Once you have completed a profile of a new client, your next step is to prepare a set of written recommendations. This is where 99 percent of you run into a problem: Most written recommendations are actually anti-sales documents presented in cheap notebooks developed at no expense and looking like they're worth every penny.
You need to build a professional-looking proposal to compete for big portfolios. One of the main reasons people have trouble getting clients to make a decision is that they give them too much to think about. I've seen advisors run an entire Frontier Analytics presentation with new asset allocations and new portfolios, but the first thing the prospects always say is "We need to talk it over."
Why do they need to talk it over? Partly because they don't have a clue what you just said. And partly because you gave them not just a mouthful, but an entire cafeteria full of unfamiliar food and then asked them to decide what they want for dinner right now.
Instead, start by getting them to decide to keep an asset you know they want to keep. "Bob and Betty, I know you like that GE stock you've had these many years. It's not such a large percentage of your portfolio that you are too heavy in it, so I'm going to recommend that you keep it. Does that make sense?"
Of course it will make sense. More importantly, we've gotten them to make a decision. Next, look at their cash positions. You might say: "You really don't need $300,000 in cash. Given that $100,000 credit line that you haven't touched, we would recommend you reallocate $250,000, keeping only $50,000 of your current cash positions. That basically gives you an emergency fund, if you have to have it overnight, of $150,000. How does that sound?"
Now they have made another decision. This one was a little tougher, but you still stick with this one until they make it.
Now, turn the page and discuss investments to sell. Here, you have listed every non-optimum investment that has to go. You might prepare Morningstar reports on each, but you should go over each one and get their agreement to sell it.
By this time, we might have freed up several hundred thousand dollars, and this naturally rolls to the last page, which is the investment recommendations. At this point, go over each investment you want them to purchase. What I would do on each of these is to at least get a "tentative" commitment before proceeding to the next:
"Bob and Betty, I like the XYZ Growth Fund. As we discussed, a certain portion of your assets needs to be in equities. Otherwise, the odds that you'll achieve sufficient growth to stay ahead of inflation and provide the lifestyle you want are small. The fund family is excellent and the manager, as I mentioned, has been with the fund for 17 years. Now without firmly committing to this, you're OK with this idea?"
What It Looks Like
Present are some simple Microsoft Word tables. And if you don't know what I'm talking about when I say "Microsoft Word table," call a temporary employment agency and ask them to send you someone for half a day who's certified in Microsoft Word. That person will understand exactly what I'm talking about.
If you are not currently offering written recommendations, start with four tables and build a proposal around them, a bit at a time. Here are some pages that should be part of any great proposal:
1. Client Objectives
Let me teach you a little word processing trick. Every time you create a new proposal, add any new client objectives that came up to your master document. The next time you create a proposal, one or more of your new client's objectives may already be on it. Add the new ones to your master, make a copy of the master and delete the objectives that don't apply to this client. You are beginning to use a word processor like a word processor, instead of just an electric typewriter!
2. Current Allocation
3. Recommended Allocation
