How The Wall Street Journal Can Help You Land Clients

June 16, 2015

by Dan Richards

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Dan Solin’s article last week, The Surprising Reason You Lose Business, discussed research by Cornell University academics. They examined why advisers who do all the right things when meeting with prospects can still lose out to less qualified and capable competitors.

That article reminded me of a conversation with Susan, a financial advisor. Susan’s closing rate has gone up dramatically since she began using a seven-question checklist from the Wall Street Journal in her initial meetings with prospective clients. By helping prospects frame their decision-making process, Susan’s odds of a favourable outcome have risen substantially.

Why investors make poor decisions

The reason that investors make poor decisions when selecting advisors lies in the tendency of consumers to overestimate their ability in a broad range of areas:

In a survey of faculty at the University of Nebraska, 68% rated themselves in the top 25% for teaching ability, and 90% rated themselves as above average.
In one study, 93% of American drivers put themselves in the top 50% when it came to driving skills.
In numerous research studies, people overestimate their abilities when it comes to logic, memory and cognitive ability.

Also referred to as “the Lake Woebegon effect” (where all children are above average) or more scientifically as “the superiority illusion,” this overconfidence results in some consumers investing on their own and leads even investors who recognize the need for advice to act impulsively without thinking through the decision to select the right financial advisor.

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