MM Client Retention

MM Client Retention Glenn Gabbard, Patty Sellin September 19, 2002 PRUDENTIAL INVESTMENTS MULTIMEDIA

JPH: And welcome to this Thursday's Managed Money Client Retention call. My name is J.P. Holland, and I'm the IMS Coordinator for the Florida region. I'm also going to be your host for the next half hour, and our topic is going to be on "Attracting and Retaining New Clients in a Difficult Business Environment." And, you know, I don't think that there are too many of you out there who would disagree that lately it's been a bit of a challenge retaining clients' assets and keeping them invested, regardless of what the investment vehicle is. And let's face it, managed accounts, many of which are large stock portfolios, are certainly no exception. But, you know, on the flip side of all that, there are a lot of investors out there who are looking for reassurance, as well as ideas as to what they should be doing now. And, well, you know, they're just not getting that, and probably because there's a lack of communication between themselves and their financial advisor. And, you know, if there's a lack of communication, it could be due to the fact that the financial advisor doesn't know what to say, or they don't know what to do in this situation. And it's that situation that can make for one heck of an opportunity to bring in new business, particularly for those financial professionals out there who do know what to say and what to do. And so to help with that today we've got two guest speakers lined up. With us on the call we've got our own Patty Sellin(?). Patty is a financial advisor here at Prudential, she's a CFP, as well as a Certified Investment Manager Analyst. She's a First Vice President of Investments and Assistant Branch Manager in our Plantation office, and she's going to be our second speaker. But

we're also very fortunate to have Glenn Gabbard on the box with us. Glenn is also a Certified Investment Manager Analyst, and is Regional Vice President for MFS Institutional Advisors. Now, I've got to believe that there are more than just a few of you out there who know Glenn, not just because his group is very active in marketing in our system, but because Glenn was formerly a member of our IMS team here at Prudential, overseeing our sales force on the West Coast. So, Glenn, welcome back. GG: J.P., it is a pleasure for me to be here, and at least to have a chance to catch up with you on the phone. I know that we've got two speakers in a tight time frame, so let me go right into my portion of the topic so we can move on to the next speaker. As J.P. said, we're going to cover specifically retaining and attracting new clients in a difficult business environment. Now, let me start with point number one, and that is in my experience communication is the key. Multiple touches each month are essential in retaining both your A clients, and also attracting A prospects in this market environment. Why is this so important? J.P. touched on it in his introduction. Clients and prospects are looking for the following key things. First and foremost, reassurance about the capital markets. Secondly, they're looking for leadership from you, they want you to have an opinion. Thirdly, they're looking for customized investment plans. Many are looking for a new advisor because they never received that. In addition to that, they're looking for an asset allocation strategy that meets their specific needs now. And also for your existing A clients, they're looking for ongoing discussion of reallocation when needed in their portfolio. They also want open and frequent communication, and they want a high level of service. Now let me make a conceptual point. One of the key things that separates yourself from the competition is to establish what I refer to as the one call practice. And what I mean by

that is when your client calls you, you need to be able to set your practice up in a manner where you can directly or indirectly answer every single question that they have. Which means that if they're interested in refinancing, you need to utilize the resources within Prudential, or you need to have a relationship outside of the firm if necessary, to be able to help them. It's critical that you be able to be the point of contact for all questions. Because if you can't do that on one call, the second call is not going to be to you, it's going to be to your competition. You don't want that to happen. Now, I talked about bringing your A clients and your A prospects together. Let me give you four specific field tested ideas that myself and my colleagues at MFS not only are executing each day with associates of yours, but are available to help you with. Number one, hosting market outlook conference calls, and I'm going to talk about the specifics in a second. Number two, conducting small breakfast, lunch, dinner market update meetings with Max managers. Number three, sorting your A clients by profession, and enlisting them to help you prospect their associates. And finally, offering unique value added services. Let's go right to conference calls. There is a Web site that you can go to, www.youconference.com/daytime.html, (Repeats Web site) www.youconference.com/daytime.html, that can allow you to set up a very time and cost effective market update conference call for your A clients and for their associates. Here's how you position it. E-mail them that you have asked, for instance, Glenn Gabbard from MFS Investment Management to do a special call for your clients. Pick two dates and two times in the same week to give them an alternative, to talk about MFS' capital market overview, and to answer any particular questions that they have about asset classes or asset allocation strategy. Tell them you have

