If you’re a successful advisor, your reputation is your biggest asset. It’s also the hardest won and the most easily lost. In the words of Warren Buffett, “It takes 20 years to build a reputation and five minutes to ruin it.” That’s why user-rating sites like Yelp pose a growing threat; just one or two disgruntled clients can undo years of hard work.
Yelp is the highest profile example of how user ratings work. Best known for its restaurant reviews, Yelp has extended its reach to professionals, including doctors and lawyers. Recently, I talked with a financial advisor named Jennifer who was horrified to discover an extremely negative review on Yelp by an unhappy client with whom she had parted company.
Yelp and other “advisor-ratings” sites give a new platform to former clients who bear grudges. Fortunately, Jennifer demonstrated that you don’t have to be a powerless victim. There are some simple, proactive measures that can help you protect your reputation against unfair reviews.
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Of course, Yelp is not the only example of the rise in user ratings. Tripadvisor is playing a growing role in consumer decisions on hotels or resort destinations. In fact, this site has become so important that a cottage industry has sprung up offering to post favorable Tripadvisor responses for a fee. This is not a unique case. A Bloomberg Business Week article discussed the problem of phony ratings that scam the system.
Despite these flaws, user ratings are growing in importance, especially among a younger demographic of consumers. User ratings are a key factor in eBay’s success. Airbnb is a website that matches people who want to rent private accommodations with people renting a room, their apartment or house. Before finalizing an arrangement, both parties can rely on ratings available on the site. An article in the New York Times described how Uber drivers are also using ratings of passengers to decide whether they’ll pick up a fare.
Historically, the prohibition on testimonials has created uncertainty about where user-generated reviews might fit. But last March the SEC published new guidelines for advisors’ use of social media on their websites that provided clarity. While compliance officers will vary in terms of their interpretation of these guidelines, there is general consensus that advisors are now allowed to include links on their websites to user comments about their services provided that:
The site is independent of the advisor and his or her firm
There is no editing of the comments by the advisor
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The advisor has not suggested specific wording or comments.
Taking out insurance on your reputation
There is one key thing that differentiates advisors from most other businesses: the comparatively small number of clients that advisors generally deal with. If an advisor has 200 or 300 clients and 1% take the time to go online to post their experiences, the responses will hardly be representative.
But that doesn’t mean that things cannot change in the future with the next generation’s hunger for peer-generated recommendations. A Forbes article entitled Can Financial Planners Be Rated Like Yelp discussed some of the startups trying to carve out a business around advisor ratings. Their business model is typically reliant on advisors taking advertisements on their sites.
Even if you don’t see this as relevant to you, remember that even one negative comment by an unhappy former client can cause a problem if prospective clients see it. One solution is to gently, appropriately, and professionally encourage existing clients to post a short comment on Yelp. If there are three or four positive comments, the impact of one negative comment will be greatly reduced.
This was the strategy Jennifer pursued. In the months that followed the negative review, when clients in their 40s and 50s expressed satisfaction and appreciation for her work, she thanked them and then said:
“I truly appreciate your kind words and am delighted that you are happy. I have had one thing happen recently that was quite upsetting that you might be able to help me with. A former client posted a negative comment about his experience with me on Yelp. This is one of the few cases where I’ve parted company with a client and there were hard feelings. Unfortunately, some people are just not reasonable. If you feel comfortable doing so, it would be great if at some point in the next couple of weeks you could go on Yelp and put down one or two sentences about your experience to provide some balance. I’ll be making this request of a few clients, so you won’t be the only ones on the site.”
User rating sites like Yelp normally ask the people making comments to list their first name and initial of last name, allowing clients to maintain their confidentiality. (This is quite different from LinkedIn, which shows the full name of anyone making a comment.) Jennifer commented that the ability to maintain their confidentiality was something she pointed out to clients – and if not for that she would not have felt comfortable making this request.
As a result, three months later Jennifer’s profile on Yelp featured half a dozen positive comments from happy clients that provided counterbalance to the negative comment that started this process.
You can think about this in two ways. First, consider whether it makes sense to take out insurance by encouraging your younger clients to post short comments on the off chance that -- like Jennifer -- you discover a disgruntled former client has given you a negative review.
Second, if part of your goal is to attract younger clients, think about whether peer reviews might help you advance your reputation among that demographic.
Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com or here for his videos.
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