Remember Gordon Gekko’s famous speech in the 1987 movie, "Wall Street?" "The point is," he said, "that greed…is good. (It) clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms…has marked the upward surge of mankind."
Did you buy into that nonsense back then? If so, have multiple market bubbles and crashes in the intervening 25 years changed your mind? Possibly. But there’s one thing I do know for certain: Greed is definitely not good for financial advisors. Here’s why.
The ultimate trust destroyer
Greed—or me-first selling—is the ultimate trust destroyer. Reason: Consumers want to know you are "on their side." What’s more, greed erodes professional judgment. Advisors end up ignoring key client issues or recommending the wrong products, which often generates client complaints or lawsuits. Sell a prospect something based on greed and I promise you will do serious damage to your reputation. Do it often enough, and you’ll be out of business.
Greed rears its slick-haired head at four points in the client relationship:
- During fact-finding: Advisors either do a sham assessment or none. The goal: To lay the groundwork for selling a product the advisor wants to sell versus one the client truly needs.
- During solution design: Advisors recommend products they don’t really believe in. Sadly, what they do believe in is whatever will give them the best comp now. Low-value/high-commission products hurt clients, but help advisor income.
- During the close: Advisors respond to legitimate client objections with tired formulas and bullheaded bluster, thereby forcing prospects to buy something they wouldn’t normally buy.
- Finally, after the sale: Advisors abandon clients to pursue their next clients, ignoring the value of nurturing existing, long-term relationships.
So how to avoid the tragedy of me-first selling? Put the client first. Here are some ways to do that:
- Always do legitimate fact-finding. The time you invest here will make you a better advisor and generate more revenue over the client’s lifecycle.
- Sell what you believe in. Always recommend high-value and low- or moderate-cost products. You may get paid less now, but you’ll make more later.
- Close through education, not hype. Lose those canned objection responses. Instead, learn to close by providing helpful information.
- Stick with your clients for the long term. Provide continuous and passionate post-sale service, and your clients will reward you with loyalty and referrals.