a limited number of slots, and so you want to know which one of the two dates during the same week they're able to make. With this approach you're able to reach a substantial number of your A clients. And I can't stress strongly enough, because of people looking for new advisors out there, ask them to give you one or two names of their associates, your A prospects, that would like to join the call. What you want to do in terms of the time, the call should not be more than 30 to 45 minutes. You should begin the call, and you should have two or three tight bullet points that summarize Prudential's current outlook of the market. You should give them a year to date summary of the different market indices, and then turn it over to myself or any one of the other Max manager representatives. And we will spend no more than five to ten minutes giving again an equally tight bullet point overview as to how we see the market going forward. At that point you open it up to questions. And again the maximum time frame for the call should be 30 to 45 minutes. It is cost and time efficient, it works. And the FAs that we've done this with have had a number of prospects that have come in to talk about their portfolios as a result of offering the opportunity to join this type of call. Secondly, conducting small breakfast, lunch, dinner client update meetings. What I suggest here is the following. Invite a combination of A clients and A prospects, and a good number range to work with would be eight to 12, I would suggest, as a maximum. Position the meeting as a discussion of successful investment strategies for the next market cycle. At the beginning the FA should introduce each client and prospect around the table. Give the backgrounds so that there's a common ground, and the FA establishes control. Myself or any other Max manager will then again not give an MFS sales presentation, but as with the conference call, we'll share our outlook on the market going forward.

What happens is that we end up in a conversation, we have a dialogue. What also happens, you're A clients are able to help sell your practice to your A prospects. And clearly when they're looking for reassurance about the market, it's an excellent forum. And the closing ratio in terms of bringing new clients in for you, and as far as ourselves and other money managers, getting new business has been extremely high when we follow this type of format. Third point, sort your A clients, sort your A clients by profession, and enlist them to help you prospect their associates. No one relishes cold calls. You've worked very hard during the last two to three years to hold on to your A clients. Sort them out by profession, cardiologist, attorney, small business owners by business sectors, etc. Identify who those clients are. And then, whether it's on the phone, but ideally in your office or in their office, ask them how to best prospect their colleagues and gain their support. An example of how you would position this would be, "Joe, if you were in my shoes, what advice and council would you give me in developing more business with accountants, cardiologists like yourself." And listen. They will tell you what to do. The next thing you want to do is get their support. What I mean by that is to gain approval to use them as a reference. Refer to them in any communication, in any action step that you take to go after their colleagues, again your A prospects. That includes referencing them and inviting to events, conference calls, in letters or in phone calls. Very important, and it's often overlooked. Last point. Offer unique value added services, and let me give you a couple of examples. One would be arrange for an expert in their field to make a presentation. As JP knows, I live and work in California as a base, and I'll give you an example. One

of my colleagues worked with an FA and put together a dinner meeting where an animator, a respected animator in the animation field, got together with a number of the FA's existing clients who were animators and colleagues of theirs who were in the animation industry who, based upon asking the question, "Who would you like to hear that would further your professional education?" We selected an individual, hosted, co-hosted a small dinner where this individual talked about trends in the animation industry. Now, for those of you that aren't in the Los Angeles area, fill in any profession, and I guarantee you that there are one, two, three, four individuals that would be very popular, and it would help these individuals further their own professional knowledge. Everybody wants to do that. Next suggestion, thinking outside of the box. Host a birthday lunch, and here's what I mean. Let's say that you're worried about a family office type situation, and you're trying to bond with the next and the next generation. You may have the relationship with generation one, but you're looking for generation two, generation three. Take one of the key family members and offer to host a birthday lunch. Have them invite other family members or friends. Arrange for payment in advance with the restaurant, and make an excuse to leave the table before the event is over. Why? Because it will give the A clients and the prospects an opportunity to talk about you, and to talk about how special it is in separating yourself, that you were thoughtful enough, cared enough about your client to put together something like that as part of your services and your practice. A couple of other quick examples. Fully utilize your firm and your money manager resources. Number one, many of the teams and the individuals that I'm working with, as I referenced earlier, are leading with the idea of have their clients refinance. Even if they refinanced last year, have you refinance this year. Why is that

