Direct marketing is a waste of money for financial advisors, claims a new survey of advisors and clients.
None of the clients with assets between $250,000 and $2 million said they found their advisors through mailers, cold calls or information sessions, according to the survey of 250 advisors and clients by Atherton Consulting Group, which advises investment management and wealth management firms.
“This suggests firms should carefully evaluate the return on investment on these tactics,” the Atherton report stated.
A better investment of resources for client recruitment, the consultants said, is for advisors to build their reputations in their marketing area through actively seeking interviews from the press and networking through community groups.
“It makes sense that prospects would come to trust an advisor through joint participation in a community activity or from monitoring their personal branding efforts such as blogs, interviews, editorials, etc.,” the report said.
In terms of gaining new clients, advisors were twice as likely to report that referrals from family members were a source of leads
than actual clients.
Another key finding was financial advisors are failing to give clients the bottom-line fee disclosures they want.
In the survey, 81 percent of clients said they were looking for an approximate calculation of fees based on their portfolio while only 44 percent of advisors say they offer this.
The study also noted investment recommendations
take precedence with clients, with retirement and tax planning ranking a distant second and third in priority.
The results are based on a survey of 250 advisors and clients in the U.S. and Canada in September and October 2012.
Financial Advisor Direct Marketing A Waste Of Money, Consultant Says
March 13, 2014
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Comments
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I have been hearing this argument since I entered the business 25 years ago, "You mail you fail." I can tell you that's categorically wrong. I am still making money from mailings that I did back in 1992 when I was still a Life and Health Insurance agent with a Series 6 license. When I started in the training program at Smith Barney, I built my book with the contacts that I had made through direct mail at my last firm and the resulting referrals that came. The problem is that no wirehouse wants to invest in that kind of marketing. Your survey is worthless. You need to talk to more than 250 people for any survey to be worth anything.
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rpm1180: 3rd year in a Wirehouse and still cold calling? How long until you realize that YOU are going to LEAVE all those cold call clients with the Wirehouse, if you ever decide to leave. Unless you like sales pressure, quotas and proprietary products? At some point I hope your focus will begin With Helping the Client. Helping the client does not mean working with blinders on with your cookie cutter approach. Worst job in the biz kid, learn what you can and split. Figure it out.
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Ken Fisher might take issue with these findings. Personal Capital might take issue as well.
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rpm1180, three years experience? Perhaps you should have dialed the phone again instead of commenting here. Based on my personal experience, the article is spot on.
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This is not true. If you currently do direct marketing you will find that many of the interested prospects do indeed have little assets or may be start-ups, but some have significant assets. I am in my third year of production for a wirehouse firm and have received 1/3 of all my new assets each year above $250,000 from cold marketing. It takes years to position yourself with the community and centers of influence as an expert in your field. Any new advisor cannot ignore direct marketing as a prospecting tool or they will be out of business before they are getting the referrals. Cold calling and marketing is not dead! Anyone saying that is simply using that as an excuse to not pick up the phone.