From the December 2010 issue of Investment Advisor • Subscribe!

December 1, 2010

Wasted Time, Wasted Money, and Wasted Hope

These Hail Mary marketing strategies are almost guaranteed to fail

Almost daily, financial advisors adopt marketing tactics that they hope will make them millions—tactics requiring as little effort as possible. Most advisors are in quite a quandary: They hate or are completely ineffective at marketing, but they realize that marketing is absolutely critical to their success. Typically, they neglect marketing until the last minute (the way a teenager procrastinates over a homework assignment) and then they look for a short cut.

The following strategies are just about guaranteed to fail. I’m sure that you probably know someone somewhere who used one of these strategies to build a million-dollar practice—but I assure you it was the exception, not the rule.

Direct Mail for Lead Generation
Logic:
You’ve received a hundred e-mails promising you “Million-Dollar Leads.” What’s the harm in buying some leads and mailing them all a letter? After all, “if I only get one client out of it, it’ll be worth it.”
Why It Doesn’t Work: First, at best the list might be 50% to 80% accurate. Second, because of modern-day “Do Not Call” restrictions, you can’t call them—which is considerably more effective (and less expensive) than direct mail. Third, FINRA advertising rules make it very difficult to create a compelling message. In order to have an effective direct mail campaign, you have to market a product (not a service), and the product must have a demonstrable benefit like a guaranteed return. That is clearly not going to fly.

Advertising Key Words
Logic:
“I’ll secure a really interesting domain like denver401k.com or rolloverspecialists.com, I’ll buy some Google Ad Words and I’ll only have to pay a couple of bucks for every lead that comes in.”
Why It Doesn’t Work: You’re hoping to find wealthy investors ($200k+) who are sophisticated enough to use the Web, but too unsophisticated to ask friends or professionals for a referral to a financial advisor. I wouldn’t bet on finding them.

Appointment Generating Services
Logic:
You receive a phone call from an “Appointment Generating Service”—they promise to call qualified investors who are not on the “Do Not Call” lists, interest them in your service, and schedule an appointment in your office.
Why It Doesn’t Work: What planet are you living on? Seventy-two percent of all Americans are on the National Do Not Call Registry, and I’m willing to bet that the other 28% are probably not very wealthy or smart—otherwise they would have been smart enough to visit www.donotcall.gov to add their phone number. Also, what makes you think that a $12-per-hour telemarketer can build rapport and confidence with a high-net-worth investor?

Yellow Pages Advertising
Logic:
“I’ve got to do something, and all these other financial advisors are listed in there. Someone must be calling on these people.”
Why It Doesn’t Work: I haven’t looked in the Yellow Pages in over four years. Before that, I opened up my local Yellow Pages about once a year. Traditional Yellow Pages advertising is plummeting. Online advertising through Google Local, YellowPages.com, etc., is accelerating because sophisticated, wealthy people are more likely to search online than browse through the Yellow Pages. I’m sure that one of 1,000 financial advisors can share how they got a $500,000 senior from a Yellow Pages ad, but I think your odds of winning the lottery are probably better.

Radio Advertising
Logic:
Every financial advisor knows at least one other advisor who has made it big on radio—not by buying 30-second spots, but by hosting a 30- to 60-minute show. You’ve heard these shows; you are surely smarter than them and can give more solid advice. It’s a little expensive but, “If I only get one client out of it, it’ll be worth it.”
Why It Doesn’t Work: There are two major keys to being successful on the radio: personality and station. You either have the personality for radio or you don’t. Finding the right station is critical and there is no science to it. Some very successful advisors who have used radio have not been able to replicate their success in new markets or after a year or two away from the mike. Also, you have to know that radio is going to generate nine people who want to trade stocks or bonds for every one person who wants to rollover his 401(k).

TV Advertising
Logic:
“The local cable company will give me a few hundred 30-second spots for only a few thousand dollars—what a deal. Everyone in town will see me (and be very impressed with how important and successful I am).”
Why It Doesn’t Work: How many times in your life have you written down a phone number from a TV commercial and called it? Maybe once or twice, maybe zero. Wealthy, sophisticated investors are just as discriminating as you are, and equally wary of responding to TV commercials. Bottom Line: In my 12 years of working with financial advisors, I have never, ever had one advisor say that TV advertising was worth it. Never.

Newspaper/Magazine Advertising
Logic:
You get a phone call from a salesperson offering you the deal of a lifetime for first-time advertisers. For less than a thousand bucks, you can have nearly a full-page advertisement.
Why It Doesn’t Work: I do sometimes recommend print advertising, but only for advisors who already have successful marketing campaigns who want to make their primary marketing work better. Newspaper or magazine advertising is like greasing the gears: It makes them mesh better. Without a strong existing marketing strategy, this type of advertising is a waste of money.

Billboard Advertising
Logic:
See logic for newspaper/magazine advertising.
Why It Doesn’t Work: Once again, how many times have you written down a phone number or website address from a billboard? I’m betting the answer is “never.” Billboards will work if you have an existing marketing strategy and live in a very small town where nearly everyone is a prospect. You are wasting your money in a larger marketplace because a) you are paying big bucks and b) most of those who see your billboard are not your prospects because they live too far away.

Public Seminars
Logic:
Everyone and their brother has held financial services seminars and picked up clients from them. Surely you can, right?
Why It Doesn’t Work: I’ve got to admit, this strategy just barely made my list. Public seminars are just starting to work again. They generally don’t work in fearful times. The market has generated strong returns recently and confidence is growing. Understand this: Public seminars will work, but it’ll take you a year to get good at speaking and event management. Each seminar will usually cost you $3,000 to $5,000, and you are going to generate a lot of smaller clients for every big fish that you catch. (Please note that I am not referring to private speaking engagements in front of groups—this represents a completely different marketing opportunity which I highly recommend.) Public seminars usually work best if you have a product-based practice (annuities, insurance, LTCI), not a service-based practice (wealth management, financial or retirement planning).

When I provide marketing advice, I suggest methods that have worked for the majority of advisors. I am quick to steer advisors away from marketing that rarely works, marketing that amounts to burnt money.

If you’d like to lose money or at least not generate any new business, try one of the marketing strategies above. I can’t guarantee it, but there’s an excellent chance that they won’t work well or work at all.

Fortunately, you have an alternative. Instead of marketing to the random, focus and direct your marketing effort to the investors who can potentially benefit the most from your services. If you touch base in a polite, recurring way—a way that adds value as you promote your own—you will take a big step forward in your marketing.

This is a relationship-based business. The marketing strategies that really work center on some form of sustained relationship with your ideal clients—not just any potential clients. I’m talking about client referral and professional referral channels, using CRM software to constantly add value for clients and prospects through new information, and marketing your business selectively with a killer brochure and website presence. These are the fundamentals. There are no shortcuts. Based on my experience and observation, these are the marketing channels that are really worth the money.    

Peter Montoya runs a marketing firm that specializes in serving Financial Service Professionals. He is the creator of the MarketingPro system. You can learn more about him at www.PeterMontoya.com.

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