Prospecting 101

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tjc45's picture
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Joined: 2005-05-06

As I've mentioned on some other threads a trainee in my office has opened 10 accounts month to date cold calling with new issue preferreds(did I spell it right?). The issues are not sensational with yields just above 6%. The accounts have ranged from $5000 to $100,000, with most between 10 and 20K.
The rookie is using a multi call approach. The first call is actually on Tax Free bonds. She uses it to identify fixed income buyers, probes for interest and puts positive responders on the call back list. She is very low key and isn't twisting any arms.
For any planner/allocators reading this and trying to figure out how you could fit cold calling for prefferreds into an allocation, fee or planning  business try this:
1. Cold call with a fixed income product. Develope a relationship over the course of several contacts by phone and mail.
2. Open the account with a good preferred, corporate, muni. Sometimes the account opens on the second call, other times it doesn't open for years. Keep at it. When it happens, it's the first trade.
3. Spread every couple weeks call the customer(not a client until they buy several times) and get trades 2, 3, and 4. All fixed income.
4. Now about three months into the relationship call them and tell them about how down there at Superior Investment Management finding excellent income opportunities is only a small part of what you do. Tell them, We specialize in helping people, just like you, achieve their investment goals by utilizing a unique proprietary bottom up, top down, upside down, inside out investment methodology and I'd like to get together with you to see how we can add value to your situation. Does that make sense? Are daytime or evenings better for you?
5. Get it done.
6. Fallback, they don't like the upside down inside out approach your firm espouses? No problem you've still got a fixed income client.
 
 
 

Greenbacks's picture
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Joined: 2004-12-21

Those preferred's will fall like rocks in a rising environment!
Be careful using them. I used them years ago when the rates were flat or close to peaking and then hold them in a falling environment! Remember if you work for a wire house never listen to your firms recommendations they could care less about you or your clients. They just want to move product at what ever cost!  
Good Luck

tjc45's picture
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Joined: 2005-05-06

Greenbacks wrote:
Those preferred's will fall like rocks in a rising environment!
Be careful using them. I used them years ago when the rates were flat or close to peaking and then hold them in a falling environment! Remember if you work for a wire house never listen to your firms recommendations they could care less about you or your clients. They just want to move product at what ever cost!  
Good Luck

You're right on both counts. Using preferred or other fixed income, for an advisor in prospecting mode, is a marketing tool, not a an investment philosophy. It's about getting your foot in the door, gaining a seat at the table, and then showing the client the real you. To manage money you have to have money to manage. Once someone invests with you, you have their ear, and their current advisor has a problem, you sitting at the table with them. In my experience using this type of prospecting you are never taking the client's last dime or loading them up with something that will hurt them down the road.
I offer to you this as a prospecting tool only. To let you know what's working today. I pass as to opinions regarding rates, default risk etc. You decide if you can use the idea or adapt it to what you are doing.

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