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Here’s Your Lead Generation Machine

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Here’s a storyboard you’ll love: Investor checks out financial advisor online and likes what he sees. Investor contacts financial advisor. Investor hires financial advisor.

It’s the ultimate referral engine, marking a reversal in the way investors and financial advisors historically connect. Instead of the advisor reaching out to the prospective client, it’s the other way around. As Nicholas Stuller, president and CEO of AdviceIQ, puts it: “People find their roofer online, their spouse, their favorite Chinese restaurant. But their financial advisor?”

Lead generation services aren’t new but technology has elevated the exercise to another level—generating consumer traffic in ways that would have been unthinkable just a few years ago. Most of the services—like AdviceIQ, BrightScope, My New Financial Advisor, Paladin Registry and Vestorly—are Internet-based advisor rating services or outright matchmakers. But not all.

Boulevard R in a different twist offers a Web-based marketing platform to advisors that automatically engages prospects, qualifies them and sets up a first meeting. And Advizent, a new venture from industry veterans Charles Goldman and Steve Lockshin, is in the process of creating an elite third-party seal of approval for independent advisory firms that join its cooperative. As of late last year, 145 firms with $151 billion in assets had signed up as provisional members of the start-up. Advizent hopes to be in the marketplace and presenting its story to consumers by the end of March.

“We believe we can, over time, generate referrals—many thousands, hopefully, a year,” says Goldman, the former head of Schwab Advisor Services. Statistics suggest Goldman may be right. According to Advizent, five million affluent investors currently use social media to research their financial decisions. Almost three-quarters are on LinkedIn and more than half follow discussion boards. Just over one-quarter use Facebook and Twitter.

“The numbers indicate there’s real opportunity to communicate with these folks,” adds Goldman. “It’s the question all the different models out there are trying to figure out. Everybody is making the same bet at the end of the day that they are able to communicate with investors.”

Michael Kitces, publisher of The Kitces Report and director of research at Pinnacle Advisory Group in Columbia, Md., has blogged extensively about the new line-up in the lead generation space. “The reality is the model of creating leads and passing them on to advisors has existed for as long as we’ve had financial services. But technology has created new pathways,” he notes. “There’s a lot more opportunity to create some scale by doing it in this environment because we can reach a whole lot more people. Certainly, you see a shift in that direction. It’s a really efficient platform.”

What’s driving the trend? Two things, according to Kitces.

“The fundamental issue is advisors want to grow their business but they have no idea how to get to prospective clients,” he says. “Advisors are overwhelmingly horrible marketers.” And while piles of industry reports say referrals from clients and centers of influence are responsible for most new business, Kitces observes that it is “very unclear whether those referrals are due to best practices or because advisors are horrible at every other form of marketing and referrals are the only thing left.”

Shopping for Advice

What makes the current crop of third-party firms so interesting is that the starting point of the engagement isn’t the advisor but the consumer. 

“The consumer is looking for someone to stand up for them. They are looking for a trusted brand,” says Goldman. “We will market to that consumer.”

The firms are deploying a range of strategies to reach the consumer. And the space is new enough that there is a lot of variability in the pricing structure. Pricing—the cost to the advisor—is pretty much all over the map.

Paladin Registry, which launched in 2004, is the elder statesman of the group. The online directory represents 1,200 fiduciary advisors who have been screened for ethics, business practices, services and credentials. As for the consumer, 40% who visit Paladin are using the Internet to find their first advisor. The other 60% are looking to replace an advisor. On average, clients have $400,000 in available assets for investment, according to Jack Waymire, the registry’s founder.

To draw the consumer in, Paladin markets its advisor rating service on various websites including its own It also uses social media and search engine optimization to generate traffic. Waymire says investors who visit the registry like it because they can research an advisor while maintaining their anonymity. 

The registry has a month-to-month contract with advisors, typically charging from $175 to $275 per month. Only 800 advisors in the registry are signed up to receive for referrals. (In a case where there are two partners, just one pays for the higher cost membership associated with referrals—then the two split referrals as they come in.) The site produces 1,200 qualified referrals a month. One of Paladin’s weaknesses historically is that the bulk of its advisors are located in the top 25 metro areas. At the moment, Paladin is trying to make inroads in smaller cities like Anchorage, Omaha and Albuquerque.

