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Hello and welcome back to Business English Pod.
For today's lesson, the fourth in our series on financial services.
In this lesson, we'll focus on pitching a new opportunity to a client.
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In certain ways, selling financial services is just like selling any other kind of product.
You connect with people and you match your solution to their needs or desires.
And of course, you show how that solution is worth the money it costs.
But with financial services, these activities are usually much higher stakes.
Working with other people's money requires you to work on maintaining a strong relationship.
It's not a one-off purchase, but an ongoing transaction.
You need to let them know how their investments are doing and show clients you understand them as people, including their concerns.
Then, when the time is right, you can pitch new opportunities.
If you're smart, you can set up a real win-win situation with your clients.
If they earn more money, then you earn more money, and you both end up better off.
In today's dialogue, we'll listen to a conversation between Robert, an investment advisor, and his client, Jessica.
Robert wants to give Jessica an update on her current investments before introducing a new opportunity involving a hedge fund.
As you listen to the dialogue, try to answer the following questions.
1.
What expression did Jessica use previously that Robert now brings back up in order to pitch her a new opportunity?
2.
What does Robert say is the main benefit of a hedge fund?
3.
How does Robert respond when Jessica expresses concerns that a hedge fund requires a big investment?
Glad to hear all's well.
And, yeah, I just wanted to check in with you on progress and whatnot.
Yes, of course.
You've got my money, so yours is a call I'll always take.
Right.
So for starters, just a bit of an update.
We rebalanced your portfolio, like we discussed, and your gross return is now running around 8%.
Hmm.
8%.
That's okay, I guess.
Though I think the S&P is up 5% this month alone.
You're right.
The S&P is up.
But the markets have been choppy all around.
So, what does that mean here?
I mean, what's the play in this situation?
Well, I was thinking back to something you said earlier.
You said you wanted to make hay while the sun shines, and so I had a couple of opportunities.
I wanted to run by you.
I'm talking about hedge funds.
Higher risk, but higher rewards.
I thought hedge funds were just for the super wealthy, no?
Well, a classic hedge fund usually has a minimum investment of a quarter mil.
Yeah, that sounds like quite a leap.
And I heard the fees are crazy.
It depends.
In a classic fund there's a 2 and 20 fee structure, meaning there's a 2 management fee and a 20 performance incentive, as long as returns surpass a specified hurdle rate or minimum return.
That ensures you don't get pinched on fees if they're not hitting targets.
And so you're investing in different companies or different types of bonds?
So how does that work?
Well, it gives us the ability to make various alternative investments.
Short selling options and futures real estate currencies mergers a wide range of strategies which aren't open to mutual funds.
But a 250k minimum?
That's a lot of money.
Yes, you're right.
It can feel kind of like putting all your eggs in one basket.
I mean, maybe if I had more to work with.
But Well, there is another opportunity that might be more appealing.
Now let's go through the dialogue again and look at the language and techniques Robert used in his conversation with Jessica.
As he says, he first wants to check in or just discuss how everything is going.
Glad to hear all's well.
And yeah, I just wanted to check in with you on progress and whatnot.
Yes, of course.
You've got my money, so yours is a call I'll always take.
Right.
So for starters, just a bit of an update.
We rebalanced your portfolio, like we discussed, and your gross return is now running around 8%.
Clients generally want to know how their investments are doing, so an important part of a regular check-in is reviewing the performance of a client's portfolio or set of investments.
In this case Robert informs Jessica about her gross return, which is her investment earnings before any fees or taxes.
A general update on performance doesn't have to be too detailed.
It's enough for Robert just to let Jessica know that her gross return is about 8%.
What are some other ways we can review current performance when updating a client?
Let's run through some more examples.
We're happy to report a return of 12% for the last quarter.
Your mutual funds are performing well, and so are your real estate assets.
Despite the shaky market, your portfolio has achieved a steady 7% return over the past three years.
Focusing on long-term growth, your investments have outperformed the index by 3%.
So how does Jessica feel about an 8% gross return?
Let's listen.
Hmm.
8%.
That's okay, I guess.
Though I think the S&P is up 5% this month alone.
You're right.
The S&P is up.
But the markets have been choppy all around.
So?
What does that mean here?
I mean...
What's the play in this situation?
The fact that Jessica knows about the SP, an important stock market index, shows she has a bit of knowledge herself.
As an advisor, this may impact how you talk with your client.
This discussion of the investing context leads Jessica to ask about the play or the strategy in this situation.
Because Jessica has asked, this is a perfect time for Robert to introduce a new opportunity.
Well, I was thinking back to something you said earlier.
You said you wanted to make hay while the sun shines.
And so, I had a couple of opportunities I wanted to run by you.
I'm talking about hedge funds.
Higher risk, but higher rewards.
In one of their previous conversations, Jessica mentioned that she wanted to make hay while the sun shines.
This idea means to take advantage of opportunities when they're available and Robert brings Jessica's exact words into this conversation in order to introduce the opportunity of hedge funds, a particular type of investment.
No matter what you're selling, your job is to make people believe that they want or need what you have.
Connecting the opportunity to their own ideas and words can help you do that.
Let's practice some other examples of using a customer's own words to introduce an opportunity.
Going back to what you were saying about lower risk, I have an opportunity you might be interested in.
This particular fund lines up well with what you called a balanced strategy.
If you want to play the game, as you say, then let's think about real estate.
I know you want to play it safe so let's have a look at government bonds.
Let's continue as Robert helps Jessica understand how hedge funds work.
I thought hedge funds were just for the super wealthy, no?
Well, a classic hedge fund usually has a minimum investment of a quarter mil.
Yeah, that sounds like quite a leap.
And I heard the fees are crazy.
It depends.
