Honestly, who needs online reviews? What advisor in their right mind would willingly encourage people to rant about them in full view of current and prospective customers?
The answer, simply, is you! The reason? Because they help to create a strong online reputation and to drive future sales. And advisors who don’t listen hard to consumer voices online — and learning from their feedback — will be at a competitive disadvantage.
Although Internet reviews have long been a fixture for book sales (Amazon), restaurants (Yelp), and personal services (Angie’s List), they’ve only recently begun to appear regarding financial products and advisors. But we believe this trend will explode soon for the following reasons:
First, the Baby-Boom generation, as you well know, is transitioning from asset accumulation to decumulation. Advisors who wish to maintain their incomes must build bridges to younger Generation X and Y clients. Guess what, folks? These prospects are big fans of online reviews, and will expect to read them before hiring a new advisor.
Second, despite efforts to “game” review sites, trust in online ratings continues to mount. According to Nielson’s 2013 Global Trust in Advertising Survey, 68 percent of consumers said they trusted online reviews, up from 61 percent in 2007.
Third, there has been an explosion of technology platforms attempting to educate buyers about their finances and advisor due diligence. These include Wallethub.com, NerdWallet, and many others. As these sites educate consumers about the importance of vetting their advisors, more consumers will begin using them to find and rate advisors.
Fourth and finally, the Securities and Exchange Commission recently announced that investment advisors who link to — or publish consumer ratings from — sites such as Yelp on their own sites will not run afoul of the SEC’s so-called “testimonial rule.” However, the review content must come from a totally independent source; i.e., the advisor must have no ability to control or edit what is written about him or her.
In short, get ready for a perfect storm of consumer preference, technology advancements, and regulatory enabling that will unleash a cacophony of consumer feedback in the months ahead. What to do now?
- Make sure your business practices are 100 percent ethical and 1,000 percent compliant. With more clients posting their opinions about you, you no longer can afford to mess up.
- If you haven’t done so yet, start nosing around the major consumer review sites. Learn how to claim and build out your profile, and then read the FAQs regarding how to respond to negative reviews.
- Check with Compliance to see how your RIA, BD, or FMO has reacted to the SEC’s new guidance. You may be surprised to learn that you have more social-media freedom than ever before.
- Finally, watch this space for “Yelp Help,” Parts 2 and 3, where we will show you how to initiate and then maintain an ethical and effective Yelp presence.