July 1998, Vol. 1, No. 3

Have you ever wondered what the buying motiva-tions of your clients and prospective clients are?

As investment management consultants, you have theopportunity in your client interview to uncover the keybuying motivations of your prospective clients and togain an understanding as to how to best serve theirneeds. Consider the following scenarios.

Mr. Abrams is the chief financial officer of aFortune 500 company, responsible for the firm's 401(k)and profit-sharing plans. After years of engaging theservices of a major national pension consulting firmwhich uses its own funds tomanage the plan, Mr. Abramsis interested in increasingemployee participation andimproving participant returns.The first consultant that Mr.Abrams talked to promoteshow many Fortune 500companies they deal with andhow impressive their central-ized investment support staffis. The second consultant Mr.Abrams talks to is proud ofhow cost effectively they canprovide a broad range ofnonproprietary investmentoptions. The third consultanttalks about their expertise in401(k) plans, manager evalua-tion and selection, and how their participant educationprogram has increased plan participation and partici-pant returns. Question: All things being equal, who willMr. Abrams choose to do business with?

Mr. Smythe runs a family office for the 80 heirs tohis grandfather's textile fortune. The administrative,estate planning and investment advisory responsibili-ties of managing $200 million in-house has made Mr.Smythe increasingly aware that perhaps better resultsand a higher level of service can be more cost elec-tively achieved through outsourcing. Mr. Smythe isinterested in obtaining highly personalized service withan extraordinary degree of sophistication and confiden-tiality. The first person Mr. Smythe talks to is a trustofficer of a major trust company who has many similarrelationships and promotes the investment acumen oftheir in-house managers and the sophistication of theirestate planning and trust work. The second person that

Buying Motivations That DriveInvestment DecisionsSteven Drozdeck and Karl Gretz

talks to Mr. Smythe is a local financial planner who ishighly reputable with an extensive estate planningbackground and an established investment advisorypractice to many of Mr. Smythe's friends. The thirdperson Mr. Smythe talks to is a consultant at a majorbrokerage firm who specializes in high net worthclients. The consultant promotes the objective evalua-tion of money managers against specific investmentmandates, the sophistication and comprehensive natureof the firm's investment process in confidentiallyaddressing the investment concerns of each investor in

terms they understand and theefficiency of having all theserelationships as part of oneaccount. Question: All thingsbeing equal, who will win Mr.Smythe's business? Mr. Jones, who consistentlydrops names and prideshimself as being one of the“good ol’ boys”, recently soldhis business for $5 million.When offering your servicesto Mr. Jones, you shouldemphasize: (1) the size of yourfirm, (2) the services youprovide, (3) the long-termrelationships he will developat the firm or (4) the reputa-tion of the firm?

In each case, the most probable answer is the thirdanswer because the buyer's key criteria was matched.Most of us will automatically match criteria when theclient tells us what the key criteria are, but whathappens when it isn't explicitly stated and you have toguess? If you guess correctly, the customer will returnon and responsive to your ideas. If you guess incor-rectly, the customer may be turned off and will possiblydo business somewhere else.

This article is the first of several interactive articlesthat we hope will help you specifically become a moresuccessful consultant. In this article we want to helpyou learn how to be systematically correct, rather thanrandomly correct, in matching your prospective client'spsychological needs/criteria. It begins with a self-diag-nostic evaluation (Exhibit 1) with its responses to beevaluated in a subsequent article. After taking this shorttest, this article will show how you can use this infor-

Most of us willautomatically

match criteria whenthe client tells us

what the keycriteria are, but

what happens whenit isn't explicitly

stated and you haveto guess?

Senior ConsultantThe Voice of the Investment Management Consultant

Exhibit 1.Self-Diagnostic Evaluation: Your Key Decision-Making Criteria

I work with a consultant and am part of a team which is evaluating, managing and responding to the needs of our clients.Consultant’s Name ________________________________________________________ Firm ___________________________________

Please answer the questions below by circling the three or four most appropriate answers to each of the eight questions. Each question will probably have morethan one response. Additional copies of this diagnostic test is available upon request.

1. What factors are important to you when deciding to purchase a car?a) Good company reputation e) Warranty i) Dependabilityb) Style/looks f) Available options for vehicle j) Improvementsc) Service available from dealer g) Location of dealerd) Dealer integrity h) Price

2. If you were to begin a new career, what would you look for in a company?a) Reputation in the field e) Written contract offered i) Reliabilityb) Attractive facility/offices f) Multiple career paths j) Company growth recordc) Helpful staff g) Location of officed) Company integrity h) Money

3. What might influence your choice on a vacation resort?a) Heard good things about it e) Assured you will like it i) Enjoyed yourself there beforeb) Attractiveness f) Many activities available j) New attractions availablec) Excellent service from staff g) Geographical locationd) Honest people h) Cost

4. What do you consider important qualities in a business associate?a) Reputation e) Keeps promises i) Reliabilityb) Good appearance f) Different interests j) Works at skills developmentc) Helpful g) Can easily get togetherd) Honesty h) Worthwhile person

