Editor's note: This blog article was originally published on March 25, 2023 and has been completely revamped and updated for accuracy and comprehensiveness.
The regulatory agencies have policies that reflect the ways investors use the Internet to find and research financial advisors. Some of the rules are still a little fuzzy, consequently, some financial advisors are still reluctant to add testimonials to their websites.
In this article, we will discuss the pros and cons of using testimonials to help create credibility and trust. These are two of the most sought-after characteristics when investors use the Internet to find, screen, contact, and select financial advisors.
What About Compliance?
We are a digital marketing agency and not a compliance service. We strongly recommend you consult with your CCO before implementing any of the marketing tactics that are described in this article. CCOs may have different opinions on the impact of new regulations and how financial advisors can integrate testimonials into their digital marketing practices.
Online Disclaimer
All of the marketing strategies in this article will more than likely require some type of online disclaimer. In general, the main disclaimer may say: “The experience of a particular client may not represent the experience of all of a financial advisor’s clients."
The disclaimer is usually found at the bottom of the same page that displays the client testimonial. If it is displayed on a financial advisor website, the disclaimer may also appear in the Terms of Use.
Regulatory agencies and compliance officers may also require certain language for testimonials and locations where the disclaimer is published. CCOs are well aware most investors do not take the time to read the terms of Use.
The Internet is a Game Changer
Increasing numbers of investors are using the Internet, not only to find financial advisors but also to research them. Regardless of how they find financial advisors, they will still use the Internet to visit websites and Google search firms and professional names.
The Internet creates a certain amount of control for investors because they can conduct their searches and research without disclosing their contact information. This anonymity is a huge plus for investors who do not want to be contacted by financial advisors until they are ready to schedule interviews.
It is safe to say, the Internet is becoming a powerful tool for investors. And, it is changing the way financial advisors are marketing their services the same way it has impacted the marketing practices of other industries.
Types of Testimonials
There are four ways financial advisors use the feedback of clients to help validate the credibility and trustworthiness of their services. The implementation of these strategies will vary by advisors and their clients:
- Testimonials
- Reviews
- References
- Case Studies
Financial advisors may use one or several types of testimonials to validate the quality of their services.
Financial Advisor Testimonials
A testimonial can be as simple as a quote from a client that is published on a website or other venue that is visible to investors on the Internet.
In an ideal world, the testimonial should not be solicited, cherry-picked, or influenced by the financial advisor. Therein lies the biggest concerns of regulatory agencies and compliance officers.
On the one hand, positive testimonials may be a way for a satisfied client to reward a financial advisor for a job well done. The comments in this testimonial are likely to be very positive. On the other hand, financial advisors will never publish negative testimonials on their websites. This is why some investors put more value on ratings and reviews where financial advisors have less control.
This concern may be reduced by publishing three to five testimonials which may be a better reflection of the financial advisor’s overall services and advice.
Paladin Tip: Testimonials can make investors feel safer, so they are more inclined to contact particular financial advisors.
Financial Advisor Reviews
Reviews are supposed to be an objective form of client feedback for a financial advisor because the advisor has reduced control over them.
Any client can post a rating with a review. Satisfied clients will most likely post positive reviews. Dissatisfied clients will tend to post negative reviews. Ideally, a financial advisor will have more positive reviews than negative ones so their overall ratings are three stars or higher.
What if advisors ask their best clients to submit reviews? They may even send links to these clients. This is one of the primary concerns of the regulatory agencies and compliance officers.
Positive reviews with four and five-star quality ratings are very valuable when investors use the Internet to research financial advisors. The more positive reviews the better because they can also have a positive impact on the financial advisor's page rank in Google and the other search engines.
Paladin Tip: Financial advisors should encourage all of their clients to provide ratings and reviews. It is one of their best strategies for validating their expertise and trustworthiness.
Financial Advisor References
What happens when prospects say: “Can I talk to a few of your current clients?” Very few advisors are going to say "no" - it could cost them the sale. Most advisors are going to respond positively by giving prospects three names and their contact information.
It is fair to assume no advisor will provide prospects with bad references. In fact, the majority of references are carefully selected, some may have personal relationships with the advisors, and some are coached to make the right comments.
The exchange between investors asking for references and financial advisors providing references is verbal so there is no documentation.
Paladin Tip: References should be provided in writing with information that provides details about the relationship.
Financial Advisor Case Studies
Financial advisors should consider using case studies in their digital marketing. The best case studies will describe the experiences of actual clients. On the other hand, fictitious case studies, with appropriate disclosure, are better than no case studies.
The role of the case study is to give prospective clients something they can relate to:
- Provide some background about the investors.
- What were the investors’ financial pain points?
- What were the financial advisor’s solutions for the pain points?
- How did the financial advisor solve the investors’ problems?
- What were the results?
Paladin Tip: The best case studies will describe the before and after experience of actual clients. Testimonials can also be integrated into the case studies.
Financial Advisor Track Records
Testimonials, reviews, and case studies are not a substitute for a financial advisor track record. Legitimate track records should be audited, GIPS compliant, and reflect the results of all of a financial advisors’ clients.
Testimonials should not contain any references to performance. However, the investors leaving the testimonial could say the financial advisor has more than met their expectations for results without describing their rates of return.
Paladin Tip: Needless to say, this will continue to be a very sensitive issue that can create compliance problems for financial advisors if it is not managed properly.
About Paladin
Paladin is a digital marketing agency that has worked exclusively with financial advisors since its founding in 2003. Paladin’s team of digital marketing professionals has more than 100 years of collective financial industry experience marketing our clients' services to individuals, families, and businesses. Plus, our team has decades of experience providing digital marketing services to financial advisors. Our clients range from start-ups to firms with billions of dollars of AUM. We are a full service agency that provides website, SEO, SEM, Video, and Fractional CMO services. Want more information about our digital marketing services for financial advisors? Email: Info@PaladinDigitalMarketing.com to schedule an introductory call. We protect your privacy.
