Prospects doing their own trading

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Fred Garvin's picture
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Joined: 2009-07-12

When you are cold calling what is your response to someone doing their own portfolio management? I usually ask how it's working for them, and yjey will say "it's going OK". What can I say next to disturb them a little bit?

anonymous's picture
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Joined: 2005-09-29

Fred Garvin wrote:When you are cold calling what is your response to someone doing their own portfolio management? I usually ask how it's working for them, and yjey will say "it's going OK". What can I say next to disturb them a little bit?

 
Prospect: "I do my own trading"
Me: "That's great to hear.  A fair number of my clients do all of their own trading.  In fact, I encourage my clients to do at least some trading on their own.  Anyway, I have two meetings in your office on Friday.  Can we schedule a quick introduction at 9:50?"

Ron 14's picture
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Joined: 2008-07-10

And then what do you present to them ? Some of these strokes actually think they can time the market. How do you show value to someone like that ?

Squash1's picture
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Joined: 2008-11-19

Ask them if they really want to do that forever?
What happens when you die and your wife is left with it?
How are you getting exposure to alternatives(hedge funds, managed futures, real estate) and don't tell me mutual funds
How do you manage your emotions when trading your portfolio?
The best job I do is making sure client's emotions don't get in the way of there goals?
Do you know how much you need in order to replicate your current income?
 
But in the end I wouldn't waste too much time.... NEXT

anonymous's picture
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Ron 14 wrote:And then what do you present to them ? Some of these strokes actually think they can time the market. How do you show value to someone like that ?

 
Usually, it's a line to get me off the phone.  However, I love people who trade on their own.  It's basically a guarantee that insurance issues have been ignored.   It's the exact same thing if a client has a broker who isn't with an insurance company.  I know that insurance has been ignored or not handled properly.

Gordon Ramsey's picture
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Joined: 2009-07-09

Ron 14 wrote:And then what do you present to them ? Some of these strokes actually think they can time the market. How do you show value to someone like that ?

 
I'd ask if they do their trading with play money or serious money.
 
Then ask for an appointment to show them the kind of work you do for people who have serious money with serious needs for that money.
 
You help people with their serious money.  Let people play with a small portion, but ask the differentiating question... because it probably worked to get another rep off the phone before.

Baldy McGrindy's picture
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Joined: 2009-10-01

why do you even want to work with that type of "I can do it myself" person?  Theres a difference between someone that takes an intrest in their portfolio/market/investments/has an opinion and a "i'm doing my own trading" person. 
 
Working with the ladder seems to be a waste of time.   You're never going to please them.  So, I'd say to him:  "Oh, ok. Well I wish you luck.  If down the road you find yourself second guessing your decisions or are looking for someone to manage your serious money, let me know.  Heres my card." 

anonymous's picture
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Joined: 2005-09-29

Baldy, on the phone do you believe what people tell you?  If a stranger called you, would you be honest with them?

Moraen's picture
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Joined: 2009-01-22

anonymous wrote:Ron 14 wrote:And then what do you present to them ? Some of these strokes actually think they can time the market. How do you show value to someone like that ?

 
Usually, it's a line to get me off the phone.  However, I love people who trade on their own.  It's basically a guarantee that insurance issues have been ignored.   It's the exact same thing if a client has a broker who isn't with an insurance company.  I know that insurance has been ignored or not handled properly.Depends.  I refer insurance business to trusted insurance colleagues and then review it before it goes in place. 

Baldy McGrindy's picture
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anonymous wrote:Baldy, on the phone do you believe what people tell you?  If a stranger called you, would you be honest with them?
 
No i don't always believe what they say on the phone but if thats their line, then I guess they either do their own investing on vanguard or they really don't care to talk anyhow.  either way, I guess they're probably not a very likely new client.  I don't think you need to shut down completely when someone throws a roadblock up at ya but those "type" of prospects are not very desireable b/c you will not make them happy, they'll complain about your fees, and I'd rather work with people that don't know how to "do it themselves" and value my opinions. 

BerkshireBull's picture
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Joined: 2009-06-10

Moraen wrote:
anonymous wrote:Ron 14 wrote:And then what do you present to them ? Some of these strokes actually think they can time the market. How do you show value to someone like that ?

 
Usually, it's a line to get me off the phone.  However, I love people who trade on their own.  It's basically a guarantee that insurance issues have been ignored.   It's the exact same thing if a client has a broker who isn't with an insurance company.  I know that insurance has been ignored or not handled properly.Depends.  I refer insurance business to trusted insurance colleagues and then review it before it goes in place.  You're missing out not doing it yourself.  You're not setting up ILITs or doing sophisticated estate planning with these people under the age of 50.  Your military people already have health, ST and LT DI setup, and have some group term life already in place.How difficult is it to get the husband a $250k permanent life policy so they have something when they get out of the service, put something a little more substantial in place on the wife, and when they're older than 45 bring up LTC?  You don't need to defer and bring someone else in to snarf YOUR revenue from you when you're dealing with simple solutions like this.

