposit or Treasury bills they will hold to maturity? Or they might need life insurance. You can find a straightforward product.
Rationale: Complicated products are often difficult to explain or misunderstood. This can lead to problems and complaints down the road.
4. Enter the manager. Treat your in-law as a VIP. Bring them into the office, introduce your manager, who welcomes them, says good things about you and invites them to call in the future. Obviously, you have approached your manager a few days ahead of time, explained the situation and the recommendations you intend to make, consistent with their situation.
Rationale: Your manager has seen this scenario before. They know you are acting in your in-law's best interest. They will suggest you document every conversation using the firm's client relationship management (CRM) software. If something goes wrong, you have an ally.
5. Spell everything out. You most likely do this with every client. Go through the financial planning process, explain why you need this information, and present the plan alongside your recommendations. Link each need to the investment that helps address it. Explain in granular detail how you and the firm make money. Discuss the “What if” scenarios. Set up a schedule of periodic review meetings. Document everything.
Rationale: You've followed the firm's procedure. You've documented everything. The frenemy feels you have treated them with respect, and is confident they're on the straight and narrow path.
6. The pressure cooker analogy. They want to invest in stocks. You make some recommendations. They second guess you all the time, work in their own picks, things the firm doesn't follow and you've never heard of before. Keep in close touch, especially during volatile markets. If you go through several months of declining markets without calling, it's like opening the lid of a heated pressure cooker. The lid flies off and hits the roof.
Rationale: Like a car going downhill in wintery conditions, you are tapping the brakes frequently, instead of picking up speed and hoping the car doesn't skid out of control later.
7. The road map. As you begin the relationship, you explain “If you follow my advice, you should get a report card. If you think I'm doing a bad job, you should be able to fire me.” The portfolio reviews you schedule are the report cards. It's similar to the pressure cooker analogy.
Rationale: Even if they don't like you, they are probably wondering how they can pull out down the road without creating a family rift. However, you've outlined an exit strategy, and now they won't feel guilty using it if necessary, because it was your idea.
There are many reasons for not doing business with frenemies. But sometimes, you must. A financial advisor in New York shared a great observation: “If you don't have a good relationship with your brother-in-law, it's highly unlikely it will improve when he becomes a client!”
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” can be found on Amazon.
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Bryce Sanders
Bryce Sanders, president of Perceptive Business Solutions Inc., has provided training for the financial services industry on high-net-worth client acquisition since 2001. He trains financial professionals on how to identify prospects within the wealthiest 2%-5% of their market, where to meet and socialize with them, how to talk with wealthy people and develop personal relationships, and how to transform wealthy friends into clients. Bryce spent 14 years with a major financial services firm as a successful financial advisor, two years as a district sales manager and four years as a home office manager. He developed personal relationships within the HNW community through his past involvement as a Trustee of the James A. Michener Art Museum, Board of Associates for the Bucks County Chapter of the Fox Chase Cancer Center, Board of Trustees for Stevens Institute of Technology and as a church lector. Bryce has been published in American City Business Journals, Barrons, InsuranceNewsNet, BenefitsPro, The Register, MDRT Round the Table, MDRT Blog, accountingweb.com, Advisorpedia and Horsesmouth.com. In Canada, his articles have appeared in Wealth Professional. He is the author of the book “Captivating the Wealthy Investor.”
