Are You Ready for the Toughest Questions Every Financial Advisor Is Asked? — co-written with Rosemary Smyth

This article was co-written with my friend, Rosemary Smyth, an international coach to financial advisors. The article is also posted on her website.

As your plane taxis down the runway, the person beside you strikes up a conversation. The what-do-you-do-for-a-living question will usually come up. When it does, you know that they will inevitably follow up with another question – perhaps something like: “My brother-in-law is really into gold stocks. Do you have any hot tips?”

Many professions have these dreaded questions. Even in social settings, doctors are frequently asked for an impromptu diagnosis of a rash, mechanics are frequently asked to identify engine trouble, and you as a financial advisor are probably asked for some kind of portfolio-related guidance.

These questions happen everywhere – in airplanes, at family get-togethers, at neighborhood barbecues, or while you’re watching your kid’s ballgame. People hear that you’re an expert and they have questions and expect answers from you.

Rather than stumbling around an answer, savvy financial advisors prepare answers to the most common questions and have them ready to deliver when the questions inevitably come.

The 5 Types of Questions

Below, you’ll find the 5 types of questions you’ll be asked. Although some of these may seem similar when you first read them, it’s helpful to have responses for each type so that a question doesn’t catch you off-guard.

  1. Analysis/due diligence questions include questions like, “what do you think about XYZ Company?” or “what do you think about stocks in the ABC industry?” These are questions invite you to add to their knowledge about a particular company or industry.
  2. Forecasting questions include questions like, “where are interest rates headed?” or “what will the market do this week?” These are questions about what you think could happen in the future.
  3. Advice questions include questions like, “should I buy XYZ Company?” or “is the ABC industry going to turn around soon?” These questions ask you to provide portfolio-specific advice.
  4. Story questions include questions like, “what’s the most money you ever made on a trade?” or “did you have any money in XYZ Company before it tanked?” These questions are looking for stories of big wins or losses in the marketplace and often precede a story that they’ll share with you.
  5. Testing questions include questions like, “do you sell a lot of this new product?” or “have you ever heard of ABC Company?” These questions may seem innocent enough but they are actually testing you to see what you are like as an advisor and how you stack up to their perceptions of what an advisor should know.

These questions are a mixed blessing. On the one hand, they show that the person may be a potential prospect (or may know someone who is) and their questions demonstrate their interest in learning more about us. On the other hand, they are all-too-common questions that could be asked with the hope of getting free financial advice.

You know you’ll face these questions. So prepare now to respond to them advantageously.

How to Prepare Your Response

First, you’ll want to make sure that you can readily identify the likelihood of that person’s client potential. (This is done by knowing in advance who your perfect prospect is and what expertise you provide to your target market). This is key to ensuring that the rest of the conversation will provide value to both you and the person you are talking to.

Second, you’ll want to speak generally to their question (so it doesn’t look like you are avoiding their question) in a way that demonstrates your knowledge of the topic. For example: “XYZ Company has been volatile in recent months and there isn’t a lot of consensus among analysts.”

Third, provide a friendly disclaimer that explains how you can’t provide a specific answer without analyzing their portfolio or determining if it’s right for them. Do so in a professional way that shows how you care about providing the best advice possible. For example, “Whether or not I would recommend XYZ Company to you? Well, that’s a harder question and it really depends on the asset mix in your portfolio and your risk tolerance.”

Fourth, pivot to an action step for them. If they have the potential to become a client, invite them to your office for a further conversation with something like, “Why don’t I give you a call this week and set up an appointment…”. Or, if you know that they won’t become a client (i.e. because they live too far away or are not in your target market) then say something like, “your own advisor could give you far better advice than I could because he or she knows your portfolio and your financial goals.”

Additional Tips to Formulate Your Responses

As you think about your responses to the 5 types of questions all financial advisors are asked, use the following list to help you craft your answers:

  • Know who you want to serve and how you help them. It’s fine to say that you don’t know the answer to a question you’re asked, especially if it’s not something your clients need you to pay attention to.
  • Avoid the temptation to expound knowledgeably on the topic, which will only lock you into the conversation and make it harder to pivot to an action step.
  • Craft answers that are neutral (so they don’t give advice) while at the same time positioning the industry and the other person’s advisor in a positive light. Don’t disparage other advisors if they do things differently than you.
  • Always move the conversation toward an action step – one that draws the potential prospect closer to you (if appropriate) or one that steers them to a professional who can help them.
  • Be authentic. You’ll build rapport with the other person and you’ll enjoy your conversation more, and you’ll position yourself in the right way in case they know someone they can refer to you.

