Building your firm without bugging friends and family

If you’re like me, your initial training to become a financial adviser taught you to start building your business with a list of all of your friends, family and neighbors as potential prospects.

But, believe it or not, I made it my policy not to do business with friends, family or neighbors.

Why? Well, for one, when I first started in the business, I didn’t know one person (other than my husband) in the town where I lived. We had just moved to Panama City, Florida, where at the time, the average per capita income was $9,000 a year. Being new in town, I had no immediate circle of influence. The only people in my natural market were other Air Force officers and their wives, all of them young families with no money!

Second, although I had some distant family members who had money, they all knew I was new to this business and I assumed they felt I likely had much to learn … and they were right! Having come from the title insurance industry, I had no background in the financial services business. Anyone who really knew me was aware this was a new venture for me. Whether it was right or wrong, I convinced myself that my friends and family would just as soon I “practice” on other people, not them. This decision served me well. 

After I started in the business, when I met socially with friends or neighbors, I went out of my way to announce I had created an official business policy that I would not work with any friends, family or neighbors. Their relief was almost palpable … and so was mine. 

The interesting part was an unexpected consequence. Once I announced this decision, my friends, neighbors and family members suddenly rallied around me and wanted to help!

Consider the psychology of this. Friends and family members want to help you. They really do. They just don’t want to help you to their perceived detriment! If you don’t make this statement overtly, everyone will think you are only visiting or reconnecting with them to benefit your business. That is what they fear, and that is what immediately puts a strain on your relationship.

Once I realized friends and family members wanted to help, I did ask them to introduce me to their friends and other contacts. Knowing my policy and trusting I would not be asking them for their business, my friends bent over backwards to help introduce me to potential prospects.

One of my neighbors was the CEO of a local company. When his company announced its IPO, he called me and told me there would be many people within the company who would need financial planning. He arranged for me to give several presentations within the company, one to the executive board, and another to the entire management team. I ended up doing business with many of those people, and it was all because my neighbor was aware of what I was doing and wanted to help me.

[More: Marketing beats prospecting]

The really interesting outcome is that eventually I ended up doing business with many, many friends and family members, but it took years before they looked at me and realized I was going to be in the business for a while. They surmised I had probably learned a few things along the way, and then they came to me, not the other way around.

I never, ever asked a friend or family member for business, but ultimately most of them have come to me and said: “Erin, I know you have a policy for not doing business with friends, family, or neighbors, but I wanted to ask you if you’d make an exception for me.” And in every case, I did make that exception, but it was a different dynamic than it would have been if I had started out prospecting them. 

It was one of the best decisions I ever made, and I’m not sure why it isn’t done more often. 

[More: The secret to closing prospects]

Erin Botsford is a 30-year veteran of the profession. She now runs the Elite Advisor Success System and Spend the Day Mastermind programs. You can discover more information about her mission here.

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