important? It's important because you can save them money. And as they're concerned and need to be reassured about their portfolio, anything you can do to make them feel good, to help them save money, locks in your relationship. The same thing is true with money managers. Client review calls are something that we can help you with all the time, not only in talking about our market outlook, but also talking about asset allocation decisions, and explaining our portfolio. Take advantage of the Max managers with respect to that. We can give you competitive help when you're in competitive situations. We have a lot of resources. You're going up against a particular group, we can give you some insights there. White papers. Go on to our Web site. And the same thing with the other managers, www.msf.com. And we have a number of white papers that can help you. We also have a number of value added presentations. Under this category with respect to MFS, if you haven't gone on to our Web site and looked at Heritage Planning, this again relates to life issues, non investment issues that are critical for your client. You can do a search by topic. But as an example, if you ask your client base, "How many of you are dealing with caring for elderly parents, or are concerned about raising money-smart kids in a family office situation?" you'll find that there's X percent that are, and they have colleagues that are interested in that as well. Again, get on to our Web site, take advantage of that, because any particular thing that you can help your client with is going to bond that relationship. In wrapping things up, I want to encourage you, on top of the other suggestions that I've given you, to stay on top of your game, and what I mean by that is the following. Have a daily client communication and prospecting plan that you execute. Five to 10 percent of the FAs that I see are up net new assets this

year because they have a plan. The ones that are down are playing defense, and they have no offense. Get your designations, CFP, Sema(?), CIMC, CF-Bates(?). Everything is a separator. And join and participate in a network of professional associations that apply. And the best example I can give you in terms of doing Max business, IMS business, would be IMCA, the Investment Management Consultants Association. And for those of you that want more information on IMCA, you can call them at (303) 770-3377. Now I went through this quickly, but I know that my time is wrapped up here, and I just want to close with the following. I know that there are X number of you that may want to talk in more detail about some of the things that I covered, that may want some additional help from myself and my colleagues, that may want to talk more about white papers or other ways that we can help you. So let me just leave you with my contact information. You can call me at (800) 343-2829. (800) 343-2829. My extension is 54627. Or you can e-mail me anytime at [email protected]. That's g-g-a- [email protected]. J.P., look forward to seeing you in person soon, and I hope this has been helpful to the group. JPH: Thanks a lot, Glenn, that was outstanding, and thank you very much for those words of wisdom. Again, if you're interested in contacting Glenn you can reach him at MFS at the number he just gave. Also if you're interested in getting a copy of his remarks, I have those. Just send me an e-mail via Lotus Notes at [email protected], and I'll be sure to forward those on to you. Well, you know what they say, you always save the best for last. And, Patty, are you with us? PS: I'm here. (Laughs) JPH: Okay. PS: I don't know if I want to follow him, he did a great job. (Laughs)

JPH: Well, you're outstanding as well. For those of you out there, I have the very good fortune of working regularly with Patty. She and her team have been making a very strong push towards annuitizing their business, and Max and Pru Choice have been a large part of that. And together, you know, we've gone on our fair share of client retention meetings within her book. So, you know, Patty, what would you ... ? PS: I guess that's called utilizing the resources, as Glenn was referring to. JPH: Exactly. So, you know, what are you seeing out there? What has been the overall attitude of your clients lately, Patty? PS: Well, I have to tell you in listening to what Glenn was saying, it was interesting, because he started off with what people really need, and they need reassurance. And I've been saying, and one of the things that has really happened through this whole cycle, is an opportunity to actually reeducate clients. And that's really been terrific, because those people that, as you try to educate them initially when the market was going up, they like looked at you and said, "Yeah, yeah, yeah, yeah, yeah," but they didn't have to really pay attention because things were working. Now all of a sudden you get that opportunity to reeducate and really teach about the capital markets, the history, and also performance measurement. I think a lot of people are very confused as to just looking at their portfolio is down, but how do you really measure that performance and what's it relative to. So you get to talk about the different styles of management and the different money managers with those styles, and how some managers have clear done a bad job, and others have actually done a good job, and they don't deserve to be fired. I think a lot of people are too quick to