Action step: Write each of the five types of questions and then craft a professional, authentic response with two potential action steps, depending on how likely they are to become clients.

Rosemary Smyth, MBA, CIM, FCSI, ACC, is an author, columnist and an international business coach for financial advisors. She spent her career working at leading investment firms before pursuing her passion for coaching. She lives in Victoria, BC. Visit her website at You can email Rosemary at:

Aaron Hoos, MBA, has worked in the financial industry since 1997. Formerly a stockbroker, insurance broker, and award-winning sales manager, today he writes for the financial and real estate industry as an educator and marketer. He is working on his second book. Visit his website at and follow him on Twitter @AaronHoos.

What the mob can teach you about running a local business

I love mobster movies (and TV shows). The Godfather, Goodfellas, Boardwalk Empire… Mob movies give a glimpse into a world that many of us do not encounter.

I think one of the things that we like about mob movies is that the backstory is often the same, and it’s something that resonates with us: Someone who started out with nothing (impoverished, recently immigrated, etc.) rises to new heights to become a kingpin.

Of course, I definitely do not endorse how they got there — like scheduling assassinations while their child is being baptized…

But there is a lesson we can learn about mobsters… usually from the period in their life just before they really hit the bigtime.

Many mobster movies show the soon-to-be-godfather visiting various local establishments, shaking hands, kissing babies, getting to know the locals. They get their hair cut at the barber shop; they buy pasta at the local restaurant.

Before he traded favors on his daughter’s wedding day, we know that Don Corleone “walked a beat” and made friends with people who would later help him.
Before he built an empire, we know that Nucky Thompson walked up and down the Boardwalk and made friends with people.

These local kingpins built relationships and reputations with the people around them. They didn’t just pop in and ask to put a business card on the person’s bulletin board. They went in and bought from the shopkeeper, asked them how business was, offered to help in any way they could, and then delivered more than was expected.

If you run a local business — a restaurant or coffee shop, a barber shop or salon, an accounting firm or chiropractic office, or whatever — if you serve a local market then this lesson is for you. Get out of your office and become the godfather of your local area. Meet other shop owners and don’t just promote your business… promote THEIR business. Ask them about their business. Learn about who they serve. Find out what problems they have (and do what you can solve their problems… without killing people, of course). Make your face known in the community. Become the go-to guy (or girl) who solves problems (even if it’s slightly outside of the expertise you get paid for). Make connections. Build bridges between other people (we call these referrals in the business world but everyone else just considers them to be friendly introductions). Show up at local sporting events. Support local schools. Advertise in the local papers.

Saturate the neighborhood with YOU (not your business). That’s what Don Corleone and Nucky Thompson did to climb the ladder.

I promise you: The competition is NOT doing this. They are spending money on advertising beyond the borders of the community and they are forced to discount their prices to try and attract people.

The result will surprise you.

People will buy from you… not because you are necessarily the greatest at what you do or because you had the cleverest advertising but because they know you and trust you and believe that you have their best interests at heart.

Customer acquisition and retention for resorts, hotels, and bed & breakfasts

The Pool Table
Image by Biplab Narendra via Flickr

This past week’s blog quietness was because my wife and I went away for a few days to celebrate our 12th anniversary. Every year we rent a lake-side cabin at a small resort, just to get away from our busy lives and to hang out together. Hot tub, fireplace, wine; you know the deal. There’s also pool table in the cabin and Janelle and I are terrible pool players, so that is always worth a few hours of laughter.

We’ve been pretty big advocates of this resort and have recommended it to several of our friends, and we’ve gone every year for the past 5 years.

Each year, I’m reminded of how terrible the resort’s customer acquisition and retention systems are. We first heard about it through an advertisement and that ad wasn’t enough for me to want to go (but thankfully my wife didn’t give me a choice in the matter).

But their (weak) advertising is the only way they are actively getting customers:
When I book with them each year, they don’t make an effort to increase bookings. (They do have my email but don’t seem to use it for anything except to send me payment receipts).

