Editor's note: This blog article was originally published in 2018 and has been completely revamped and updated for accuracy and comprehensiveness.
Financial advisors need leads they can convert into qualified prospects that in turn are converted into revenue-producing clients.
This is all part of a structured sales funnel that starts on the Internet using digital marketing and ends when the advisors’ sales processes convince prospects to hire them.
How big is the need for leads? When we survey financial advisors, the overwhelming majority say their biggest marketing challenge is producing a consistent flow of new leads every month.
Let’s look at the numbers. If the advisor wants to add two new clients per month and the advisor’s close-ratio is 25%, the advisor needs eight new high-quality leads per month. Where are the eight leads going to come from?
In the absence of a lead generation marketing strategy, financial advisors are limited to referrals that can be few and far between. In fact, most referrals merely offset attrition over the course of a year.
Waiting for the telephone to ring is not a proactive marketing strategy if the advisors’ goals include organic growth.
Why is outbound marketing obsolete?
In the past, most advisors used outbound marketing tactics to produce leads, prospects, and clients for their services. This tactic was based on financial advisors initiating contact with investors. The most frequently used version of this tactic was cold calling.
Cold calling never worked very well because it required financial advisors to contact investors who did not want to be contacted. Rejection rates were off the charts, but at least financial advisors had some level of control over the process (number of cold calls per day).
Most financial advisors abandoned these obsolete outbound marketing tactics or they left the industry for greener pastures.
Why is inbound marketing the future?
The foundation of inbound marketing tactics is investors initiating contact with financial advisors. The good news - inbound marketing generates warm leads for advisors.
In the past, the main form of Inbound Marketing was advertising: Print, radio, TV. Investors were supposed to see advertisements and initiate contact with financial advisors. But this form of lead generation was extraordinarily expensive and all too often the results did not justify the fixed costs.
A new form of lead generation for financial advisors is using the Internet to produce leads. Investors find advisors on the Internet, visit their websites and initiate contact. This may sound simple enough, but it takes a sophisticated sales funnel to make it work.
Financial advisors use content marketing, social media efforts, and Local SEO to produce traffic to their websites. They also have custom websites that are designed to convert traffic into qualified leads for their services.
The Internet has changed the way a lot of industries market and deliver their products and services. However, the Internet is just beginning to impact the marketing practices of the financial service industry.
Why do financial professionals outsource their need for leads to third parties?
Financial advisor firms must own their brands and their websites to make inbound marketing work for them. Financial professionals do not own brands and websites.
Professionals pay third parties to produce leads for them. These companies use digital marketing to produce leads then they validate the leads and match them to multiple financial advisors. The matches are based on location, service requirements, and the advisors’ minimum asset requirements. In the past couple of years, leads can be increasingly virtual due to Covid.
Why are some leads unresponsive?
The number one complaint financial advisors have about third-party lead generation services is the unresponsiveness of some investors.
On the surface, unresponsiveness defies logic. Investors find lead generation service providers on the Internet. They are routed to a landing page where they submit their contact information: Name, telephone, email, location, service requirements, and available assets. This information is used to match them to financial advisors who pay fees for the leads.
The question for the ages is why would they submit this information and not respond when they are contacted by financial advisors? Most investors protect their contact information.
One answer may be confusion on the part of the investors. For example, they thought they were getting information versus solicitations from multiple investors. Or, there is a timing issue. They are gathering information now to learn more, but don’t plan to interview financial advisors until later.
What can financial advisors do to improve responsiveness? They must have sophisticated sales funnels that can accommodate both types of investors - those who are seeking financial advisors and those seeking financial information. Smart advisors use the information to build relationships and credibility.
What is the difference between a lead and a contact?
Investors may have more than one need when they use the Internet to find, research and initiate contact with financial advisors. For example, they want:
- Immediate contact to schedule interviews
- To see who is available in their community
- Information about financial advisors
- Information about financial topics
- To screen financial advisors for future interviews
Only one example is based on a need for immediate contact. Several examples are based on a need for information: Find out who is available; learn more about advisors; learn more about specific advisors.
These are the only rational reasons why investors give up their anonymity to get what they want – interview advisors, learn more about advisors, solve a financial problem. Otherwise, it is the predisposition of investors to withhold this information to protect their privacy.
Why are investors cautious?
In general, there are two types of investors who use the Internet to find, research and contact financial advisors.
There are first-time users. These investors have not used the services of financial advisors in the past. Perhaps, they are rolling money from a 401k to an IRA or they inherited money from a relative. They know very little about financial advisors, but they tend to know a few people who had bad experiences with their financial advisors.
There are also replacement users. They have used the services of financial advisors in the past, but for any number of reasons, they terminated the relationships and are seeking replacement advisors.
It makes sense that first-time and replacement users are very cautious when they select financial advisors. Neither one wants to make a mistake that will damage their future financial security.
Should financial advisors provide an educational eBook?
Investors are naturally cautious because they do not want to make mistakes. So it makes sense for financial advisors to educate them about the industry and its representatives. The education is less promotional and more helpful. eBooks are ideal because investors have to register to gain access to the information.
eBooks can educate investors to select the financial advisors who provided the eBook. They do this by providing features and benefits for:
- What is the importance of being a financial fiduciary?
- What is a fee-only advisor?
- What is a CFP®?
- Why is independence important?
- What is a boutique?
Then the eBook describes how these features benefit investors.
Why is CRM an important service for financial advisors?
Based on the above explanation, it is very important that unresponsive investors be added to the advisor’s email marketing system. The CRM system is used to send periodic emails that are designed to keep advisor names and contact information in front of the leads.
This sounds simple enough, but a lot of advisors send the wrong information to the names on their drip marketing lists. For example, some advisors send newsletters that contain generic financial information. This is a big mistake. Investors already have access to this information from a hundred other sources starting with the Wall Street Journal.
The drips should focus on the pain points of investors and describe how financial advisors can solve problems that help them achieve their most important financial goals.
The more relevant the content in advisor emails, the higher the probability investors will schedule time for interviews.
What does it take to produce positive ROI?
Based on the above information, the only bad lead is an investor who cannot meet the minimum asset requirements of the financial advisors. The other way to look at it is there are leads that want immediate contact and leads that want deferred contact.
At the end of the day, it is always about positive Return on Investment (ROI). How much time and money do advisors spend generating leads? How much revenue do they produce from the leads?
Most advisors think in terms of annual revenue, but it is also valid to think about the amount of revenue that is produced by clients during the life of relationships. If an advisor’s average retention rate is seven years then a $10,000 client is really worth $70,000 and that is before market appreciation, reinvested income, and new assets from current clients.
