Clients are feeling the impact of inflation. They are paying
more for many everyday items. TV news tells them some products are in short
supply and they may be paying even more. Some clients might want to stay on the
sidelines until someone rings a bell announcing it’s time to invest. Here are
ways you can be proactive by tapping into their concerns.
Years ago, I met an advisor who made a great case for
investing in utilities. Using the electric company as an example, he would ask
if he sent them a check every month. The answer was yes. “Wouldn’t it feel
great if the electric company sent you a check back to you every quarter?” The
client smiled and said yes.
This article is not meant to recommend any specific stocks.
Your firm’s research is paramount. You only suggest stocks the firm considers
are good buys. Many of these stocks are total return stocks. The client is
“paid to wait,” collecting dividends while hoping the stock goes up. Many
industries are filled with household names. You could also choose to buy ETFs
representing an entire sector or industry.
Eleven Rising Costs To Get Your Client Thinking
Here are 11 areas where your client would say: “Yes, costs
are rising. I feel the pain in my wallet.” You can show them how they can own
part of the firm or an industry.
1. Automobiles. Visit a new car dealership and you
might be surprised. There are no cars! You’ve seen the ads on TV: You choose
the specifications for your car. They “build it for you” and it’s delivered a
couple of months later. You hear about people paying sticker price or above to
buy a car, if they can find inventory. Is this a good time for your client
to own a car company?
2. Health insurance. Health-care costs have risen
faster than inflation for years. Your client sees their premiums rising every
year. Deductibles grow at the same time. If your client is complaining about
increasing health insurance premiums, would they want to own part of a
3. Brand name groceries. Consumers see prices rising
at the supermarket. They feel comfortable with brand names. Their weekly “shop”
costs more and more. They know if money is tight, food is one of the last areas
where people will cut their spending. Your client has favorite brands. They
think the product is great. Would they like to own some?
4. Warehouse stores. People feel they get better
prices in the big box stores. This also includes home improvement stores and
“category killer” retailers. Your client probably shops there. They have
difficulty finding parking. Do they own any stock in their favorite stores
5. Power utilities. It’s that argument for getting a
quarterly check back from the people you send a check every month. It’s a
regulated industry. What kind of dividends is your local power company
paying? Have they increased over time?
6. Cable companies. Many people still use cable.
Those companies have gone into the content production and phone service
business too. How much is your client’s monthly cable bill? Has it gone up
over the past few years? Do they think the industry has enough potential to
justify an investment?
7. Pharmaceuticals. Turn on your TV. Who are the
advertisers? Drug companies come to mind. There are plenty of “ask your doctor
about” ads. Any idea what those advertised drugs cost to buy? Check it out
online sometime. The population is getting older. Does your firm think
pharmaceutical companies have a bright future?
8. Wireless providers. Everyone has a cellphone. The
service to keep them going isn’t cheap. How much is your client’s wireless
bill? Do they think the “phone company” is a good investment? What kind of
dividends do they pay?
9. Gasoline. Fuel prices are on the morning news.
Everyone watches for them while driving. Places with good prices have long
lines. People will need to buy gas as long as they drive cars with internal
combustion engines. How does your client feel about gas prices? What do
dividends look like in this sector?
10. Credit card companies. This category includes
financial institutions that also issue credit cards. Your client knows what
banks pay on money fund balances. Not a lot. They know what credit card
interest is too. Which side of the equation do they want to be on?
11. Logistics companies. Years ago, buying by mail
order meant waiting six to eight weeks for delivery. It was spelled out in the
advertisements! Today waiting more than two days for delivery is rare. More and
more people are buying online. Your client knows “free shipping’' isn’t free
because the expense is built into the price. If the volume of shipped items
increases, it’s logical someone is making money. What does your research
department think about these firms?
These are industries that touch your client’s everyday life.
Many firms are household names. They “understand” how they make money. They
don’t think those businesses are going to disappear anytime soon. This might
get your client more comfortable with considering your investment recommendations.
Click here for the