Albert Einstein once said: "We cannot solve our problems with the same thinking we used when we created them."
As I discussed last month, the better we are at defining the real problems faced by our clients and prospects, the more we can help them implement proper solutions. Think of the last major problem you had to deal with in your life—say your aging hot water heater conked out just as winter arrived. What were your initial thoughts and concerns? For instance: I can’t take a bath or a shower and the pipes could freeze. Then there’s regret. When you had your annual HVAC checkup a few months earlier, the technician suggested replacing the hot water heater because it was getting old. You considered replacing it—until you got the hefty estimate. Because of cost, replacing the hot water heater went from “urgent” to “important/but not urgent” in your mind. Same problem, same circumstances, but a different outlook because of price. By kicking the can down the road, however, you ended up spending more and faced considerable inconvenience.
Real World Example
As advisors, our job is to help clients focus on real issues they’re facing and the pain of not addressing them. Think back to your aging water heater, it was a concern six months ago when you had your annual HVAC checkup, but you didn’t experience enough pain at the time to feel a sense of urgency. The less the perceived pain, the less the urgency.
Same goes for your clients.
A wealthy business owner (let’s call him Bob) felt he had all the solutions he needed for all the problems he could imagine. He had wills and trusts in place to protect his estate. He had sufficient life insurance to fund his estate taxes. He had a buy-sell agreement with his sons to take over the business someday.
“All good,” he thought to himself. “I can sleep well at night.” He was confident that his solutions covered all of his anticipated problems and challenges—or so he thought. After exploring Bob’s objectives and reviewing his planning, we discovered some serious gaps. The buy-sell agreement he had with his sons didn’t conform to his desire to keep the business in the family. His estate plan didn’t lock in the unified credit at today's value, and it exposed him to estate taxes in the future. Further, we learned that Bob didn’t have enough liquidity to protect the liquidation of his land from taxes and fees, and his existing life insurance was in his estate.
After a careful analysis, Bob could see there were significant issues he hadn’t considered. Bob had more problems than the solutions he had in place—and I could tell by the look on his face, he was nervous and wanted to change the outcome.
“What do you think I should do?” Bob asked with some trepidation. In situations like these, you must be careful as the advisor. This is when you want to bring the team together and show a united front. It’s too easy to present product solutions to the client and miss the underlying opportunity to recast the total plan to conform to their objectives.
In Bob’s case, the team recommended buy sell-agreements between his sons. That way, the business couldn’t go to their spouses in the event of a divorce. The estate plan was retooled to lock in the unified credit today by using sophisticated grantor trusts to move future appreciation out of the reach of estate taxes. Finally, after all the legal planning was completed, Bob decided to fund the buy-sells with life insurance that was owned in a partnership between all of the owners of the business. In addition, Bob’s existing insurance policies were removed from the estate, and he bought additional coverage to cover future appreciation.
Our job as advisors is to heed this fundamental rule of human nature: People will do what they want to do when they want to do it. To get them to change their mindset we must show them we are a partner, not an adversary. By working together, we can patiently make the magnitude of the problem big enough in their mind so they feel the real pain of the problem now (that is, no hot water, staying in a hotel)—more so than the benefit of the solution (replacing what they already had, a hot water heater).
Needs Selling
Getting the client to “own” their problem fully is often referred to as “fixing the problem.” This occurs when they’re internalizing the problem. That’s what’s at the heart of “needs” selling. If the prospect doesn’t think they have a problem (or need) or doesn’t believe they need what you’re selling, then they aren’t going to act.
It’s one thing for you to identify the need for your client (for example, your water heater is on its last legs) and convince them to acknowledge that they have a problem (you mean my water heater is about to die!). But it’s another thing for them to want to explore alternative solutions. Enlightenment happens when the client has an “Aha!” moment. They finally see the problem through the proper lens and now know they must do something about it soon – before it’s too late.
Once your client or prospect fully understands their problem, however, there’s a key step that most salespeople miss—the connection between the problem and the solution. This connection is often misdiagnosed as procrastination. But in most cases, their inaction has deeper roots. Your client or prospect has come to the realization that they no longer have any tools and solutions on their own to solve the problem. But instead of rushing in to fill the void, you must be patient and give them space to process the pain of loss.
Not allowing the client/prospect to process the pain is why many advisors and salespeople lose the sale. Impatience and a sense of urgency often causes advisors to present their solution to buyers too early in the sales process—before the buyer finally capitulates and accepts that their solution isn’t going to work. Granted, every advisor/salesperson wants to close the deal. We’re trained to control the process and not let the prospect have a chance to change their mind. But, I’ve learned over time, you must leave the prospect alone for a while to come to the realization that they can’t fix their problem on their own.
Where Advisors Come In
Consider the premise that we really sell problems instead of solutions. The better we are at defining and communicating the real problems and the consequences of not addressing them, the more successful we will be at implementing the proper solutions for them. Remember, clients do what they want to do, when they want to do it. That’s where you come in.
As best-selling author and motivational speaker Tony Robbins likes to say: "Every problem is a gift. Without them we wouldn't grow."
Dr. Guy Baker, CFP, CEPA, MBA is the founder of Wealth Teams Alliance
