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Financial Advisors: Testimonials That Matter

Publishing client feedback is a valuable financial advisor marketing strategy that advisors should use to document their credibility and trust on the Internet. However, it is also a complicated strategy because several nuances based on firm policies and industry regulations impact the use of client feedback in financial advisor marketing strategies.

This article will take a deeper dive into the nuances that impact this form of marketing. 


What are the various types of testimonials?

Financial advisors have four primary ways to engage current clients to provide feedback about the quality of their advice and services:

  • Website testimonials
  • Online ratings and reviews
  • Case studies
  • References


What is the primary source of testimonials?

By far, the number one source for testimonials, ratings, case studies, and references will be current clients. In particular, clients with longer-term, positive relationships with financial advisors.

A distant second is the use of Centers of Influence (CPAs, Attorneys, Agents, Other Advisors) that provide their services to common clients.   


What about investor concerns?

Cautious investors will always be concerned that financial advisors may have cherry-picked their best clients to provide testimonials. There is some validity for this concern. No advisor will knowingly publish a bad testimonial on their websites. 

Consequently, investors may give more credence to ratings and reviews on third-party websites. That is because financial advisors will have less control over what is written about them by current or former clients. 

These are valid concerns and financial advisors may want to add a disclaimer when appropriate to address this concern.


Is a 5-star rating a track record?

The testimonial or review performance of a current client who agrees to provide a testimonial does not constitute a track record. There are numerous requirements for producing marketable track records for financial advisors.

A 5-star rating for a financial advisor can indicate client satisfaction, but it shouldn't be viewed as a track record. Here's why:

  • Number of Reviews: A 5-star rating based on three reviews can be very different than a 5-star rating based on 300 reviews. A larger number of reviews typically gives a more accurate picture of client satisfaction.
  • Depth of Reviews: Some ratings might be accompanied by detailed client testimonials or feedback, while others might just be a star rating with no comment. 
  • Scope of the Rating: A high rating might reflect an advisor's excellent interpersonal skills, prompt response times, or other service-related qualities rather than their investment performance or financial planning acumen.
  • Dynamic Nature: Ratings can change over time. While relevant, an advisor’s past performance doesn't guarantee future results.


What about written testimonials?

You should obtain written statements from current clients extolling the quality of your services. The simplest way to do this is to ask clients to share their experiences working with you. This can be done after a successful milestone, during an annual review, or when a client expresses exceptional satisfaction.


What about ratings & reviews?

A rating is a score with an evaluation that is a narrative describing an investor’s experience with your firm.

Encourage clients to rate and review your services on platforms that allow for such feedback, provided it's within regulatory and compliance guidelines.

Similar to testimonials, ratings and reviews should not indicate past performance or give a false sense of security. It's important to ensure that all reviews are genuine, not solicited with any form of remuneration, and that advisors do not solicit clients who will only post positive reviews.


What about case studies?

A case study is a detailed examination of specific client scenarios, showing how your financial guidance has made a difference.

With a client's permission, the case study should cover the challenge, the solution, and the results achieved.

Confidentiality is paramount. All personal and identifiable information should be removed or anonymized. Furthermore, case studies should provide a disclaimer that past results are not indicative of future results and that the case study does not guarantee the same results.


What about references?

A reference is a client or Center of Influence (CPA, attorney) who can vouch for your knowledge, services, and results.

Ask long-term clients if they would be willing to serve as references for potential clients to speak with by telephone or Zoom.

Always get written permission from clients before listing them as references. Maintain their privacy, sharing contact information only when necessary and with their consent in advance.


What about compliance?

Remember, the key is to always prioritize transparency, authenticity, and regulatory compliance. Before publishing any testimonials, reviews, or case studies, it's wise to consult with legal or compliance experts familiar with the financial industry to ensure you're operating within bounds.

Regulatory bodies like the SEC (U.S. Securities and Exchange Commission) have specific rules about using testimonials. Advisors should ensure that testimonials do not state or imply that the advisor's past results will reoccur in the future or make any promises regarding future results. Full disclosure with context should be provided for each testimonial.


What about performance records?

Performance is a metric that many investors look at when deciding to choose a financial advisor. However, when it comes to testimonials, it's essential to differentiate between anecdotal evidence of performance and a rigorous, audited track record.

Various factors impact performance results, including market conditions, investment strategy, and individual choices. An individual testimonial should not represent the average experience or expected performance of a financial advisor’s other clients.

Testimonials and Performance: While clients might be satisfied with their performance and mention it in a review, this is an individual experience. Such reviews should not be used to imply or project future performance for other clients. It's crucial to provide a clear disclaimer stating that the testimonial is based on personal experience and does not indicate future results.

Displaying Performance: Financial advisors can display performance data, but there are stringent requirements to ensure it's accurate and not misleading. Any performance data shared should be based on a comprehensive time period, preferably since the inception of the advisory practice, and it should be updated regularly.

Regulatory Oversight: Regulatory agencies, such as the SEC, have guidelines about representing performance in various marketing strategies. Financial advisors need to be careful to adhere to these guidelines and ensure any performance representation is fair, accurate, and provides the necessary context.

Performance Reviews: Instead of relying on testimonials for performance insights, advisors can provide potential clients with systematic performance reviews. These reviews should provide data on how portfolios have performed over time, considering various market conditions, and be accompanied by the necessary disclaimers.

Final Thoughts on Performance: While performance is a key consideration for many investors, it's important to ensure it's represented fairly and accurately. Anecdotal testimonials can be a glimpse of client satisfaction, but they should not be the sole or primary evidence of an advisor's capability.


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

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