How Guanxi Explains Advisor Success
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My most gratifying experience is seeing how my research helps with those who learn it. Yet, my daily experience reinforces the view that we have a long way to go to achieve meaningful relationships.
My clients are understandably focused on using my research to increase their AUM. I recently learned of a Chinese concept called “guanxi” that explains exactly why some advisors are more successful at building their client base and AUM.
Advisory firms have diverse needs. When we don’t have the necessary experience in house, we reach out to vendors and explore strategic relationships. It has the potential to be a win/win for vendors. They get a steady stream of business. Our advisory firm clients benefit from using a fully vetted professional at a discount over the price they would have negotiated directly.
I’m struck by how many of my initial contacts with vendors go off the rails. They dominate the conversation with long, rambling answers, often dealing with irrelevant issues. Their focus is explaining the benefits of dealing with them.
Rarely do they show any interest (much less curiosity) about me, our company, who we serve, what we’re looking for or why a relationship with them might benefit us (as opposed to them).
In most cases, what should have been an easy “sale” turns into a lost opportunity.
When I don’t pursue the relationship, they do a follow-up, filled with clichés about being willing to answer any questions.
I suspect they felt the initial call went well and they are genuinely confused about their inability to close the sale.