Six cold calling lessons every adviser should know

Every capital raiser wants the soft warm, or even hot, introduction to a desired contact, with your mutual connection acting as a pseudo safety net. But what if that option is not available?

There is another way to get in front of a contact, but it’s an option not many feel comfortable or confident in: the cold call.

Cold calling can send shivers down the spines of many capital raisers. Many get call reluctance. Some don’t know what to say. They fear rejection. But it might also be the very thing needed to start the strong business relationship that propels your company to the next level of capital and funds management.

While cold calling is a daunting task for many people, you often only get one chance. So, what are the steps to making an effective cold call, and how do you handle rejection?

The podcast with all the answers

Capital Conversations is a podcast I host that dives into the secrets and insights of leading capital raisers in the Australian finance and wealth industries, with guests that include CEOs, founders and heads of distribution who have collectively raised billions of dollars.

After hosting the first two seasons of the podcast, a number of my guests shared their cold calling trials and tribulations. Two things stuck out. The first, and most important, I will save for those who read through to the end. The second is that cold calling is an art form that simply takes practice to perfect.

The following are some tried and tested guidelines you can use in making your cold calls, each backed by a story from the podcast.

Six lessons from the people who have done it

1. Look for a warm introduction first.

Do your research on the prospect and see if there is any way you can get a warm introduction. If that is not possible, then prepare for the cold call. If you can’t find a warm introduction in the first 15 minutes of research, it’s cold calling time!

Anthony Kapetanovic, founder of Akambo, shows what a warm introduction is worth. When he left Morgan Stanley in 2007 to start Akambo, he had about 60 clients. It started with a beer at a conference in Sydney, where he got chatting to the man next to him, an accountant from Melbourne who turned out to live five houses from his own.

That conversation became a joint venture, and Akambo went on to host a seminar for the accountant’s clients. Around 150 people turned up and it produced about 100 appointments in the following five weeks, with people who had never really been asked about their wealth. Akambo borrowed the trust the accountant had already earned, and today serves close to 7,000 clients.

2. Research the person and find a common link.

The first guest on Capital Conversations, Adrian Whittingham (co-founder of Scarcity Partners and ex-executive director of Pinnacle Investment Management), found out where a prospective client has his coffee every morning, decided to go to said café every morning, and ended up doing business with his desired contact.

Find that common connection, whether it be as simple as attendance at a conference or the same sport, and use it to your advantage.

Felicity Walsh, managing director of Franklin Templeton in Australia and New Zealand, calls research one of the most underestimated tools in capital raising. Understanding the needs of the person in front of you, and weaving that into the conversation, shows you care.

3. Cold calling is necessary, but it is not life or death.

It is far easier than performing CPR on someone who isn’t breathing, or performing surgery.

Sheridan Lee, founder of Shed Enterprises, once cold-called billionaire hedge fund manager Ray Dalio from a phone booth in New York, and walked away with Bridgewater as one of her first clients. The worst that could have happened was a no.

Charlie Viola, founder of Viola Private Wealth, likens cold calling to being a 16-year-old trying to date again: you will hear plenty of no, so you simply keep going.

4. Don’t hide behind emails.

Emails can be a waste of time, and they are often the default to make a salesperson feel they have done something and made contact. The funny thing is, emails from unknown contacts often end up in junk. You need to speak with the prospect, so pick up the phone or figure out a way to bump into the person face to face somewhere.

Charlie Viola started his career with a desk, a phone, a phone book and no clients. He rang accountants and lawyers, and one Melbourne-based consultant, Dale Simpson, agreed to meet for an hour while he was in Sydney. Charlie made his case in person.

By the time he got back to his desk, there was an email waiting saying referrals were on the way, and that he had “more front than Myer”. The email came after the conversation, not instead of it. That first referral led to a flow of Macquarie executives, who still make up around a third of Charlie’s client base today.

5. Prepare and rehearse before you dial.

Script your call with dot points and rehearse it. Charlie Viola says every rejection forced him to sharpen his pitch. Over time he got his messaging down to something shorter and more concise, without wasting words, and it still serves him in client meetings today.

Escala Partners’ Scott Carmichael takes preparation a step further. He describes himself as being in the “meeting business”, and swears by the “pre-meeting”, a conversation with the client beforehand to find out what is on their mind.

6. On the call, ask relevant questions and keep it about them.

For example, ask them to explain their approach to investing and portfolio construction, their investment philosophy, their approach to allocating to a sector, their review and due diligence timetable, and their process and criteria for manager selection.

Focus on the particular asset that you have. Ask them about gaps, challenges, and when they last reviewed that sector. Find out as much as you can. The key is not to talk about you, but to talk about them.

Do not sell at this point. The goal is to get them engaging and to set up the next step. This is purely a fact-finding assignment.

I told Charlie Viola a story on the podcast that makes this point. When my wife and I went looking for a financial adviser a few years ago, I left the choice to her. She knew straight away who to call: an adviser she had met once at an industry event, who spent the entire conversation asking questions about her, rather than telling her how great his firm was.

Cold calling in practice

Here are three examples of cold calling strategies.

1. Introduce yourself and ask how they prefer to receive investment ideas.

If you have done your research and found no information on this, it is an appropriate question to ask. You may ask related questions such as: what is your timetable? What is the process for presenting ideas? Who do you send them to? What information do you require?

The person may ask you some questions about your product, at which point you can provide very brief information, but do not do this unless invited to. Most salespeople make the mistake of ringing up and diving straight into their pitch.

2. Be brief, be clear and be direct.

Make sure you explain clearly why you have called. For example: “G’day, Troy. Steve Robertson here from ABC Investments. Before I tell you how great my products are, can you please outline your approach to investment portfolio construction, particularly in relation to private markets and alternative investments? If you can outline this, I will be able to ascertain if my products are worthy of consideration.”

3. If the call and the voicemails fail, what next?

Sometimes it is better to stop making the phone call, but you still need to connect with the prospect. You need to find another way. This can be at conferences or events where that person is attending or speaking, or you can think outside the box, like Adrian Whittingham, who found his prospect’s coffee shop and hung out there every day until he bumped into him.

Then there is the lounge or lobby lizard approach, which has worked effectively for many salespeople. If you know their office address, hang out in the lobby. Pretty simple. Keep an eye out, particularly at the start and end of the day, and mid-morning, mid-afternoon and over the lunch hour. Then pounce when you spot them and make a face-to-face introduction. How to do this well is a subject for another time.

The five golden rules of cold calling

1. Do research on the person you are calling and try to find a connection.
2. Ask lots of questions about them and their organisation.
3. Be silent on your own product and strategy.
4. Rehearse the cold call.
5. Pick up the phone and make the call.

The lesson I would add

After two seasons of hosting Capital Conversations, the first thing that stuck out is that cold calling is not as daunting as many people suspect it might be. The starting point is the realisation that the person you are calling wants to hear from you. They just don’t know it yet.

You both have something in common: they build portfolios and allocate capital, and you have solutions for them. A good call makes their business better too.

The worst that can happen is that the person does not answer or rejects the call. As my guests showed me, that is rarely the end of the story.

To hear more from the capital raisers behind these lessons, Capital Conversations is available now on the Capital Outcomes website, Spotify and Apple Podcasts. And soon, we will be releasing short recap episodes on specific capital raising techniques, including cold calling, mentorship, bracing for the future of the industry and building culture.