Newcomers to the financial industry will find that cold calling can still be an effective method of finding new 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, 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 to be included in cold call scripts.

Key Takeaways

  • Rather than try to make a sale on the first call, make some suggestions to the prospective client and be sure to follow up.
  • Make sure you emphasize your talents and ask questions—but don't get too personal.
  • Listening to your clients and their needs can give you valuable information and prove that you're a great broker.
  • Make sure you set up a date to follow up with your prospective client.

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 an account that they give the impression of ramming stocks down the prospect's throat. Being too persistent, however, will cause many prospective clients to either get suspicious or recoil. Instead, give the prospect two or three stocks to keep an eye on—ones you believe will do well. It's a good idea to avoid sharing your very best ideas with non-clients, because your next pick (if and when they become your clients) may suffer in comparison with your first ones. Essentially, you want to give your prospective clients three stocks you think have the greatest potential for appreciation—even if that growth is relatively small.

By providing prospective clients with two or three recommendations instead of just one, you will also be hedging your bets while evincing the understanding of a portfolio approach to asset management. Remember, anything can happen in the stock market and it's not uncommon for even the best companies to trade lower in some markets. Finally, hearing the name of just one stock, your prospect may get the impression that you are after their money for one stock and one trade, and this is surely not how you want to start a relationship.

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 your next ideas. This is what's known as a soft sell approach.

Don't Mail Things

There is an old saying in the brokerage industry—mailers are failers. This doesn't mean that you shouldn't provide the potential client with the information they request, but try to do what you can by email. This keeps the prospect involved. You'll probably be better off if they're willing to go to a website that describes your company and your talents while offering access to your company's research and investment analysis. 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.

Rather than send out mailers to a prospective client, engage your clients through email or by directing them to your website.

Emphasize Your Talents

If you have experience with estate planning or retirement plans, or if you can present a narrative about how 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 a reason to have confidence in you before sending 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 learn about the prospect's financial goals and dreams. Still, remember that 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 on the very first call are more likely to fail. Better to leave the prerogative of revealing this information up to your prospects by suggesting this—once they get to know you and learn about your firm and your capabilities, perhaps they would be willing to discuss their assets and goals with you. This allows you to sell the potential client on the advantages of dealing with you and your firm without being the stereotypical pushy salesmen.

Listen To The Prospect's Responses

Remember, we have 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 over 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 spouse, kids, or their very 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 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 also provides the opportunity to ask some basic questions regarding the prospect's financial position. At the end of the call, brokers should say that they would like to follow up in a few weeks or months, and suggest a specific date to do this. Of course, this means that you should follow up with the prospect on this date. This will show them that you are an organized professional who means business.

The Bottom Line

Cold calling will likely continue to be a necessary part of being a broker, especially for newer brokers as they build their book of business. Although it may be a hard sell, cold calling doesn't necessarily have to be so problematic. The most successful brokers emphasize their firms' reputations and their talents and listen to what prospective clients have to say. If you follow these simple tips, it's likely that you'll succeed at using cold calling to build up your business.