Editor's note: This blog article was originally published on April 24, 2023 and has been completely revamped and updated for accuracy and comprehensiveness.
When financial advisors contact Paladin about digital marketing, 82% of the time they answer this question with a resounding “no”. Then they go on to tell us their biggest marketing challenge is the production of a steady flow of leads each month.
Why such a strong no? Survey after survey shows financial advisors have abandoned Outbound Marketing (cold calling) and do not have an Inbound Marketing (Internet search engines) strategy that is working for them.
This leads to a basic question: is the financial advisor or firm responsible for the production of leads? The answer to this question is part of the marketing conundrum because it can be both.
Why a big no? Survey after survey shows the most frequent need for financial advisor marketing is producing a steady flow of high-quality leads.
This leads to a basic question: is the financial advisor or firm responsible? The answer to this question is part of the marketing challenge because it can be both.
Who was responsible for the production of advisor leads in the past?
As recently as a few years ago, most financial advisors, firms, and professionals were using outbound marketing tactics to produce leads for their firms and practices.
Outbound marketing was based on advisors initiating contact with investors. So, it made sense that this was the responsibility of professionals who dialed for dollars (cold-called names on lists) versus their firms. Back then, the financial professionals with the best sales skills produced the best results. Their ability to ignore rejection was also a major plus.
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When outbound marketing was in vogue, financial professionals were responsible for producing their own leads. Only the biggest firms spent major marketing dollars on building their brands' awareness and generating leads for the advisors.
What happened to outbound marketing?
Outbound marketing was widely considered an invasive form of marketing by advisors.They were calling investors who did not want to be called.
New advisors were encouraged to sell their firms' products and services to friends and family - based on established relationships and trust. Once those relationships had been "contacted," they had to start calling strangers, and that is when the trouble started.
This invasive form of marketing produced extraordinary reject rates approaching 100%, contributing to the industry's exceptionally high turnover rates for new financial advisors. Back in the day, an acceptable turnover rate was reported to be 70%.
The final nails in the outbound marketing coffin were new technologies that enabled investors to screen solicitations. Two effective examples were Caller ID and spam filters. This made outbound marketing even less productive to the extent some well-known firms abandoned its practice. They did not want to be known for boiler room sales tactics.
Can referrals replace outbound marketing?
Some advisors claim they rely on referrals to produce new clients for their practices and firms. Undoubtedly, most advisors receive a few referrals each year from friends and family, but is that a real marketing strategy? Or, are the financial advisors waiting for the telephone to ring.
If the biggest marketing challenge is not enough leads to talk to, then we would have to say referral-based marketing is ineffective with one exception. That is, a consistent flow of referrals are coming from Centers of Influence.
It is fair to say referrals are the ideal type of leads. In particular, when the referral sources endorse the advice and services of the advisor. This should create a significant competitive advantage for financial advisors relying on referrals for organic growth.
The challenge is there are just not enough of them. Waiting for the telephone to ring is not a viable marketing strategy.
What about the historical definition of inbound marketing?
If outbound marketing is based on financial advisors (professionals) initiating contact with investors, then inbound marketing is based on investors initiating contact with potential advisors (firms or professionals).
To be clear, firms with bigger marketing budgets had used inbound marketing tactics for decades when they advertised their services on radio, TV, and print. Investors initiated contact when they responded to the advertisements.
So, what is new about today’s inbound marketing?
Why is inbound marketing a game-changer for advisors?
You have seen how the Internet has impacted the marketing practices of other industries. Now it is impacting the marketing practices of the financial service industry.
Like a TV ad, the Internet empowers investors to connect with prospective advisors. However, the web is a much more powerful medium because it is a way to find advisors and learn more about them by visiting their websites and Google searching their names.
Investors can enter a few keywords in a search engine, and they have access to an unprecedented amount of information about financial advisors in their communities.
How does inbound marketing work online?
Three key metrics drive the success of inbound marketing:
- How visible are financial advisors online?
- How much traffic does that visibility produce for financial advisor websites?
- What is the conversion rate of the financial advisors websites?
When investors know the financial advisors' names, they enter their names in the search engine. When investors don't know the advisor's name, they enter various keywords: Find a financial advisor near me.
Investors are learning to use four primary web-based applications:
- Find financial advisors online
- Learn more about advisors
- Contact the advisors that fit their requirements
- Research financial topics
What is the marketing problem for financial advisors?
Now we are back to square one. Who is responsible for implementing inbound marketing - the firm or the professional? And, perhaps more importantly, who is responsible for the expense?
This is not as naive as it sounds.
If the financial advisory firm believes professionals are responsible for producing their own leads, then why would the firm want to be responsible for this marketing expense? However, to be fair, the firm also benefits from building brand awareness, business valuations, and new client revenues.
One perspective is investors will use search engines to research advisors. In general, this means they will visit advisor websites, and Google search their names. Firms, not professionals, control these web-based marketing tools and processes.
There is also another issue. The firm and the professional could be one and the same. In this case, the issue of responsibility for producing leads goes away.
What is the irony of inbound marketing?
Smaller, independent boutiques may benefit more than bigger firms with larger marketing budgets.
That is because smaller firms are in a better position to deliver the information investors are seeking on the Internet. This is more difficult for firms that employ or license thousands of financial professionals.
The big firms may have more brand awareness but they also make investors' research processes more difficult.
Smaller firms can market themselves and the professionals who work there more easily. Plus, they can be affiliated with other professionals and firms (Schwab, Fidelity, Pershing) that give them access to the same resources as the bigger firms.
Perhaps this is the reason why independent RIAs are the fastest-growing segment of the financial service industry.
About Paladin
Paladin is a team of digital marketing professionals with more than 100 years of collective financial industry experience marketing our clients' services to individuals, institutions, and financial advisors. Paladin is a boutique agency that was founded in 2003 to provide game-changing digital marketing services to a limited number of firms and professionals in the financial service industry. Our services range from designing and developing custom websites to providing SEO, SEM, and Fractional CMO services. Want more information about our digital marketing services? Email your request to Paladin’s CMO: Jack@PaladinDigitalMarketing.com