In a classic fund there's a 2 and 20 fee structure, meaning there's a 2 management fee and a 20 performance incentive, as long as returns surpass a specified hurdle rate or minimum return.
That ensures you don't get pinched on fees if they're not hitting targets.
Jessica isn't warm to the idea right away.
She thinks hedge funds are for the super wealthy or very rich and have high fees.
This is where Robert needs to explain exactly how the fee structure works.
The two kinds of fees that are useful to understand are management fees, a standard percentage paid to an advisor, and performance incentives.
These are like bonuses, which are paid only if the investment increases in value beyond a certain amount or minimum return.
Overall, Robert's purpose in explaining these fees is to reduce Jessica's concerns about high fees.
A simple explanation of the fee structure is critical, since that will often be a client's biggest worry.
Let's run through some other ways of giving a simple and clear explanation of fee structures.
Basically, we take a percentage of the assets we manage.
With this fee structure you only pay for performance beyond a minimum return.
There's a 2% annual fee on this, plus 5% based on how well the investments do.
This fund has a fixed management fee, which gives you a lot of clarity.
With a basic understanding of the fees, Jessica then wants to know how a hedge fund works.
And so you're investing in different companies or different types of bonds?
So how does that work?
Well, it gives us the ability to make various alternative investments.
Short selling options and futures real estate currencies mergers a wide range of strategies which aren't open to mutual funds.
As you can hear, a hedge fund simply gives a wider range of investment options.
Robert provides a list of these alternative investments to show Jessica that a hedge fund introduces new opportunities.
Robert's purpose is to show the benefits of hedge funds.
He talks about how they give them the ability to take a range of strategies, and he notes that these strategies are not available in mutual funds, a more common way of investing in stocks and bonds.
Let's have a look at some more ways of explaining the benefits of a new investment opportunity.
This fund delivers very good returns and lines up with your ethical concerns.
By focusing on innovative companies, this opportunity has huge potential for growth.
This is a really safe bet that will protect your assets over the long term.
So do the benefits of hedge funds sound appealing to Jessica?
Let's find out.
But a $250K minimum?
That's a lot of money.
Yes, you're right.
It can feel kind of like putting all your eggs in one basket.
Jessica might see the benefits, but she returns to the fact that there's a minimum investment of 250K or 1000.
So what do you do when a client has concerns?
Do you tell them not to worry about it?
In fact, it's usually better to actually acknowledge the client's concerns to show that you understand.
And that's what Robert does when he says, you're right.
And he emphasizes her concerns with the idiom, put all your eggs in one basket.
That expression means depending on just one person or one thing for success.
If the basket falls, all your eggs break.
What are some other ways we can acknowledge a client's concerns to show we understand?
Let's try some more examples.
I certainly hear your concerns, so let's take this slow for now.
You're right.
The fees on this are pretty high, so it's important you're comfortable with that.
Absolutely.
This is a big investment, so please take your time.
As we can hear at the end of the dialogue, Robert has more than just one opportunity up his sleeve.
I mean, maybe if I had more to work with.
But Well, there is another opportunity that might be more appealing.
Robert doesn't just acknowledge Jessica's concerns.
He goes on to introduce yet another opportunity that might be interesting, given her worries about a minimum investment.
You'll have to tune in next time to hear about that opportunity.
For now, we can see that Robert has done a good job of updating Jessica on her investments and setting up a conversation about new opportunities.
Now let's practice some of the language we learned in today's lesson.
Imagine you work as an investment advisor.
You are talking to a client about performance and new opportunities.
You'll hear a cue by the client.
Then I'll give you a suggestion for what you can say in response.
We'll guide you through each step in the practice and provide an example answer for each response.
Ready?
Let's give it a go.
So, how have my investments been doing since we last talked?
Start by saying that you're happy to report a gain of 10% over the last quarter.
Answer.
Well, I'm happy to report a gain of 10% over the last quarter.
That's decent.
But as I said, I'm okay making some bigger bets.
Now say that if she's interested in big bets, then you have something she might like.
Answer.
If you're interested in big bets, then I have something you might like.
Oh yeah?
What might that be?
Next, state that you have an outstanding hedge fund with a 2% base fee and a 12% performance fee.
Answer.
We have an outstanding hedge fund with a 2% base fee and a 12% performance fee.
I'm not sure whether that's the right thing for me or not.
Now say that it has very good returns and you are very experienced with this kind of fund.
Answer Well, it has very good returns and we're very experienced with this kind of fund.
Yes, I'm just not a big fan of the 12% performance fee.
Finally, say you understand her concerns and you can give some more information.
Answer.
Sure, I understand your concerns and I can give you some more information.
Now let's practice some of the vocabulary we've covered in this lesson.
In a moment, you'll hear a series of sentences with a word replaced with a beep.
Repeat each sentence, including the missing word.
For example, if you hear... You can say...
After each response, we'll provide the correct answer.
Let's begin.
I want to avoid putting all my eggs in one Answer.
I want to avoid putting all my eggs in one basket.
Can you tell me more about the fee on this kind of investment?
Answer Can you tell me more about the fee structure on this kind of investment?
Hi Tony, I just wanted to call and... Regarding your portfolio.
Answer.
Hi Tony, I just wanted to call and check in regarding your portfolio.
There's a lot of risk with this, but also very high...
There is a lot of risk with this, but also very high rewards.
We've reached the end of this lesson on pitching a new investment opportunity.
We've looked at giving a performance update and using a customer's own words to introduce an opportunity.
We've also learned how to explain a fee structure, show the benefits of an opportunity and acknowledge a client's concerns.
For more practice.
Premium members can access the online quizzes and PDF transcripts for this and other lessons on the BEP website.
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Thanks for listening and see you again soon.
