Questions to convert suspects to prospects to clients
Simon Singer, CAP, CFP
Do you know where your next client is coming from? Do you need more ideas or more prospects? Would you like more time, more money or more fun? If so, then you need to become an expert in the art of questioning.
You have to learn how to turn compelling statements and observations into questions. Asking questions helps you to build rapport, gain confidence, and collect more and better data. For example, you should ask questions about estate tax or asset protection. “Have you analyzed which assets to distribute at which times and in what order to increase the value to your children?” “Do you think that estate planning is all about taxes? Because I will suggest to you that it’s not. Estate planning is getting the right asset to the right person at the right time and the right amount.”
These can be philosophical conversations or charitable conversations. It’s finding out that a client has one child who has made some troubling life decisions and the client doesn’t want to leave them too much money. It’s learning that a client’s daughter may be heading toward a marriage that’s likely to end in divorce.
The art of questioning helps advisors read between the lines. “After you’re gone, will your children talk to each other?” We’ve all seen situations where families fall apart because mom and dad didn’t take into account what was important to the kids. “It took a lifetime to build your estate; doesn’t it make sense to take a few moments to preserve it?”
Here are some questions you can ask clients to learn more about their needs and aspirations.
What do your children need, and how do we give them what they can handle? Equal and fair are not necessarily the same thing — and asking the right questions can help you determine how to reach a solution that’s appropriate for the situation or person. Rather than try to split something into three equal portions, for example, I may give a house over here and a portion of the business over here and a car over there. Once you have an understanding of the client’s situation, you can divide assets, money and securities as is fit. Not everyone has the same financial knowledge, and not everyone is financially responsible — so the structure by which the assets are divided is extremely important.
Do they know how much liquid capital they’ll need to retire and maintain their after-tax lifestyle index for inflation? We call it critical capital mass. You can have your own words for it, but it means having enough money saved so that when a client draws down on principal and interest, there’ll be enough to last beyond their life expectancy, after taxes, index for inflation. Ask questions to find out if clients are on track for that critical capital mass. If there’s a deficit, what are they doing about it? I would prefer my client ends up with too much money, and I’m sure you would for your clients as well.
How are they going to pay off the mortgage on their retirement assets? They may say, “Mortgage? What mortgage? I have my retirement assets.” But in many places, there’s a tax that’s going to come out of those assets before they ever get a chance to spend it. “Which is more important to you, the return on your money or the return of your money?”
Do they know what would happen to their business? There are a slew of questions to ask here: How much money would you take out of your business if you didn’t have to pay the tax on it and your accountant agrees? What’s your exit strategy for the retirement plan assets on your business? What is your strategy for exiting your business? How would you like to be in business with your partner’s widow or widower, their attorneys, their children, their children’s attorneys — plus their new spouse, their children and their attorneys? The lack of a buy-sell agreement leaves the family in a position to work with people that they don’t even know. Did you know if the business capital can’t be used just to absorb the tax, the tax may very well absorb the business?
Why are you here? I start every single client meeting by asking them why they’re here, because I don’t know what they know. They might say, “My accountant told me we have to meet.” They might say, “Well, we’re getting sued.” Or “We’re here for estate planning or income tax planning or tax reduction.” I want to know what they’re thinking about before I start with my presentation.
We read books, we attend seminars, we listen to podcasts, but we don’t necessarily know what the client is listening to. It’s important for us to understand and uncover what estate and income tax planning means to them. What have they accomplished so far with regard to their income or estate tax planning? What do they like or dislike about what they’ve been doing?
Maybe more importantly, ask where they hope to be in the future. “If we are sitting here one year from today, what would have happened during those 12 months for you to look back and be happy that we met?”