Welcome to Financial Advisor IQ
Follow

If You’re Chasing Customers, Something is Wrong

September 15, 2017

This time we hear from Jon Baker, president of Atlanta, Ga.-based Jon Baker Financial Group. He recalls how getting stood up by a potential client made him rethink his business model to ensure it never happened again.

I remember the day well, because it was Christmas Eve. I was a young advisor and would go anywhere and do anything to chase down a potential client. I had met this particular prospect at a home show a few weeks prior, where he told me he was very busy and could only meet me at 8 p.m. On Christmas Eve. At his home.

I was young and eager to build my business, so I put him on my schedule.

Christmas Eve rolled around and I had to leave our family meal to put on my suit, hop in my car and head across town to take this meeting. When I arrived at the address I saw a light on in the house but when I knocked on the door, nobody answered. I knocked again; still no answer. Then I saw the light inside the house go off. I had just been stood up.

That event stuck with me, as did other scheduling snafus in those early years. How could I prevent them? What was I doing to make these prospects feel like it was okay to cancel our meetings without telling me in advance? Even after I went through so much trouble?

After a while, I decided my approach was backwards. Customers should be chasing me, not the other way around. To do that, I had to change what I was selling. So I made the decision to move to a fee-based business.

My staff thought I was crazy. Why would anyone pay for a retirement plan or a financial plan when we had been providing that for free? Well, nothing is free of course. We did make money from our relationships with our clients but it just was not obvious what the costs were up front. I came to believe that if we were clear about the service we were providing, and the cost of that service, our clients would appreciate that and reward us with their business.

I often use the example of a dentist who offers a free exam — no charge for a cleaning and checkup. However, the one catch is that you must agree to have your cavities filled at his office. That dentist has a pretty good incentive to find cavities. I’m guessing many people would avoid this dentist and even cancel appointments they had made. That’s the same way potential clients can feel when they have a free meeting with a financial planner — they know they are going to get charged somehow and someday; they just don’t know how or when.

So despite my staff’s doubts, we went ahead with our new business model, trusting that our clients would not only be happy with our service but they would be happy enough to tell their friends and family about our company. And that is exactly what happened.

Jon Baker

We started this new practice in 2000 and business doubled in each of the first three years. Our clients like the clarity that fee pricing provides and they like the clear action steps we deliver. They no longer worry that a meeting will be a sales pitch, so they don’t cancel meetings.

It takes time to see the results of good financial planning and people are more committed if they have “paid in advance.”

When I look back at it, it sometimes seems funny that such a small thing — dropped meetings — had such a big impact on my business. But it makes sense. People want a good product, and they are willing to pay for it and to come to your office. I haven’t had a meeting at anyone’s house in decades.