Newcomers to the financial industry will find that cold calling can still be an effective method of garnering clients and building a book of business. While conducting investor seminars and visiting corporations to assist in the administration of their retirement plans are excellent alternatives to cold calling, sometimes cold calling is still beneficial, or even required. But it only works if you do it well, so read on for a list of tips and strategies that should be included in cold call scripts. (For related reading, see Alternatives To The Cold Call.)

Don't Sell on the First Call
Many freshly-minted brokers make the mistake of trying to make a sale the very first time they speak to a prospective client. In many cases, they are so eager to open up accounts that they give the impression that they are trying to ram stocks down the prospect's throat. However, being too persistent can often have the opposite of the intended effect and cause prospective clients to recoil. Instead, give the prospect two or three stocks to keep an eye on that you think will do well. Avoid sharing you very best ideas with non-clients, however, because your next pick (if and when they become your clients) may suffer in comparison to your first picks. Essentially, you want to give your prospective clients three stocks that you think have the greatest potential for appreciation, even if that growth is relatively small.

Also, by providing your clients with two or three names, you will "hedge" your bet so to speak, as well as give clients an understanding of a portfolio approach to growing their assets. Remember that anything can happen in the stock market and it is not uncommon for even the best companies to trade lower in some markets. Finally, in providing the name of only one stock, your prospect may get the impression that you are after their money for just one stock and one trade!

After the initial conversation, wait a couple of weeks or months, then follow up with the prospect and review the picks you gave them. Odds are, if your selections have done well, the prospect will be more interested in talking to you and hearing about your next ideas. This is a "soft sell" approach.

Don't Mail Things
There is an old saying in the brokerage industry that "mailers are failures". This doesn't mean that you shouldn't provide the prospect with the information he or she requests, but try to do what you can by email. This keeps the prospect involved. If he or she is willing to go to a website that describes your company and your talents and provides access to your company's research, you'll probably be better off. The more you engage your potential clients and give them the opportunity to participate in learning more about you and your firm, the more interested they are likely to be.

Emphasize Your Talents
If you have experience dealing with estate planning or retirement plans, or if you can tell a story about ways that you've helped customers achieve their financial goals, you'll make more headway than if you simply pitch the prospect stocks to buy. The prospect will need to have a reason to have confidence in you before he or she will send money your way.

Ask Questions, But Don't Get Too Personal
A good salesman - and a solid advisor - asks plenty of questions. This is how you will find out what the prospect's financial goals and dreams are. But remember: They don't know you and, therefore, they will be reluctant to discuss intimate details about their current stock holdings. Brokers who go for the throat and ask these personal questions in the very first call are more likely to fail. Instead, leave revealing this information up to your prospective clients by suggesting that once they get to know you and learn about your firm and your abilities, perhaps they will be willing to discuss their assets and goals with you at a later date. This allows you to sell your firm and yourself without being a pushy salesmen.

Listen To The Prospect's Responses
Remember, two ears (and just one mouth) for a reason. In other words, brokers can benefit from listening more and talking less. Listen to whatever your prospective clients say on the phone because even though they may not open up to you on the first few calls, they sometimes release valuable information that can help improve your odds of making a sale. For instance, they may talk about their wife, kids, or large mortgage. They may also mention the death of a relative, or a recent change of jobs. Life-changing events such as these present reasons why a prospect may need the help of a financial professional. It is your job to show them this and to present yourself as the best possible candidate for the job.

Set a Date to Call Again
The first telephone call that you make to a prospective client is an introduction - not a sales call. It allows both the prospect and broker to get to know each other, and provides the opportunity to ask some basic questions regarding the prospect's financial position. At the end of the call, brokers should tell the prospect that they would like to follow up with them in a few weeks or months, and give a specific date to do this. Of course, this means that you should follow up with the prospect on this date. This will show the prospect that you are professional, organized and mean business. (To learn about what clients expect for their brokers, see Is Your Broker Acting In Your Best Interest?)

Cold calling is likely to continue to be a necessary part of being a broker, particularly for newer brokers as they build their book of business. But remember, cold calling doesn't have to be a hard sell. The most successful brokers emphasize their firm's reputations, their talents and listen to what prospective clients have to say. If you follow these simple tips, it is likely that you'll succeed at using cold calling as a way of building up your business.

To continue reading on this subject, see Making The Most Out Of Your Day.

Related Articles
  1. Options & Futures

    Broker Or Trader: Which Career Is Right For You?

    A day in the life of a broker or trader is an exciting and varied one. Find out how to decide between these two financial professions.
  2. Professionals

    How To Target Ideal Customers

    Expand your definition of a lucrative client and uncover a new realm of possibilities.
  3. Brokers

    Alternatives To The Cold Call

    Want to build your business as a financial professional? We provide some choice advice.
  4. Entrepreneurship

    Six Rut-Busting Business Moves For Brokers

    Find out how to beat a plateau and boost your sales to the next level.
  5. Professionals

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  6. Economics

    What Does a Relationship Manager Do?

    A firm’s relationship manager works to maintain positive relationships with its customers and partner firms.
  7. Personal Finance

    Mobile Payments in 2015: When Will Cash Be Obsolete?

    A wave of new mobile payment technology is setting the stage for a revolution in how we buy in stores.
  8. Entrepreneurship

    5 Bad Habits Every Entrepreneur Should Avoid

    Learn how to avoid specific bad habits that plague entrepreneurs, such as failure to plan, bad associations and not keeping a good work-life balance.
  9. Stock Analysis

    Salesforce and SAP: Don’t Expect the Same From Both

    Take a look at the similarities and differences between SAP and Salesforce in the customer relationship management (CRM) software marketplace.
  10. Professionals

    How to Avoid Scuttling Your Client’s Retirement

    Bad habits can ruin a retirement portfolio (and your credibility as an advisor). Here are some practices to avoid.
  1. What are key factors that are generally considered in demographic studies conducted ...

    Key demographic factors that a company might examine to assess a potential market and more effectively target potential customers ... Read Full Answer >>
  2. Is good customer service something to look for in a company in which I am considering ...

    Investors should consider good customer service before buying a stock especially in consumer-oriented sectors. Customer service ... Read Full Answer >>
  3. What does it mean when they refer to the churn rate of a telecommunications company?

    Mobile network carriers, part of the telecommunications sector, refer to a churn rate as the percentage of customers during ... Read Full Answer >>
  4. Why did Target's (TGT) expansion into Canada fail so quickly?

    Target (TGT) decided to expand north into Canadian markets in 2011. By 2013, it had built 133 stores across several Canadian ... Read Full Answer >>
  5. How do companies calculate the estimated duration of a new project?

    Different kinds of companies use different techniques to estimate project duration. For internal projects, estimation requires ... Read Full Answer >>
  6. What are the biggest stadium naming rights deals of all time?

    The top three stadium naming rights deals of all time were all for stadiums hosting New York City teams. The largest was ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!