Virtual Financial Advisors Need New Marketing Strategies

Summary

• The internet has changed the game. Investors have access to vast amounts of online information, which makes them less responsive to outdated marketing practices.
• Traditional marketing practices are being challenged by the virtual advisor. In most cases, virtual advisors deliver the same advice and services but the methods of communications may differ.
• Virtual marketing should not be confused with virtual servicing. Every advisor has clients who relocate and retain their services. This creates virtual servicing relationships when investors stay with advisors.
• Virtual marketing principles: Now comes the hard part. How do you market your services in a virtual environment?

If you are like most financial advisors, you have been using outbound marketing strategies for decades to add new clients to your firm or practice. But outbound has a fatal flaw. You have to initiate contact with investors, and since most investors do not want the contact, rejection rates for these strategies (telemarketing, direct mail) approach 100%.

Ask yourself these questions to determine the success of your current marketing practices:

• Are your outbound strategies producing new clients?
• How much time and money do you spend on outbound?
• Are you experiencing diminishing outbound returns?
• Are referrals your only source of new clients?
• Are you producing enough new clients to offset losses and grow?

Outbound marketing has two other fatal flaws. First, it takes some serious sales skills to be successful, and second, it requires a willingness to experience a lot of rejection to produce a limited result. Most financial advisors would rather produce financial plans and invest client assets. They do not view outbound marketing to be the highest and best use of their time and money.

GAME CHANGER

The internet has changed the game, like it has for so many other industries. Investors have access to vast amounts of online information, which makes them less responsive to outbound marketing tactics.

It also means the financial services industry has lost an element of control. Investors can use the internet to learn more about advisors, find advisors, research advisors and validate the information that is provided to them by advisors.

TRADITIONAL MARKETING

The foundation of traditional marketing is face-to-face contact. This form of marketing benefits the advisors with the best sales skills because face-to-face contact maximizes the impact of their sales and relationship skills.

This works for most investors because they still select advisors they can meet with face-to-face. It is what they are used to and change comes slowly. But, the internet is beginning to have an impact, and that impact will accelerate as more investors rely on what they see on the internet to make advisor-related decisions.

THE VIRTUAL ADVISOR

In most cases, virtual advisors deliver the same advice and services as traditional advisors. They may even charge the same fee for their services or provide a nominal discount because they spend less time traveling to and from meetings.

The virtual advisor changes methods of communications, but not services. There is no face-to-face contact. Communications are limited to telephone, email, Skype and FaceTime.

SERVICING VS. MARKETING

A word of caution: Virtual marketing should not be confused with virtual servicing. Every advisor has clients who relocate and retain their services. This creates virtual servicing relationships when investors stay with advisors who deliver competitive returns for reasonable amounts of risk and expense.

This is a virtual relationship, but it was not the result of virtual marketing. The relationship was developed using traditional marketing.

The challenge is to win new clients using virtual marketing tactics. This is infinitely more complex and very few advisors have developed effective strategies. It is even more complicated when the principal competitors are traditional advisors who use face-to-face sales tactics to convert prospects into revenue-producing clients.

VIRTUAL MARKETING PRINCIPLES

Now comes the hard part. How do you market your services in a virtual environment?

All of your virtual marketing tactics should be based on three assumptions:

• Investors are using the internet to find advisors.
• Investors are using the internet to research advisors.
• What investors see on the internet will impact who they talk to and who they eventually select to be their advisors.

FIND A FINANCIAL ADVISOR

Finding advisors on the internet is a no-brainer. Enter “financial advisor city state” in Google and there will be page after page of organic and AdWords results.

Organic rank for the best keywords is an expensive process that can take years to accomplish. You can buy page one visibility with Google AdWords, but very few advisors report meaningful results using this marketing tactic.

A major non-controllable is the keywords investors use to find advisors. Advisor websites should rank for hundreds of keyword combinations to maximize internet visibility.

Investors may also access various directories in their search for local advisors. Advisor websites should include Local SEO (Search Engine Optimization) to maximize local visibility and drive traffic to websites.

RESEARCHING ADVISORS

Most investors use three processes to conduct online research:

• Visiting financial advisor websites
• Google-ing search advisor and firm names
• Visiting third party websites: FINRA.org, SEC.gov

CONTACTING ADVISORS

This is where it gets a little dicey. Most investors are cautious when it is time to initiate contact with financial advisors. In fact, Paladin surveys show this is where the virtual marketing process breaks down.

Investors are naturally cautious, in particular if they have had bad experiences with previous advisors or they are first-time users of advisor services (rolling 401k assets into IRAs).

The surveys show they are cautious for three reasons:

1. They find disturbing information on the internet.
2. They are not sure what advisors will do with their contact data.
3. Wall Street has a reputation for aggressive sales tactics.

How big is this challenge? 77.3% of advisors say they have some traffic on their websites, but less than 1% of their visitors initiate contact.

VIRTUAL MARKETING TIPS

Paladin surveys show there are three reasons why investors use the internet to find and research advisors:

1. They want to know more about financial advisors before they start interviewing them.
2. They want to learn more about specific advisors or firms.
3. They want to initiate contact with a particular advisor or firm.

Advisors have to anticipate these needs and make sure they provide the information that investors are seeking. The following tips will improve advisors’ virtual marketing results:

• Publish a free eBook on websites that educate investors about financial advisors. Require registration to obtain their contact information. Input the contact information into a CRM system and stay in touch until they are ready to talk to advisors.
• Make sure the website delivers the right information. Investors are looking for financial experts they can trust. Transparency increases trust. Withholding information reduces trust.
• Make it easy for visitors to initiate contact. This is more than just a “Contact Us” button. Include reasons why they should initiate contact.
• Lastly, advisors should create a safe environment for investors when they ask for their contact information. Our surveys show investors are very concerned about submitting their contact information to someone they just found on the internet. A safe environment is more than a reference to a privacy policy. Advisors should spell-out exactly what they will and will not do with investors’ contact information.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.