My $50 Million Mistake
April 3, 2017
by Dan Solin
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We learn from our successes and failures, except in the latter case it can be very
painful. But that’s why I will never forget what I could have done to land a $50 million account.
I remember the meeting like it was yesterday. It had taken me almost a year to persuade the head of
human resources for a mid-sized industrial company to agree to discuss their 401(k) plan with me.
A great opportunity
It was a typical plan, populated with expensive, actively managed funds, with a couple of token index
funds added to the mix. I was confident that, with the right presentation, I could persuade him to switch
the plan to one consisting solely of a limited number of portfolios (at different risk levels) using lowmanagement-fee passive funds. I knew I could demonstrate lower cost to plan participants and higher
expected returns.
It was a no-brainer.
I wasn’t going to take any chances with such a large, promising prospect. I wanted to be sure my
presentation was flawless. I arranged for the meeting to be held at the office of the fund family I was
using, and asked them to have their best client-facing person lead the meeting.
They didn’t disappoint. The person they selected had a Ph.D in finance. He was engaging and
articulate. His presentation was flawless. He reviewed the data showing the impact of high costs on
performance. He discussed the peril of stock picking, market timing and chasing returns. He provided
compelling data on the dismal performance of actively managed funds. He illustrated his points with a
few well-designed slides.
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I thought his presentation was brilliant – far better than anything I could have done.
I left the meeting elated and congratulated myself on making these extensive arrangements. The HR
person seemed impressed and appreciative as well.
A week or so passed and I decided to follow-up. The HR person told me they were “considering their
options” and would get back to me.
They never did.
My flawed assumption
What happened?
I made a logical assumption many of you embrace when dealing with prospects. I thought the use of
logic and reason would change the mind of my prospect. A study by Yale behavioral economist Dan M.
Kahan sheds light on why my premise was flawed.
In a series of experiments (discussed in this article) Kahan demonstrated the use of data aggravated
pre-existing differences in positions on a variety of issues like climate change. One commentator
summarized Kahan’s findings as follows: “A conservative Republican with strong science intelligence
will use their skills to find evidence against human-caused global warming, while a liberal Democrat will
find evidence for it. This is also true for issues like fracking, evolution, and the risks associated with
gun possession – whatever your preconceived political belief on this issue, you’ll use your scientific
intelligence to try to prove you’re right.”
The more data you provide to someone with a pre-existing belief, the more likely they are to align
themselves with their belief, even though it’s contradicted by the evidence.
Of course, there are exceptions. People who are genuinely curious are more likely to be persuaded by
the evidence.
The takeaway
How should this research affect your meetings with prospects?
If your prospect (like my HR person) believes strongly in active management, you’re unlikely to change
his or her mind by overwhelming them with data. This approach may have the opposite effect. They will
use your data to adhere more strongly to their pre-existing belief.
If I could go back and redo my meeting, I would have conducted it myself, without an impressive
expert. I wouldn’t do any formal presentation. Instead, I would ask a series of questions that initially
would establish an emotional connection between the prospect and me. As the meeting progressed,
my questions would focus on their existing plan and elicit his perceptions of its pros and cons.
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I would let him lead the meeting, instead of trying to educate him on the merits of passive investing. I
would try to elicit his concerns and then attempt to address them.
I still might not have converted him from a prospect to a client, but the odds of doing so would have
increased significantly.
Dan Solin is a New York Times best-selling author of the Smartest series of books. His latest book is
The Smartest Sales Book You'll Ever Read. His sales coaching practice has expanded to include
advisory firms throughout the world. Dan is no longer affiliated with any advisory firm.
Get Dan's investing insights by signing up for his free, weekly newsletter here.
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