(Forbes) - When it comes to most prospecting and lead-generation services available to advisors today, the problem is this: In a crowded industry where differentiation is like oxygen, most of these services equate to a pay-to-play yellow pages where you’re just another name in the “Advisor” section.
In many ways, we’ve resigned ourselves to this “directory” approach as an industry—in fact, it is largely heralded as the “new and improved” way. The latest Financial AdvisorTech Solutions Map from Kitces lists 14 advisor lead-gen services, and the vast majority of them fall in this category, where cold-calling is replaced with what I would call “tepid-calling.”
Modern prospecting is still a noisy, multistep process—even with the directory approach. Prospects are connected with multiple advisors at once, so you better be fast (and convincing). The clients you do win are saddled with a large, often perpetual fee you owe to the lead-gen service for the privilege of being allowed to compete for that new client.
The biggest problem, as I see it, is that the focus of many prospecting services is on simply speeding up and scaling the existing process of connecting prospects with advisors. Rather than leveraging tech to innovate on the process and make it better, we are content to simply make it faster.
There’s gotta be a better way.
To be clear, I don’t believe there is a “perfect” solution where technology can magically turn every lead into the right lead so that advisors never have another wasted consultation with a bad prospect. That’s not realistic. Admittedly, there’s only so much you can do to reduce the “noise” of the prospecting process.
Still, by examining our current process and identifying friction points, we can evolve prospecting well beyond its current iteration.
One of the biggest friction points is that individuals often don’t realize or aren’t convinced that they need help. In other industries, the prospecting process begins with some type of education to help individuals better identify their need and, ultimately, the professionals who could best help.
Look at Angi (formerly Angie’s List). You enter what you’re looking for and they guide you through specific questions to help you connect with the right group of professionals. Even if you’re not sure what you want, the questionnaire includes an educational aspect that helps you understand what you need.
In the financial industry, the vast majority of prospecting services do little to help prospects understand the value of working with an advisor. They simply connect interested prospects with eager advisors. If we do it right, I believe technology could turn interested prospects into eager ones.
For instance, investor-advisor matching technology could easily be used to increase financial literacy and help prospects understand their situation better—thus increasing their awareness of their need for help.
As an example, when my company built a lead-gen platform to help connect advisors with prospects, we included a “gamification” aspect where prospects build a simplified financial plan using rough estimates to help them see upfront how close (or far away) they are to achieving their goals. Before they even reach out to an advisor, they gain a deeper understanding of what it will take to retire or buy a house or whatever their goal may be.
Another big friction point of prospecting for advisors is the time wasted on prospects who aren’t ready to hire an advisor.
In reality, most prospects have no idea what it looks like to work with a financial advisor, and they pop up on your radar while they are just beginning the process of finding out. They may have been looking to satisfy their curiosity when they entered information into a prospecting site. Often, this results in a lot of dead-end calls and can be a huge time suck for advisors.
A better prospecting process would allow advisors to show their value upfront with minimal time commitment, thus satisfying the prospect’s curiosity and sparing your calendar. It seems that technology could easily solve this issue by letting prospects and advisors share basic information back and forth without requiring long conversations or divulging tons of personal information.
This is how it works in most other industries. Prospective clients first tell the service provider what they’re looking for. The service provider then responds with a quote on what they can provide and how much it will cost. This way, prospective clients already have an idea of what they will be getting before taking the next step.
Yet in the financial industry, the directory approach to finding an advisor doesn’t allow for this very valuable step of telling a prospect what they might get from an advisor relationship. Skipping this step can result in prospects being less bought into the process and less motivated to actually follow through on hiring an advisor.
Lastly, the current process tends to be expensive—both in terms of money and time. Sure, it’s better than cold-calling and hitting up friends and family for referrals, but is that really worth paying out a fee for the length of the relationship?
To me, the cost alone is proof enough that the directory process is far from the best technology can do. If they’re charging that much, then there must be a lot of people involved that need to be paid. It’s a people-driven process in a tech-driven wrapping. Advisors are paying a lot for “faster” right now when we should be at a point where we’re paying for “better.” The scaled directory approach simply isn’t worth the cost.
Technology doesn’t just make processes faster—it makes them more efficient and effective, vastly reducing the need for people to serve as stopgaps. Technology can and should do so much more than just speed up our lives. While the current prospecting process for advisors clearly works on some level, now is the time for us to look to the future and introduce new ways to leverage technology to connect with new leads.
With the right tools, the prospecting process could be less expensive, more exciting and more engaging—for everyone involved.
By Chip Castille - Forbes Councils Member
February 13, 2023
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