pull the trigger, to want to fire somebody, when it may not be warranted. And so we go through and really do that education. The biggest benefit that we've had and the reason that we've been able to grow assets through this horrible time frame, (Laughs) because it is included in that, is because of the communication I believe that we have. We sit down, we meet with our clients, we meet with them over the telephone if they're not local. But we make appointments to communicate, and we speak to them on a very regular basis. And I have to tell you that through this time, as much as we communicate, and it's much more than what I see other people doing around me, so we think we do it a hell of a lot, it's still not even enough. Because the rougher the time frame, the more that communication is key. And then when Glenn was mentioning that I thought that's interesting, because it's not just about having a quarterly contact and you think that you're doing your job. That's not comforting enough, they need to hear from you much more regularly than that, and especially through these ... you know, and some people may need even more hand holding on the daily basis or every few days. And it's a lot to demand of yourself, to be able to provide that service, but it's those kinds of things of sticking with people through the tough times that are going to make them stay with you when the times get better. And it's really solidifying the relationship. Gaining and building relationships to get through the tough times means that those relationships are going to be so much more successful as times do get better. Also I do a weekly radio show each Friday afternoon. And through that radio show I've been able to bring in different money managers and analysts. And while "analyst" is a dirty word now, actually for them to be able to explain how they're looking at the companies and the things that they're measuring and

the things that they're focusing on. Last week I had one of the top oil analysts, and he did a great job. And he said, "Really, I'm not buying my sector right now. You know, there's only one company out of my whole group that I could tell you to buy." JPH: Hey, Patty, let me ask you a question. You know, we talk about communication, what are you actually saying to clients? I know that recently ... PS: Bunt. (Laughs) JPH: I mean, I'm asking you to give away all your secrets. But I know that you recently had an appointment with an account that you inherited, and, you know, you had a very good conversation with that person, so what is ... PS: Well, I have to tell you that I just inherited this account, and was able to get an appointment in front of the people. And so when I went to their home to meet with them, I walked into a door where I had some very angry, angry people. And the biggest issue was that they're very busy and they're working people, and they have a substantial portfolio, but they weren't watching it as closely as they should have because they entrusted their financial advisor to be watching it, and their financial advisor never communicated with them. And so they had no idea that they had lost as much money as they were down, because they really didn't pay attention to it, and then that's partially their fault. And I explained, "Hey, you know, you get a statement, and it works both ways, it's a relationship, it's just not one sided." But they were very, very angry, and their big anger was really at the firm and feeling that the firm had failed them. And, you know, me, it's about the relationship that I have with my clients. I don't want clients to do business with me because I'm with Prudential, and I don't want them to not do business with me because I'm at Prudential. It's about my relationship with them, what I can bring to the table, what I offer.

The big things are that people actually do want to hear an opinion. You can call people up and say, "Boy, it's really ugly," and they can say, "Boy, it's really ugly," too, and "What do you think? What do you think?" and go back and forth, but nothing gets accomplished with that. You really need to take and have an opinion and have a statement to be able to say, "This is what's going on, and this is what I think you should do." Or "These are our choices. And if we do this, then that can happen and this can happen. And if we do that, then these are the things that can happen. What's going to make you most comfortable? And this is the recommendation that I have." And sometimes it may be to do nothing, but at least you've put thought into it from their perspective, and you're looking out for them. And that has really been the big thing in speaking with these people. I mean, they didn't want anything to do with us, and they didn't want anything to do with Pru. By the end of the night they were like, "Okay, let me tell you about the other assets that we have outside," and that kind of thing. So now we've actually built a relationship with somebody that's going to be our client, that is willing to refer other people to us, and all the ingredients that we have as our criteria for somebody to become a client. Which I explained, "This is what it takes for somebody to be our client, this is what we expect from them, this is what you can expect from me. If this makes sense, then we can continue on. If it doesn't, then I should leave now." JPH: Outstanding. PS: And that's really what it is. But I have in our little business system here a clear vision as to the type of service that we want to deliver to our clients, the type of feeling that I want our clients to get. And I cannot control the markets. And that's the first thing that I say, "We can't control the markets, the only thing that we

