Three ways to ask close friends to become clients

Bryce Sanders is president of Perceptive Business Solutions Inc and provides HNW client acquisition training for the financial services industry. In this article for WP, he provides tips on networking the movers and shakers in the community - even when it's against the rules. Sanders' book, “Captivating the Wealthy Investor” can be found on Amazon.

Are you scared to approach certain friends for business?  You belong to the right organizations.  You rub shoulders with wealthy people.  It’s easy asking a stranger to do business.  If they say “Buzz off” you don’t need to see them again.  When they are friends, it becomes more complicated.  You don’t want to create an awkward situation.  What can you do?

Strategy One:  You Wear Different Hats

You are a personal friend.  You also are a financial professional qualified to help them manage their money.  Step from one role to the other for ten minutes, then step back.  Here’s how.

“I would like to take off my ‘friend’ hat and put on my ‘financial advisor’ hat for ten minutes.  Is that OK?  You might pantomime taking off and putting on an invisible hat. You speak with them as a prospect. When you are done, you say: ‘I’m taking off my financial advisor hat and putting my friend hat back on.’  If they want to continue talking business or asking questions, they likely say: ‘Keep your financial advisor’ hat on for a little longer. I have some questions.”

This works because you are clearly defining roles.  They can relate to its simplicity.

Strategy Two:  Risk to Friendship is the Reason to Talk

Your friends consider you their good friends.  They have likely avoided talking business because they worry about what happens if something goes wrong.  They would not only lose money; they would lose your friendship too.  Make the risk to friendship the reason to talk.

The conversation has three parts:

Part One:

“Fred, you know where I work and what I do.  I’ve never brought up business because you are my friend.  That’s important to me.  I’ve never wanted to put our friendship at risk.”  Stop talking.  They will likely let you keep talking.  They might say: “Your friendship is important to me too.”

Part Two:

Besides, I’ve always assumed you work with someone already.  They probably take great care of you and give you excellent service.  Most successful people have that kind of relationship with their advisor.”  Stop talking.  They might agree.  They have a good advisor.  They might say they don’t and ask “What can you do for me?”  In that case, you talk about their situation.  Let's assume they say nothing.

Part Three:

“I thought we might spend a few minutes talking about “What I do.”  You might come across someone with a problem.  You would know how I might be able to help them.” 

You are many things to many people.  Your explanation aligns to their circumstances.  They will know how you can help them or someone in a similar situation. 

This works because the ”third party approach” lessens the “She wants me to buy something” tensions.

Scenario Three:  You Can’t Fire Friends

Now the scenario is slightly different.  They know what you do.  There’s a need.  They bring up how they would do business with you under ordinary circumstances, but you are friends.  They bring up: “If something goes wrong, you can’t fire a friend.”  Once again, they are worried about the risk to the friendship.

Here’s the approach. “If you do business with me, you should get a report card. If I’m doing a bad job, you should be able to fire me.”  You have introduced accountability. You will let them know how your recommendations are doing.  These report cards are the periodic portfolio reviews you deliver, hopefully face to face.  You show their performance vs. appropriate benchmarks. You review their performance, item by item, reminding them why they own certain investments.

Clients love accountability.  They can be pretty forgiving of underperformance (but not forever) if they know you are paying attention and have their best interests at heart.

This strategy works because their major concern was the lack of an exit strategy if investing with a friend as their advisor didn’t work out.  You provided a roadmap to unwind the relationship.  They rationalize they wouldn’t feel guilty if they took that route because it was your idea.

Many advisors are hesitant to approach friends for business. These are three ways to make it a comfortable conversation.