Waymire doesn’t think third-party prospecting will go mainstream but that it will continue to capture the attention of advisors who are comfortable with Internet marketing and like it for its sort of passive appeal. “Most of the traditional forms of referral-based marketing are relatively expensive and time-consuming,” he adds. “This way you don’t have to do direct marketing, join the clubs or meet with CPAs. You can just do what you do best: working with your clients.”  

Scott Noyes, a financial advisor for 30 years, founded Noyes Capital Management in New Vernon, N.J., nine years ago. He serves 54 families representing $65 million in assets under management. One of his first challenges was answering the question: How will prospects find me? So in addition to personal networking, Noyes, 56, turned to Paladin and a couple of other lead generation services.

“When I look back at where my clients came from, 30% probably came through Paladin or someone like Paladin. When you do it over time, it adds up. If I get one referral a month I’m pleased. At least you are getting a warm pre-qualified lead instead of looking for a phone call,” says Noyes, who has a $500,000 minimum. “It’s not just an automatic handing you of clients. You’ve got to work for them and compete. But it does get you in the door. How else do you get in the door? Mailings for me haven’t worked at all. You can do seminars but that is buying people a lot of meals for, hopefully, one live one. It’s not a be-all, end-all, but it’s helpful.”

Emerging Models

Three other services that are getting a lot of buzz: AdviceIQ, Boulevard R and, because of its pedigree and price point, Advizent. Each could not be more different from the next.

Since launching in the fall of 2011, AdviceIQ has endorsed 2,400 advisors and reached out to consumers by way, of all things, old-fashioned journalism. The firm nationally distributes three compliance-approved articles a day written mostly by member advisors. It also ranks advisors. AdviceIQ’s Stuller calls it public relations and digital branding that will help to convert prospects while serving as a reputation management tool when it comes to existing clients.

“It accelerates what happens in nature,” he says. “Investors need to be educated and drawn in. Our model is to go where the eyeballs are. When prospective clients hear of you and see you on independent journalism sites (like Morningstar, Online Investor and Motley Fool) it will accelerate that process of hiring you.”

AdviceIQ costs $995 a year and, notably, vetted advisors don’t have to contribute news articles in order to use the “AdviceIQ Certified” tagline. They do, however, get the benefit of using archived articles royalty-free and their contact information also pops up, thanks to geo-charting technology, when a consumer in search of an advisor referral throws out his or her zip code.

Boulevard R, meanwhile, launched this past spring a tablet version of AMP, a financial planning software tool that helps advisors quickly engage and qualify prospects. In this case, the advisor does the initial legwork by staging a presentation or event. The advisor, presenting to say 10 couples, would give each one an iPad or Android tablet and have them create, basically, a mini financial plan. The outcome?

“Now the advisor has 20 highly qualified individuals who are already engaged. The tool provides a lot of intelligence,” notes Matt Iverson, a director of Boulevard R. “If you can engage people, whoever attended that meeting is much more inclined to follow up with the advisor. It’s not rocket science. The software is pretty complex but the whole interaction process is really simple.”    

Boulevard R charges $97 a month for AMP. Apple’s leasing arm, according to Iverson, rents out 10 iPads for $160 a month. “I think the financial services industry is always a little slow to adopt. But those advisors who are willing to embrace technology in the next five years can really enhance how they engage people,” he adds. “Costs will continue to drop and you’ll be able to do it for larger and larger groups. Imagine getting in front of a workforce of 50 people. It’s a great opportunity to engage prospects in a new way.”

With Advizent, Goldman hopes to take referral-gathering into uncharted territory. The firm’s third-party seal of approval will be subject to the strictest of standards, and advisors will be audited annually. On-site audits will take place every other year. On average, Advizent is looking for million-dollar clients. Membership ranges from $25,000 to $100,000.

“The most important thing you need to be able to say to the consumer is that the advisors you are referring truly are better. What we are doing is creating a trusted brand with standards that need to be relevant and understood by the consumer,” Goldman says. “Our mission is to empower consumers through education and access to true fiduciary service.”

Advizent will use tools like search engine optimization, social media and Web advertising to reach consumers as part of its public relations campaign.

“This isn’t just a simple website we’re throwing up. We will concierge the consumer the whole way through—connecting them with the right advisor and making the first appointment. That’s what investors want,” he adds. “Not much has actually happened in our industry in terms of creating new clients ever. It’s pretty much been hand to hand combat. We believe there are consumers out there, both affluent and high net worth, who are interested in a new approach.”