Daniel H. Pink is the author of five provocative books, including the long-running New York Times best sellers, A Whole New Mind and Drive. His latest book, To Sell is Human, is No. 1 on both the New York Times and Wall Street Journal business best seller lists, as well as a No. 1 Washington Post nonfiction best seller.
In this Q&A, he offers some insight—tailored to financial advisors—on selling in today’s environment.
Some advisors might not think of themselves as salespeople. But you argue in your book, To Sell Is Human, that most of us sell all day, every day. Can you elaborate on this idea?
Selling is something human beings do all the time. No matter what we do for a living, we spend a big portion of our days persuading and influencing people to do things—to change, to take action. And getting people to move is at the heart of what financial advisors do. As an advisor, you need people to agree to take action, to plan for the future. I think all of us have to get over this idea that selling is artificial because, in fact, it is something fundamentally human.
Independent financial advisors are more often selling an experience and a service—themselves as individuals— rather than specific products like wire house advisors. How is this type of “experience” sale different from a product sale?
When you get right down to it, what an independent financial advisor does is help people solve problems they may not realize they have. An advisor works to identify what are often hidden challenges and then fashions a solution that’s right for that particular client. The principles of persuasion and influence – no matter what you are attempting to persuade someone to do or buy – tend to be more similar than one might think. Convincing your kid to clean up his or her room is not that different from convincing a family to buy a minivan, or from convincing a client to move his or her retirement account over to you.
What do you think is the No. 1 most important part of selling as a financial advisor in today’s environment of information parity and “seller beware”?
I think it is the skill of problem-finding. Today, if your clients know exactly what their problems are, they can find solutions on their own. This means problem-solving has become far less valuable than uncovering problems clients don’t know they have. Yes, financial advisors still need to be able to solve problems, but they have to be as good a problem-finder as they are problem-solver. For example, if I have X amount of dollars and all I want to know is how I should allocate those dollars across asset classes, I can figure that out on my own. I can go to someplace like Betterment and pay 25 basis points—a lot cheaper than an advisor. What I need is someone to come in and say, “Your problem isn’t asset allocation; your problem is that you have two kids and no life insurance. And hey, by the way, you can use life insurance to protect your family, and as an investment vehicle.” Problem-finding is the most important skill to have when people can solve their problems without an advisor’s help if they choose.
What do you think is the biggest misconception about selling today that could make it harder for a financial advisor to gain a new client?
The biggest misconception is that selling is pretty much the same as it was 10 to 20 years ago. That’s not true. It’s changed fundamentally. The most significant change has been the shift from information asymmetry to information parity. In the old days, sellers had significantly more information than buyers and could use this to their advantage. Today, buyers and sellers have almost equal access to the same information. This is ferociously the case in financial services.
I’m old enough to remember newsprint books called the Value Line, which people used to find information about companies. Later, I remember when there was a brokerage company on the corner in Washington, D.C., that had three or four computer terminals where people looked up stock prices. Back then, you had to go to an advisor to learn pretty much anything about investing. Today, buyers and sellers are evenly matched when it comes to the amount of information they have about products, whether that product is a financial product or a financial advisor.
It’s incredible how much information about financial services is available and easily accessible now. You could go online right now and do a Monte Carlo simulation in about five minutes. If I asked her to, my 17-year-old daughter could give me the market cap and stock price of any public company. She could find this information in about 30 seconds without leaving her seat or even using most of her fingers.
What is the impact of this new information parity?
Because the landscape has shifted so fundamentally, what it means to sell something in today’s environment is totally different from our archaic notions of it. A world of information asymmetry is a world of “buyer beware” where the seller could take the low road. A world of information parity is a world of “seller beware” where the low road is a perilous option. Seller beware means that sellers have to realize that buyers already know their problem, know what they want, and know how to find it. Sellers can no longer simply sell products. If a financial advisor is working from the old perspective that they have cornered the market on the information available about a strategy, product or solution and tries to sell from that perspective, it can make it hard to be successful.
What are some important things for independent financial advisors to consider when planning a sales pitch?
The most important thing is to think about the purpose of a pitch. There is some interesting research that shows the best sales pitches don’t aim to convert people; they are invitations. They invite people to collaborate. This has changed the way I think about making a pitch. The purpose of the pitch is not to convert or sell on the spot; the purpose is to invite the other side to begin a conversation.
You state in your book that a lot of people have a negative opinion of selling, and salespeople in general, due to archaic notions about sales. How do you think a financial advisor could approach someone who has this opinion and doesn’t want to be “sold to”?
There are two things that a financial advisor can do in this situation. One: Serve first and sell next. Be useful and helpful to the person to whom you’re selling. Provide information, offer white papers, and offer free consultations, that type of thing. Two: Draw on your legitimate expertise. What is abundant today is information. What is scarce is expertise. So capitalize on your expertise.
Note: This article was written and published in advance of Daniel Pink’s keynote address to advisors at First Allied’s National Conference in June 2014.
About Cetera® Advisor Networks
Cetera Advisor Networks LLC is an independent broker-dealer and registered investment adviser firm that utilizes a unique regional director model to support financial advisors through the entire life cycle of their business. As part of Cetera Financial Group®, a leading network of independent retail broker-dealers, Cetera Advisor Networks is able to build and support regional teams through local service, regional offices and a national home office, facilitating the success of financial professionals.
Cetera Advisor Networks is a member of the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA). For more information, see ceteraadvisornetworks.com.