Gaddock's picture
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Joined: 2007-02-23

I would ask what's your percentage?
 
I'll make you a challenge. 
 
Give me a small amount of $$ to start and I'll actively trade your account for an entire quarter for free. If I can triple your performance and have 100% of all my positions do exactly what they are supposed to, I get to handle your entire account for 1.5% a year. 
 
I've found most that "trade their own account" have no real $$ to speak of and have a 401K or two that they have zero clue what's even there.
 
But, I have captured a couple $500k ish accounts this way. 
 

Wet_Blanket's picture
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Joined: 2008-11-13

Maybe a dumb question, but how would you be able to trade for free?  I don't think you can just turn off commissions, or am I missing something?

gb0413's picture
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Joined: 2009-07-21

 isn't there a statistic that there is a 4% average differential of those who invest on their own and those who work with a proffessional?  you could sit there and hash that conversation for an hour, it all depends on how open he actually is to sitting down with you.  If he enjoys sitting on e-trade for 8 hours a day let him have at it.  Probably a client that would be calling 3-5 times a week anyway.

etj4588's picture
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Joined: 2008-08-18

I would wish them good luck and send my business card.  If they are trading on their own, they clearly don't value advice from a professional.  So why waste the time and energy trying to convert them?

3rdyrp2's picture
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Joined: 2008-11-13

Gaddock wrote:Give me a small amount of $$ to start and I'll actively trade your account for an entire quarter for free. If I can triple your performance and have 100% of all my positions do exactly what they are supposed to, I get to handle your entire account for 1.5% a year. 
 
Yea, I would TELL them I'll actively trade it for a quarter.  Maybe I'd put the money in something I feel confident it for THAT quarter.  Maybe make an adjustment or two during the quarter but I wouldn't be spending more than 3-4 minutes a week checking out the account if there's a chance you don't get it all.  Besides, how would you allow a client to have money that you trade on and he doesn't pay you?  Something smells of a compliance red flag.

Wet_Blanket's picture
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3rdyrp2 wrote:Gaddock wrote:Give me a small amount of $$ to start and I'll actively trade your account for an entire quarter for free. If I can triple your performance and have 100% of all my positions do exactly what they are supposed to, I get to handle your entire account for 1.5% a year. 
 
 Something smells of a compliance red flag.
 
Hence my question.

Gaddock's picture
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Joined: 2007-02-23

Wet_Blanket wrote:Maybe a dumb question, but how would you be able to trade for free?  I don't think you can just turn off commissions, or am I missing something?
 
You're missing something

Gaddock's picture
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Joined: 2007-02-23

3rdyrp2 wrote:Gaddock wrote:Give me a small amount of $$ to start and I'll actively trade your account for an entire quarter for free. If I can triple your performance and have 100% of all my positions do exactly what they are supposed to, I get to handle your entire account for 1.5% a year. 
 
Yea, I would TELL them I'll actively trade it for a quarter.  Maybe I'd put the money in something I feel confident it for THAT quarter.  Maybe make an adjustment or two during the quarter but I wouldn't be spending more than 3-4 minutes a week checking out the account if there's a chance you don't get it all.  Besides, how would you allow a client to have money that you trade on and he doesn't pay you?  Something smells of a compliance red flag.
 
Huge diff how I do business and you. An account that I just had transferred in started with $10k cash. A couple swing trades later I had over $50k of his $$. just over 2 months later the guy was up over 11% on nothing but cash he brought in. My wager with him was to have every trade be a winner in a quarter. 15 or so trades that all were successful and concluded and he's in the process of brining over $$500k at 1.5%.
 
He's good friends with some of my other clients and sits on a couple endowment boards. One is already a client. You think I may have a shot at the other where the current broker who "wouldn't be spending more than 3-4 minutes a week" He stuck them in managed money and sees them once a quarter, maybe. I talk to them every other day.
 
My career AUM goal is not that far off.

Gaddock's picture
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Joined: 2007-02-23

iceco1d wrote:I don't work for free.  Ever.
 
So you never gave a presentation that the prospect didn't bite?

Wet_Blanket's picture
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Joined: 2008-11-13

Gaddock wrote:Wet_Blanket wrote:Maybe a dumb question, but how would you be able to trade for free?  I don't think you can just turn off commissions, or am I missing something?
 
You're missing something

Did you start doing fee based business, and waive the fee for the first quarter?

Gaddock's picture
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Joined: 2007-02-23

Something like that. We can waive fees just like waiving an account fee. As long as the firm gets theirs nobody cares.

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