They should consider:

  • Offering an incentive to book in advance. For example, if you book your next visit with them when you check out of your cabin, you should get dinner and wine for two (which is usually an additional extra you can have delivered to your cabin).
  • Making recommendations for occasions that we might not have considered renting. For example, they might suggest to me: “Why not treat Janelle to a weekend away for her birthday?”
  • Offering referral incentives. Heck, we’ve sent them a few thousand dollars worth of referred business over the years, surely they could hit us back with a thank you card at least. Or a bottle of wine.
  • Sending relevant emails. They are a couples resort so they might consider sending bimonthly ideas for dates, candlelight dinner recipes, and maybe he-said/she-said date movie reviews. They might also include last minute discounts or incentives like: “we have 2 cabins open next weekend! First to book gets 25% off” (or something like that).

This resort is a great place but it’s not doing enough to lock in happy customers and to get more customers out. Janelle and I have talked about going elsewhere next year, not because we don’t like this place but because it makes no difference to us; they haven’t given us a reason to return… and it is so easy for the resort to change that!

If your resort, hotel, bed & breakfast wants to increase rentals, take the time to develop a long-term relationship with your happy renters and encourage them to talk you up to their friends.

3 Twitter types (and why I’m joining the losers)

I used to think that I should follow fewer people on Twitter than the number of people who follow me. When I had 100 followers, I felt that I could follow up to 100. When I had 1000 followers, I felt that I could follow up to 1000. The reason? I didn’t want to be a loser.

I had divided Twitter users up into three groups based on their ratio between the people they follow and their followers:

  • The snobs: These people follow like 5 people but have hundreds of thousands of followers. Well, that might be overstating it a bit, but the ratio is generally at least 1 followed to 10 (or more) followers.
  • The average: These people have approximately equal followers; generally a ratio of 1-to-1 (somewhere thereabouts).
  • The losers: These people follow lots of people but aren’t followed by nearly as many. Their ratio could be 2-to-1 or 5-to-1.

I wanted to be average. I knew I would never be popular enough to be a snob and didn’t want to be a loser by coming across as a desperate follower. (That sounds a lot like high school, actually, and that’s a depressing thought). I know I’m not alone in this thinking; I’ve heard the “Twitter snob” reference on more than one occasion. And there are lots of apps and resources that talk about getting people to follow you.

Recently I changed my mind on this issue. The catalyst was my review of my LinkedIn account. On LinkedIn, I’ve indicated that I am an open networker (that’s the “LION” acronym you often see), which basically says that I accept all invitations from others.

I made the change in LinkedIn because I’m a writer. I write more effectively when I’m listening to other people. I want my writing to be relevant, interesting, and to transcend traditional thinking to teach people new things. In order to do that, I need to be widely connected and I need to listen to a lot of people, both inside and outside of my target markets. It made sense to adopt that “widely connected” mindset in LinkedIn and I’ve recently realized it makes sense to adopt the same mindset in Twitter.

It applies to you, too. I don’t think you need to be a writer for this to be a relevant truth. We all benefit more when we listen: We remain relevant; we build up our Rolodexes; we hear problems and needs; we break down barriers and transcend traditional thinking.

It’s valuable to listen… and that’s why I’m joining the losers by following more people on Twitter.

Countdown to the Olympics: How to be an Olympic-level entrepreneur #8

The Olympic Flag flying in Victoria, British C...
Image via Wikipedia

In 8 days*, the 2010 Winter Olympic athletes will compete to be the best in the world. Entrepreneurs compete for a similar pinnacle of success every single day. This series of blogs will countdown to the Olympics with 31 ideas about what it takes to achieve gold in your business.

To be an Olympic-level entrepreneur, you need to be willing to go where you need to go.

Athletes go to the Olympics, the Olympics don’t go to the athletes. Today, we can conveniently fly to whatever exotic (or non-exotic) locale the Games have to be in. But in ancient times it required a long journey to get there. Regardless of how near or far the Olympics are, one thing is true: If you don’t show up, you can’t compete.

Likewise, today’s Olympic-level entrepreneurs can work from the comfort of their home but need to be willing to go elsewhere – perhaps to work with clients or to speak or attend networking events. I’ll be honest, this one is a sticking point for me. I live in a great house in a great city and I like hanging around with my wife. I’m focused and creative in my office. I don’t write as well when I’m on the road. As a result, my not going is one factor that holds me back.

Yeah, I don’t like holding up the mirror and making that honest realization about myself. I Know it’s a “must do” for other entrepreneurs… and for me as well. The networking that comes out of trade shows, conferences, and other industry events can build your business and your position in the industry. There will come a time when I need to suck it up and make the journey myself.

* Disclosure: I was traveling recently and didn’t always have access to the internet, so I missed a couple of publishing dates. This blog has been published and back-dated to keep the countdown sequential.