"12% per annum fixed? Too good to be true mate"

Andrew Thomson - General Manager

If I had a dollar for every time someone uttered this statement to me, well I probably wouldn’t be rich, but I’d have a very large piggy bank full of $1 coins.

Over the years, working in many industries and sometimes finding myself on the frontline of a sales process – I often encounter folks who register or enquire simply for the purpose of telling me they’re not interested in our product or what we’re selling or advertising. It’s a phenomenon that has often confused me, but over time I’ve come to the conclusion that it’s a form of self-reassurance.

Andrew Thomson - General Manager

It’s almost like these people are interested, but just can’t bring themselves to admit it or take the next step to be involved, so they just ring or email to let me know they don’t believe it as a way to reassure themselves they are not missing out on anything!  Sort of like ‘reverse FOMO’?

I’m always happy to take these calls, as at least it gives me a small (albeit usually brief) opportunity to let them in on the secret. It’s NOT too good to be true, we’ve got 1,000 clients that will tell you this, some of them have invested more than 5 times with us and they will keep doing so!

My success rate of talking these people around is limited to say the least, but I’m not exactly a salesman.  What I enjoy more about these calls is trying to understand the psychology of why someone takes time out of their day to tell me they’re not interested! It’s not only limited to email or phone communications either - a few months back I attended a series of conferences where I spoke in detail about our current product, how it works and gave my views and commentary on the broader market. It was incredibly well received and the results in terms of bring on new clients were exceptional, both direct and via referral. However, the phenomenon was still alive and well, with at least 3-5 people per city approaching me afterwards for the sole purpose of telling me they’re not interested and that 12% fixed returns are too good to be true. 

Given the setting, I felt it wasn’t appropriate for me to engage in a conversation with these people at the time and try to talk them around, as I was surrounded by plenty of potential new clients who had come to tell me they are interested! Even better, while in Melbourne – I had an actual existing and repeat client standing there when one gentleman approached to politely let me know he wasn’t interested (not that I had asked him!) and our investor quite aggressively returned serve with a retort that his last 3 investments with us said otherwise… to which I say, bravo sir and thank you for your support!

 All this got me thinking though:

1.    Why do people feel the need to tell me they’re not interested?

2.    What is it that makes them not interested?

3.    Why do they think it’s ‘too good to be true?’

Well I’ll don my amateur psychologist hat and see if I can answer the above 3 questions.

1.    Deep down, they are interested.

2.    See #1

3.    There a number of answers to this question. They misinterpret ‘fixed’ for ‘guaranteed’, they are unfamiliar with traditional returns in property development, they have consistently seen their investments or super earn much less and many, many others.

Breaking this down: Fixed most certainly doesn’t equal guaranteed. If we could guarantee 12%, I don’t think we’d even need sales people. There are no products out there anywhere in financial services offering guaranteed returns that I’m aware of. Even a term deposit with a major bank only has the deposit guaranteed (by the government for authorised deposit taking institutions) but the returns are not guaranteed. Internally, we landed on 12% as our fixed return offer as we feel it’s a realistic and conservative figure. The benchmark for almost all residential development is 20%, so to us – giving ourselves the opportunity to earn an 8% (or more) margin is attractive. 

So while the ever present disclaimer in financial services rings true ‘past performance is not a reliable indicator for future performance’ – what I can say is that if we’ve done it over and over again, then it’s not too good to be true – is it?