5. Why do you frequent certain restaurants?a) Reputation b) Satisfaction assured i) Consistent qualityb) Atmosphere/ambiance f) Variety of dishes j) UPgrades food/servicesc) Good service g) Locationd) Integrity h) Reasonable prices

6. What do you pride yourself on? Or, what do you admire in someone?a) Good reputation e) Fulfills verbal word i) Reliableb) Provides good image f) Seeks new challenges j) Strives for personal excellencec) Offers assistance g) Ease of accessibilityd) Trustworthy h) Paid for work rendered

7. Why do you go to a particular clothing store?a) Excellent reputation e) Good return policy i) Quality merchandiseb) Good-looking store f) Good selection j) Keeps up-to-date stylesc) Helpful staff g) Easy to get tod) Good reputation h) Good value for money paid

8. What are some of the qualities you would want in a friend or a spouse?a) Confidence in person e) Word is good as gold i) Dependableb) Attractive f) Wide range of interests j) Self-improvementc) Helpful g) Is there when neededd) Trustworthy h) They’re worth the worth

Self-Diagnosis ResultsTabulate the frequency of particular answers. For example, if you chose answer C in five of the eight questions, its frequency count is five. Determine thefrequency and complete the chart below. Most people have two or more numbers which receive a frequency rating of four or greater.

a) __________ b) __________ c) __________ d) __________ e) __________ f) __________ g) __________ h) __________ i) __________ j) __________

These results will be tabulated and analyzed in a subsequent article. You will learn how your motivations compare to other investment management consultantsand will fully appreciate the need for a highly flexible approach when dealing with others.

To be interviewed for personal insight into your practice and to be included in our survey of investment management consultants, please fax back your results andthat of participating colleagues who work with your clients.

Please send this completed Self-Diagnostic Evaluation by mail to Steven Drozdeck, The Progress Center, Logan, Utah 84321 or via fax (435-753-8847). Pleasebe sure that you include your name, address and phone number so that we can send you the article on Rapport.

Your Name ________________________________________________________________ E-Mail Address __________________________________________

Firm _____________________________________________________________________ Phone Number __________________________________________

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ity had two or three consistent criteria/ motiva-tions.

The key question is: “Would it be useful toknow what really motivated people (withouthaving them take this test) so that you couldmore effectively persuade them? Would it alsobe useful if you could get this information incasual conversation?” and, finally, “Would youlike to have this information about yourcustomers and prospects so that your mailing ortelephone campaigns have more significantimpact?” If yes, then this and subsequent arti-cles will explore methods to gain this valuableinformation and offer some suggestions forusing it.

Back to an analysis of the test. The choicescovered represent only a small portion of thecommon themes. Unfortunately, there is nosingle theme that goes across the board. Each

person has their own unique set of motivationswhich can be discovered by asking a series ofsimple questions and listening carefully to theresponse. Remember: Each person has consis-tent sets of decision-making criteria that cutacross different situations.

When you are aware of someone's key crite-ria, you can package your message much morepowerfully by matching those criteria. Thechances are they will respond more favorablysince their own, unconscious motivationalthemes were being employed. For example: Ifyour client’s key criteria include “service” and“reliability,” you will get a more favorableresponse if you emphasize service and reliabil-ity. If you emphasized price and convenience(perhaps your criteria), your client may not findyour idea as interesting. He or she would haveto mentally massage your ideas to determine ifthey met his service and reliability needs. Whynot do it for him? This is what persuasivecommunication is all about. This is the

mation to enhance your presentations. Thisself-diagnostic will allow you to discover someof your personal key (conscious and uncon-scious) criteria or motivations for makingdecisions. Such information is useful to knowbecause each of us tends to emphasize orimpose our personal criteria/ motivations onothers, whether or not it is appropriate. Forthose of you who are building a business andare relying on a team to respond to the needs ofyour clients, this is a particularly important toolbecause each member will be motivated to theirmaximum performance differently.Unfortunately, what motivates one person mayactually deactivate another. (This concept isexpanded later.)

Once you have taken this self-diagnosticexamination, you will discover somethingsignificant about yourself (and, by inference,others) that will affect the way you setfuture goals, deal with individual clients,work with employees and associates, andpossibly how you interact with friendsand family.

Analysis and Equivalences

The words associated with each ques-tion answer were basically equivalents orsynonyms of each other. All the a’s meanbasically the same thing (reputation), asdo the b's,etc. Any words or equivalents thatyou used on four or more occasions can beconsidered personal “key criteria” or “motiva-tional theme” for you (or for whomever tookthe test).

You may notice a difference between yourresponses for the odd and even number ques-tions. The odd-numbered questions areoriented toward things and activities (car, vaca-tion, restaurant, clothing store). Theeven-numbered questions are oriented towardrelationships (company choice, associate,admirable characteristics, friend).

Did you discover certain repeated motiva-tions for yourself? Was there a differencebetween things/activities and relationships?

