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Can Prospecting for Clients Be Outsourced? Part 2

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In the first part of the post, we looked at the major lead generation offerings. In this post, we answer the question in the title.

The rise of these various services raises the fundamental question—can you really outsource prospecting for clients? Some planners I’ve spoken with have suggested this is impossible—clients do business with people they know and trust, and there’s no way to start building trust if some third-party service delivers people to you.

Yet the reality is that there’s a difference between prospecting and sales—prospecting is the activity you do to meet potential new clients, while sales is the part where you try to convert a prospective client into an actual client (regardless of whether you “sell” a financial product, or financial advice as a service).

Thus, having your prospecting done by a third party service doesn’t eliminate the sales part of the process; for better or for worse, you still have to take the prospects and turn them into clients. What it does—or is intended to do—is deliver a stream of qualified prospective clients to you so that all you have to do is actually persuade them to become your client and pay you for what you do.

Thus, the key value proposition for these lead generation/prospecting services is their ability to deliver a steady stream of prospective clients, and that those individuals actually be qualified prospects for your services (i.e., people who fit your target market, have the financial wherewithal to do business with you, and desire your services). And while these services are difficult to deliver on, they’re not impossible; in point of fact, marketing is an activity that is particularly effective with size and scale, implying that a service trying to reach the public to deliver hundreds or thousands of prospective clients to advisors really may be more cost effective than each advisor doing it individually.

Accordingly, it’s notable that marketing and the delivery of potential prospects to advisors is also becoming part of the value proposition for many emerging turnkey financial planning platforms (TFPPs), from the Garrett Planning Network to mega-RIAs like Edelman Financial Group (which leverages the marketing value of Ric Edelman’s books and media activity to provide a regular stream of prospective clients to the firm’s advisors). 

In the near term, expect to see competition heat up further in this space, with both the rise of TFPPs that include marketing as part of their value proposition, and third-party platforms. In point of fact, the competition has already gotten under way, as some firms in this space report that the cost of financial-planning-related search terms through Google and other search engines have risen dramatically in recent years. This will put pressure on the membership associations like FPA and NAPFA in particular, which have traditionally offered this “for free” as a membership benefit but haven’t necessarily invested into the technology and marketing the way a for-profit entity might; on the other hand, given how difficult it is to succeed in this space, it’s quite likely some of these newer companies will not be around at all in 3 years.

Nonetheless, the bottom line is that the process of finding new prospective clients is a significant challenge for many advisory firms, yet is something with great economic value and that is conducive to scale and marketing leverage. Consequently, while there may be individual firms that are winners and losers, I anticipate this trend will be here to stay. 

So what do you think? Would you ever outsource your prospecting in this manner? Do you think this is an effective way for a financial planning firm to get marketing scale? Would you rather get marketing through a TFPP or outsource to a standalone third-party service? Do you think this is a viable business model? 


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