Prospecting in a Down Market

By Bill Kica on July 18, 2022

“The strongest principle of growth lies in human choice” – George Eliot

Growth is not easy under any market conditions. 

In turbulent markets such as these, tough choices move to the fore. 

• Do we continue allocating time and resources to marketing and new client acquisition? 
• Or is it more prudent to “circle the wagons” for now and play defense until this market turmoil ends?

History shows that there may never be a better time for the proactive advisor to onboard new clients than when markets are “misbehaving.” The intense emotions induced by excessively turbulent markets may be just the catalyst needed for overdue change. 

In some acute cases, it perhaps can equate to the proverbial “straw that breaks the camel’s back” for clients who have felt an underwhelming sense of neglect or disconnection from their advisor.

In fact, many elite advisors claim that they had their best years for adding new clients in past down markets. Perhaps this is partly because of the client’s heightened willingness to get a second opinion and partially because the incumbent advisors have not prepared their clients well enough for down-market cycles.

Clarifying Priorities

For us to enjoy growth through up and down markets, we are well served to have an unbroken focus on two core priorities. While some trimming of our sails is understandable to adjust for prevailing headwinds, we can stay true to our longer-term strategic growth plan by focusing on activities that both Retain & Obtain clients simultaneously. 

It doesn’t have to be an either-or choice. We can think of it as two faces of the same coin. Retention of existing clients AND onboarding of new clients can go hand in hand. Although our days may feel more reactive than usual (i.e., in-bound client calls, tactical asset allocation calls, morale building, etc.), it does not have to come at the cost of picking up more clients who are underserved by other advisory practices. 

If we are truly a client-centric practice, the distracted advisor’s short-fall should be a screaming opportunity for our gain.

Priority #1: Retain

One advisor I know said it best . . .  

• Question: When is the best time to tell your customer you love them? 

Answer: Right before someone else does!” In volatile or down markets, our priority is to ensure the well-being of and connectedness to our clients. 

Simply stated, it’s time to get on the phones and speak with all our clients. The “iceberg syndrome” reminds us that a general rule of thumb is that if one client expresses concern, then it is highly likely that 20 or more are feeling the same but may not be brave enough to initiate the conversation with us. 

Complacency here by us may create an unnecessary risk of losing clients or eroding trust. If they don’t get reassurance and direct, timely guidance from us, they may seek it elsewhere, whether from “talking heads” on media outlets, their brother-in-law, or perhaps other advisors in their network.

This requires us to increase the frequency, relevancy, and quality of client outreach. We should be prepared to provide personalized insights as to what these events mean to each client’s specific goals. On their minds might be questions like, . . . “am I really OK?”. . . “am I really going to make it?” 

Suggestion: A lot of good things can happen from conducting a Proactive Client Review. In times of uncertainty, it may make sense to schedule the next review cycle sooner rather than later so that we are all on the same page. 

To do this well, here are 5 Steps for conducting a Proactive Client Review: 

1. Eliminate Surprises – Given prevailing conditions, keeping clients aware of actions taken on their behalf to address these conditions is one of the key reasons they work with us. We can go a long way in eliminating surprises by providing clarity and consensus of actions. 

2.    Engage in Planning – Clients prefer clear expectations. Reviewing in detail their financial plan (rather than merely their portfolio’s performance or allocation) and how it was designed to weather storms can often be the single most reassuring thing we can do. 

3.    Address Fears – Consider speaking briefly with our clients before the upcoming review to confirm that nothing is missing that is of particular importance or worrying them now. If they report something worrying them, we should be sure that it is prioritized in the meeting and specifically reflected in the meeting agenda.

4.    Answer “What’s Next?” – We should take the opportunity to review our step-by-step process (aka Client Journey) together and the goals for their wealth plan. This is done to de-mystify where they are on their planning journey and to put in perspective any shorter-term deviations along the way. It allows us to connect the dots within the architecture of their Wealth Plan and the relationships between their Investment Plan, Financial Plan and Estate Plan. 

5.    Achieve Clarity – A good Client Review ends with our clients affirming that they now have clarity on where things stand with their financial affairs and where they stand regarding their longer-term goals irrespective of market conditions.

Done right, a comprehensive Client Review in turbulent times affords us the opportunity to ask our clients who they might know that is also feeling uncertain or uncomfortable. Most people want to ensure that the people they care about most are well cared for and receiving the same high level of care they just received from us. 

Often, we hear something to the effect of a client saying, “would you have time to do this for my friends Joe and Jennifer Wilson? They seem to be worried about what’s going on right now?”

Thus, it is important to ask every client if they know someone they want us to meet with who needs the same high-touch level of care. I have found that most clients do have someone in their circle of influence that is feeling uneasy and would derive great benefit from us doing a comprehensive review for them as well. And we shouldn’t be surprised that this leads to an opportunity to be introduced to a new potential client.

Priority #2: Obtain

Remarkably, surprisingly few advisors add new clients even in the strongest of markets. 

The by-product of the long Bull market was to provide a lift in overall asset levels of most practices. As a result, advisors may have enjoyed virtual “career years” in terms of higher annualized revenues. Unfortunately, this may have led to a general malaise or complacency when it comes to exercising our new client acquisition muscles. 

A senior advisor described this complacency feeling to me as akin to a line from the old Pink Floyd song, “I have become comfortably numb.” To grow our practice in a down market cycle, the risk of complacency has serious costs. 

Here are 3 Actions that we can take to move to an offensive footing and actively prospect in a down-market: 

1. Get on the Scale: As they say, “what gets measured, gets done.” If we wanted to lose weight, we would likely need to get on the bathroom scale to see if we are making the progress we desire. It is the same with prospecting. It is helpful to record and post our weekly outbound prospecting activities to ensure we are making the progress needed to acquire new clients. 

In times of turbulence, it will be easy to get distracted by incoming news and interruptions. Tracking and recording our prospecting activities will help us ensure we are doing enough of the right things to get the outcomes we seek. 

I find that growth teams pay as much attention to “leading” activities as they do to “lagging” outcomes. If they wish to increase their outcomes, they increase the focus on the type and amount of activities they are pursuing upstream to get the outcomes they desire downstream.

2. Shots on Goal: Whether we look at professional soccer, hockey, baseball (times at bat), or almost any leading team, there appears to be a clear correlation between the number of “shots taken to the number of points scored.” And the gap widens dramatically for the championship teams. 

In our experience, growth teams set specific weekly / monthly prospecting activity targets and monitor their variance closely from that standard. For example, an effective leading indicator for setting activity targets may be “appointments per week with qualified prospects.

3. Focus on the “Highest Yielding” Opportunities First: Not all new business development techniques represent the same return on our time and energy. Growth teams are fiercely aware of where their best outcomes come from and focus their priorities and resources around them. 

For today’s market realities, the right “type” of activities increasingly centers around securing introductions via top clients, leveraging connectors through strategic networking and nurturing strategic referral alliances. It is far, far less about cold marketing.

A good example of how some growth teams institutionalize this focus is by publishing a formal group marketing calendar. This would lay out a cadence of meetings within each core growth initiative, such as scheduling Connector Meetings or CPA & Attorney Alliance Meetings every six weeks. 

In summary, we can enjoy new client additions in challenging markets as growth-minded teams. This is best done without taking away from the necessary care and attention to retain our existing client relationships. Done right and with intention, both priorities can open the door to new relationships that can go a long way in providing a buffer for our practice in down market cycles. 

To learn more about how to prospect effectively in down markets, contact Bill Kica at bkica@hightoweradvisors.com