Most people are surprised that they use thesame or similar criteria as the basis for many oftheir choices. This is important information toknow about yourself, and very important toknow about others. Over 10,000 people havetaken variations of this tests and the vast major-

“essence” that allows you to motivate andpersuade. Instead of having to “hope” or“assume” that your client translates genericfeatures and benefits into personally meaning-ful concepts, you help the process. Alwaysremember that a crucial aspect of the persua-sive process is learning what the other personreally wants and what are their key motiva-tions.

Key Questions

When you have a conversation with a client,ask: “What made you choose X (product, job,friend)?” or “What is important to you in anX?” Although they may have to think about it,the answer will probably be one or more oftheir key criteria. (In the same way, if they tellyou why they did not purchase something they

are telling you which criteria were notmet, thereby, again, telling you theircriteria.) Asking similar questions aboutother topics sometimes over two or threeconversations will allow you to hear, andmake note of, any repeated motivationalthemes. For example, “What is an invest-ment that you're happy with? What madeyou choose it?” (Note that we askedabout a good investments rather thantaking the chance that the customerwould provide us with criteria for a poorinvestment while simultaneously dredg-

ing up unpleasant memories and associatingthem with us.) “What made you choose thisbank? ... me? ... this investment advisor?”There are other questions which provide insightto your clients’ underlying motivations,whether they are pro-active or reactive, if youshould make your presentation emphasizingsimilarities between products or the differ-ences, and even how they mentally process theinformation. These will be explored in futurearticles.

"Hot Button" Words andEquivalents

Although people tend to use consistentcriteria to make decisions, it is rare thatsomeone would describe these ways of decid-ing by using the identical words. For example,Betsy may go to a particular gas stationbecause of the large product line, a particularclothing store because of good selection, a

... because each of ustends to emphasize orimpose our personal

criteria/motivations onothers, whether or not

it is appropriate

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W W W.SRCO N S U LTA N T.C O M

S E N I O R C O N S U L T A N T

James P. OwenCo-Founder

Stephen C. WinksCo-Founder, Publisher & Editor-in-Chief

Sydney LeBlancConsulting Editor

Mamie Woo McNealProduction Editor

Eddie BryantMarketing Consultant

Advisory BoardJerry Bott

Merrill LynchJohn Brock

Brock-Hazzard/First Union SecuritiesDick Charlton

New England Pension ConsultantsBob Cluck

Canterbury CapitalHarold Evensky

Evensky Brown & KatzJeff Frum

Wells FargoRich Gleason

Salomon Smith BarneyKathleen E. HegenbartSalomon Smith Barney

Brian HunterPrudential Securities

Greg HunterAlex BrownBill Johnson

CapTrustJohn Kelsey

Salomon Smith BarneyKeith Phillips

Morgan Stanley Dean WitterBob Rowe

Morgan Stanley Dean WitterDick Smith

Capstone Investment GroupJim Yanni

Yanni Partners

restaurant because of variety, and have manythings to talk about as a requirement of friend-ship. In each of the above cases, the theme ofhaving multiple options available is dominant.To such a person we would wish to emphasizethe concept of multiple choices and usesynonyms that indicated choice such as “alter-natives,” “choices,” “variety,” etc. You wouldemphasize the selection of products/services atyour bank and, perhaps, a mutual fund from alarge fund family, allowing various investmentstrategies and alternatives.

Listed in Exhibit 2 are some of the moredominant motivations/hot-button words andtheir synonyms that occur often in businessconversations.

Please note that these are rather vaguewords which have different meanings and asso-ciations to different people. “Service,” forinstance, can mean a variety of things. Youwould have to further question such a person asto what constitutes good service. In fact, people

provide numerous linguistic clues which cangive you insight into their thought process.

How To Learn More

If you fax, e-mail or mail the tabulatedresults back, you will receive a copy of “TheABCs of Rapport'” which will explain how toestablish rapport with someone in as little asfive minutes at the same depth that normallytakes 2-3 hours using hit-and-miss methods.Additionally, we would like to contact your foryour input on a number of other topics that willform the basis of future articles.

Please send the tabulated results via mail toSteven Drozdeck, The Progress Center, Logan,Utah 84321 or via fax (435-753-8847). Pleasebe sure that you include your name, addressand phone number so that we can send you thearticle on Rapport. Thank you in advance foryour participation.

Senior Consultant

THE VOICE OF THE INVESTMENTMANAGEMENT CONSULTANT

Notes

Exhibit 2.Hot-Button Words

Advertising Reputation Recognition FamiliarityAlternatives Variety Selection ProductsAppearance Looks Atmosphere AmbianceCleanliness Looks Neatness SanitaryConvenience Location Proximity NearHelp Support Aid AssistanceCourtesy Consideration Service RespectCredit Cashflow Bargain DiscountDependability Reliable Reputation ConfidenceExtras Gifts Incentives BonusesHabit Tradition Familiarity SentimentImage Style Status The “In” ThingHonor/Honest Integrity Honesty TrustMoney Price Cost ChargePerformance Durability High Standards Holds UpPrestige Class Peer PressurePrompt Quick Speed FastAffiliation Relationship FriendshipQuality Value CraftsmanshipReputation Referral PopularitySafety Security Protection WarrantySuitability Appropriateness ApplicabilityTimes Open Convenience Hours