Here comes the pitch
What follows now is an actual sales
“script” taken right out of a real brokerage firm sales training manual. The
broker reads from the script. It doesn’t matter what your responses are, the script
has answers for everything. The broker, the firm and the stock mentioned are made up. The
script however is very real.)
The opening scene
It’s seven o’clock at night.
You’ve just finished dinner. The phone rings. A voice says:
Mr. Jones, good evening. How are you
today?..
My name is Bob Broker calling you from New
York City. Do you have a moment? I’ll be brief...
Mr. Jones, are you familiar with Dewey,
Cheatem and Howe?..
As you know, we are a successful investment
banking and research firm here on Wall Street. Let me tell you why I am calling.
One of the unique things we do here at
Dewey, Cheatem and Howe is to find high quality growth companies before they are
recognized by the market. We are also a lead underwriter on municipal tax-free bond
issues.
Mr. Jones, what I would like to do is very
simple. First, I will mail you a letter introducing myself and Dewey, Cheatem and Howe.
Second, as we develop an idea that meets your personal objectives, I will contact you and
present the idea for consideration. Would that be all right with you?..
OK, then all I need is a proper
mailing address.
I assume you are currently “In the
Market”?....
So I don’t inundate you, what are your
specific areas of interest, when you invest in the stock market?..
Believe me, I have no interest personally
in what you’ve done in the past—but for suitability purposes—can you name 1
or 2 stocks you’ve purchased in the last 12 months?..
How many shares?..
Have many brokers do you have, by the
way?..
With which firms?..
So we do not waste each others time—if
we found an idea that fits your investment objectives would you consider doing business
with us? ...
One last question before I let you
go—when you invest, in a good idea, what is a comfortable commitment for a guy like
you?..
Mr. Jones, my name again is Bob Broker and
I will put that information out to you in today’s mail. I look forward to speaking to
you in the future.
So far so good, we are still in the dream
world. The broker asked questions which could be used to pick good investments for you. He
asked about your investment history, about the amount of money you’re comfortable
putting into a stock, he didn’t try to sell you anything, he promised to send
information and he said that he would call again only if he found an investment that
“fits your investment objectives”. So what’s wrong with that?
Well, here are some more excerpts from the
very same sales manual:
Realize you must create Shepherd/Sheep
Relationship
Do a “Wallet-echtomy” - take his
wallet out of his pocket
Same stocks for everyone.
You are the broker, therefore you must
control.
The goal, of this first call was to
determine if the prospect is worth a second call - It is only “Yes” or
“No”! Seminars, mailings are OK, but a successful phone call is more meaningful
and has better results.
You are also setting up the second
call/visit and it is similar to one-on-one basketball. A lot of attempted moves/fakes, but
you must counter each one, control the game, overcome irrelevant objections nicely
(without forcing) and go for the basket, or in other words, the order.
How do you feel now, dream or nightmare?
Act II—the second call
Seven days later, the phone rings again.
Again, this is the actual script:
Mr. Jones, this is Bob Broker (speak
slowly and clearly) of Dewey, Cheatem & Howe. How are you? (Let him talk, but
not too much.)
I am certain you recall our first
conversation in which you suggested I call when an interesting opportunity presented
itself! (put the burden on prospect)
This morning we had a meeting on HotStock
Corp. By the way, do you have a pencil and paper? There are some important highlights to
note. (Start using ABC’s of selling - Accuracy, Brevity, Clarity.)
First, here are the facts. HotStock is
poised for a breakout when the company announces its new defense contract.
Second, this is a billion dollar market and
we believe HotStock will be the market leader.
Third,- I can still get you stock at $5.00
a share!
(After 3rd point, say) “Do you
see what we see here Mr. Jones?”
(If he says “No,” ask him)
“Mr. Jones, is there something you don’t understand or maybe something I left
out?” (And reaffirm your points because it is useless to go on if he does not say
“yes.” We will discuss this very thoroughly at our sales clinic.)
(Assume he says “Yes.” You now
complete your company description and GET READY - In your mind - IT IS NOW GET THE ORDER
TIME.
“Mr. Jones, what is a normal
commitment? $50,000? That is 10,000 shares at the offering (assuming $5/share.) Do
you appreciate there is NO COMMISSION involved? Good!
“You know, I have an excellent idea.
Let’s be extremely conservative. Since this is a 3 to 5 step program, let’s take
50% of your normal commitment and really find a relaxed level of
comfortability. So
instead of $50,000 let’s only invest $25,000.
“Let me take some information and we
will take your indication to purchase shares of HotStock on the first public
offering.
“Mr. Jones, I have a few simple
questions.” (Use and take all information on new account form.)
Mr. Jones in order to take advantage of
Dewey, Cheatem & Howe’s expertise, we require a good faith deposit of
$5,000 on your order.
Thank you. I knew you would understand.
Now, the date we feel HotStock is going to
be issued is April 1. I’ll be in touch a day or two prior to tell you how successful
I have been in securing the number of shares you desire. We are truly excited you’ve
joined our family of clients. WELCOME ABOARD. Thank you and good-bye.
Now what?
Now that you’re a client of Bob Broker,
many wonderful things begin to happen:
Small penny-stock companies are touted as the
next IBM or McDonalds. The stocks were marked-up 25% when you bought them (which you
weren’t told) and now there is no market at all; nobody will pay you anything for the
stock. The Dream is over!
More Wonderful Things
Your Treasury bonds are sold to “enhance
your income” with a government “plus” fund (the “plus” being
complicated and risky, options and futures strategies).
You receive a confirmation in the mail showing
that you bought stock you never authorized. Bob Broker tells you it was a back office
error and will be corrected “tomorrow”. Six months later, “tomorrow”
has not yet arrived.
You receive another confirmation for an
unauthorized purchase. Bob Broker tells you he “only had a small block of a
”hot" stock and he only gave it to his best customers." You tell him to
give it to one of his other “best” customers; he never does and the price of the
stock drops like a stone.
Bob Broker says, “never mind what’s
in the prospectus, I happen to know that the company will be bought out at $30 next
week!”
Bob Broker sells you a commercial real estate
mortgage limited partnership as a better source of safe income than your bank CD’s.
After all, “you can never lose money in real estate.”
Bob Broker guarantees a stock is a winner
because it’s going to be listed on NASDAQ next week. In fact, he tells you, he just
bought some for his own personal account and for his mother.
Bob Broker calls you all the time now. His
conversation is filled with terms like “dividend roll-over,” “swap,”
“move out of this ... move into that,” “syndicate item—no
commission,” “preferred customer,” “be part of our institutional
program,” and “Buy it now—the Arab money is coming into this stock next
week.”
All of these words and phrases are designed to
induce you to buy or sell something. All are designed to hide the real risks from you or
to cover up improper actions. You are supposed to believe the activity in your account is
normal, and that you are getting special treatment, possibly even inside information. Any
objections you make are easily met by a broker trained to overcome sales objections.
Sprinkled through the rest of this book,
we’re going to be presenting more of Bob Broker’s high-pressure sales pitches
and how he overcomes your objections.
Then when the loss finally occurs, you’re
supposed to think it was just bad luck. Bob Broker will tell you, “These things
happen in the market, you know.”
Do you call that fair?
None of the above was “fair
dealing.” In each case Bob Broker went too far. While it is silly to think there is
no conflict of interest between you and your broker, there is a line he is not allowed to
cross. If he crosses that line and you lose money, that loss is his fault. You have every
right to expect him and his company to return your money. Losing money is not unfair.
Losing money unfairly is unfair!
Part 1