can control is how we deal with the events that take place, and have a strategy in place for the "what happens if," and then what are we going to do. But now is really ... You know, it's interesting, because they're hard times, and it's the most depressing time that I've ever been ... and I've been in the industry a lot longer than I want to share. (Laughs) But it is actually probably the best prospecting opportunity, and the best opportunity to build relationships with people than we've had in a long, long time. And so I think that people get it. It depends on your spin, how you want to look at it. It's really the mental image that you're picking, and how you really, you know, turn it into a positive. We've actually built our assets quite substantially this year. And with the market having declined as much as it is, (Laughs) I keep thinking, well, once the market recovers these assets are really going to show a lot, even bigger numbers, because this is in a down time we're growing. Imagine how it can be the other way around. I think what Glenn said is a key thing too, and I hate to use somebody else's material, but when I hear something good and it makes sense, that's what I do, (Laughs) I incorporate it. And it really is about having that leadership kind of opinion. It's the communication, it's the leadership opinion. They want to know how you feel. You're supposed to be the expert, you're certainly supposed to be smarter than them. And if you're not and if you don't have that, then you're not value added. You have to bring value to the table, or they don't need you. And to look at their portfolios and go through ... run a pet report, or run the different kinds of reports that we have available, and talk about asset allocation and that re-allocation of assets, is a tremendous opportunity. But sometimes it's hard to get people to do things. But now they're really willing to do much more than you could have gotten at other times. So you do have an

opportunity to get people's positions for what you think is the best place to be going forward in the market, and be in control of the situation. And that's your job. I mean, I really don't know how ... and it's interesting to do a call like this. J.P.? JPH: Yes. PS: In that this is our job to do every day, it really shouldn't be any different now than it always is supposed to be. JPH: Right. PS: We're supposed to be contacting clients on a regular basis, we're supposed to be reviewing their portfolio with them on a regular basis, we're supposed to be finding out if their needs have changed, if their objectives have changed, if any life events are happening within them, so that we can make sure that we're adjusting the portfolios appropriately. So nothing is really different. JPH: Right. PS: It's just maybe people need it more, so we need to be aware that the need for it is greater, and so that communication should just be more often. But it's really the same thing. JPH: Patty, in maybe 30 seconds or a minute, I know you've been very successful in building relationships through your radio show, how does somebody who's listening in today, you know, get involved with maybe doing a radio show of their own? Is there someone you would need to call? Or how do you go about doing that? PS: Well, they can call a local radio station in their area. We do have a little bit of a non compete thing within Prudential, so they may not be allowed to be on the same station as another person within Prudential in the same area can be on. But they call the local radio station and see if they can buy radio time. That's what

I do. I pay a lot of money for it, it's not a cheap, you know, marketing venue. But for me it's been a worthwhile expense, from it's not from cheapsville. But you can do one minute spots just to do market updates. I do an hour long show where people call in and ask questions. So you have to be able to be prepared to deal with whatever question comes, (Laughs) which can be quite interesting at times. But there are radio stations, you can go and speak at Barnes & Noble. There are a lot of different marketing outlets and opportunities to get out there and get in front of people, and be the, you know, quote and unquote, "expert." So I just think it's really researching and taking the time to look around you and see where there's an opportunity to attract the kind of people that you want to attract. JPH: Fantastic. Patty, I'd like to thank you very much for your time this afternoon. And I'll probably ... PS: Well, thank you for inviting me. JPH: Thanks for having us. I think I'm going to see you tomorrow in your office. PS: Oh, great. Bring presents. JPH: We'll see you then. PS: Okay. (Laughs) Bye, bye. JPH: We'll conclude our Client Retention call for this week. If you found the call to be useful, you should know that we hold it every Thursday at 4:00 pm. The topic again is always to be client retention. On the call there will always be someone on hand from one of the Max managers to talk about sales ideas that they've run across. There will always be one of our own financial advisors on the call. And if you'd like more information and ideas to help you grow and maintain your managed money business, you can also click on the managed money web site, and then click on the Client

Retention banner to see all sorts of articles and client approved pieces, and stuff that you can use today. Also, you'll find the tape recordings of all the previous, or many of the previous weeks' calls. So that's it. I'd like to thank you all for your attention this afternoon, and I hope you all have a great weekend. Take care. (END OF TAPE)

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