How to Sell Investment Services

As I understand, the term "consultative selling" was first used by author and sales expert Mack Hanan. The concept is simple. Know what your customer needs and offer them solutions to their problems. The process is a two-way street. Both buyer and provider are actively involved and should communicate clearly and with respect. While lots of advisors and their firms find themselves on the A list, there is a continuing flurry of lawsuits being filed that allege self-dealing, opacity of disclosures and reasonableness of fees. Visit the 401k Help Center website section regarding court decisions and legal activity to read for yourself.

As with any industry, the investment community is constantly self-examining its practices in order to improve. This is a positive thing. As I point out in "Fake News, Plagiarism and Business Ethics," good players have a vested interest in self-policing since they can be tainted, reputation-wise, as the result of bad actions of others. I've spoken to hundreds of buyers of financial services who question the checks and balances of those who manage their money or otherwise influence their retirement planning decisions. Frequent and clear communications with their respective advisor, consultant or portfolio executive can go a long way in assuring the doubting Thomas. There is no shortage of inspiration about how to effectively interact.

Over the holidays, I observed a back and forth between sellers and buyers at a national jewelry store. While waiting my turn, I watched shop clerks attend to customers who seemed thoroughly prepared with questions about quality and price. I'm not a big purveyor of charms but was certainly impressed with the breadth of knowledge on both sides of the cash register. I can relate. As my friends know, I have a penchant for perfume and like to treat myself to a new scent now and then. I do my research in advance, visiting sites like Wine connoisseurs are similarly motivated to gather information and sellers are wise to help educate them.

Whenever the product or service is personal, sellers must respond accordingly. Empower potential or existing customers with straightforward information. Be prepared to answer questions. Treat each client with respect as if they really count. For some organizations, the cost of selling could be too high unless the transaction is "large enough." Size is a perfectly fine business model to adapt but make it known in a courteous way that minimums apply. A small investor today could be your large investor tomorrow.

Most selling involves humans and that means that behaviors can't be ignored. Before he passed away, famed sales guru Zig Ziglar said "You can have everything in life you want, if you will just help enough other people get what they want."

Financial Technology and the Fiduciary Rule

Whether the proposed U.S. Department of Labor so-called fiduciary rule becomes law this year remains to be seen. Many in the industry think its passage is nigh. Critics hope for a reprieve, asserting that costs are likely to outweigh benefits.

One oft-repeated concern is that small savers will be harmed if financial service companies decide to jettison accounts that fall below target asset levels. The Securities Industry and Financial Markets Association ("SIFMA") explains "Because they cannot afford a fiduciary investment advisory fee, they will instead be forced to solely rely on a computer algorithm known as a 'robo-advisor.'"

Financial technology enthusiasts will counter that a more automated approach to retirement planning is a good thing for big and small savers alike. Certainly the topic merits review for at least two reasons.

  • The use of machines has exploded in recent years. In her November 9, 2015 speech about technology, innovation and competition, U.S. Securities and Exchange ("SEC") Commissioner Kara Stein foretells buoyant growth with an expected $2 trillion in assets under management by robotized advisors by 2020.
  • There are central questions about the fiduciary obligations of a company that concentrates on algorithmic advising and money management. Besides seeking to contain model risk, there is a need, at a minimum, for a vendor to regularly review client objectives and constraints. Click here to access a white paper on this topic by National Regulatory Services.

A few weeks ago, a handful of venture capitalists and prominent angels announced a $3.5 million capital round for a financial technology company called Captain401. Its stated goal is to help small businesses streamline the creation and administration of 401(k) plans that the founders argue would be too expensive to offer without automation. A cursory review of the company website makes it impossible to know much about its business model, technology safeguards or compliance infrastructure. Nevertheless, the funding of this and other "Fin Tech" organizations augurs favorably for added growth in this area.

As the global retirement marketplace adapts to regulatory and economic realities, it will be interesting to watch (or perhaps lead) what unfolds in terms of innovation, service provider competitiveness, cost tiers and other outcomes that impact savers and those who have already retired.

The Monkey Shirt Won't Fit No Matter What You Say

I'm one of those optimistic souls who still believes in good customer service. I regularly reward vendors who go out of their way to provide what used to be considered the norm but increasingly falls into the "unusually superior" category. I try to be polite and patient. Hey, we all make mistakes once in awhile. Sometimes however it is just plain difficult to accept bad service. Consider the case of my recently ordered Curious George tee shirt from an vendor.

  • I ordered XL so I could have a baggy T to wear to the gym.
  • What arrived in the mail today was a shirt that was so small that I thought they had sent a child's size by mistake.
  • I called the vendor and they insisted that the shirts run tiny but indeed I had received an adult XL and that they would not reimburse me for shipping but would credit my account for $22. Though I pointed out that the roundtrip postal costs would exceed more than 50% of the purchase, Grace in customer service said "no."
  • I showed the item to my husband who laughed and suggested that we might, if lucky, be able to give it away to a toddler.
  • I called and complained. It is not the money per se and I have a lot of things to do other than complain about casual garb. I just got annoyed at the fact that the shirt was so obviously misrepresented as a "typical" sized top. The customer service representative credited the shipping costs to my account immediately and instructed me to return the shirt to the vendor for a reimbursement of the $22.
  • The outcome of this encounter is that I plan to continue as an client but will never buy from the tee shirt vendor again!

Our pension, endowment and foundation clients often bemoan the quality of service they get from their service providers. You can understand their plaint. At a time when money is tight (but even if it wasn't), every penny spent on services and products on behalf of beneficiaries should result in top-notch delivery. "Good" is not extraordinary.

At a time when institutional investors are outsourcing even more of their regular work flow to third parties, contracts absolutely must describe the core elements of any engagement and/or product purchase and everyone should perform according to those terms. Conversations about ongoing communications should address frequency, detail and availability of help in case there are questions (and yes, asset owners should expect a real person to answer their questions when they occur). Investment decision-makers with hiring and oversight responsibility can mitigate their own fiduciary risk by making sure that customer service expectations are met (and hopefully even exceeded).

If the shirt is advertised as an adult XL, it should fit someone larger than a small child. Ditto for anyone providing goods, services or both to stewards in charge of $25 trillion in global assets. Representation of what an organization is buying should relate to the reality of what they receive.

Editor's Note: If you have an example of bad service you want to share, please email We will not publish the names of the alleged offenders but would like to know what elements of good service are important to institutional investors and their attorneys and advisors.