Two factors are essential to generate organic growth successfully. One is connecting with high-quality prospects. Client referrals and referrals from other professionals are the most effective way to connect with high-quality prospects. But getting such referrals is not enough. Wealth managers still need to win the trust and confidence of the introduced prospects. Many wealth managers are challenged regarding converting prospects to clients. Their narrative when meeting prospects is a significant factor. A narrative is how financial advisors communicate the way they approach working with clients.
There are three types of narratives used by wealth managers when they meet prospects:
- In the expertise narrative, wealth managers convey that they are leading authorities with the experience and knowledge prospects need and want.
- The consultative narrative is about wealth managers communicating, after understanding their clients well, their ability to provide tailored solutions.
- The personal narrative is about building rapport based on “personal chemistry.”
The most often-used narrative is expertise, regularly used by about 70% of wealth managers. The expertise narrative focused the introductory conversations on the capabilities of the financial advisors and their firms. A far second is the consultative narrative that almost a fifth of wealth managers regularly use. Here, the emphasis is firmly on the prospects, and the capabilities of the wealth managers are discussed very little and usually at the very end of the introductory meeting. About one out of ten wealth managers focus on building personal rapport with prospects—the personal narrative.
A powerful trend emerged based on the wealth managers’ conversion rates. The more financial advisors explain that they aim to understand their prospects and provide customized solutions, the more likely a prospect will become a client.
With the expertise narrative, wealth managers convert about half the prospects they meet within six months. That percentage goes up to about 65% for wealth managers using a consultative narrative. The personal narrative only results in about one out of five prospects becoming clients.
Many wealth managers believe it is necessary to demonstrate their knowledge and capabilities when they meet prospects. They see this as a way to demonstrate the value they can provide. The expertise narrative works about half the time, motivating wealth managers who use it to continue doing so.
The decision to use the personal narrative, though not very effective, is usually a function of the personality of the wealth managers. These wealth managers tend to be socially comfortable and have high emotional intelligence.
The consultive narrative requires the wealth managers to make the prospects the center of the conversation. It is all about explaining who is in control of the process, and it is the prospects. There are different ways of developing and sharing a consultative narrative.
While most wealth managers succeed with the expertise narrative, it is less effective than the consultative narrative. However, for the consultative narrative to produce results, wealth managers must gain insight into the thinking and goals of prospects and modify their narrative accordingly.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.
