How to Make Lead-Generation Services Work

Some, like Zoe and Paladin, perform due diligence before they allow advisors onto the network (you have to be fee-only, have a CFP, CPA or CFA, and pass two screening interviews to get on Zoe); AdvisorFinder asks advisors to list their areas of specialty and compensation preferences (i.e. flat fee or AUM); while SmartAsset simply requires advisors to be SEC-registered with no disqualifying regulatory disclosures.

Paladin charges quarterly or yearly memberships and then charges a variable price for leads of different prospect asset sizes. Zoe charges a perpetual, ongoing fee on assets brought in through its leads, similar to the Schwab and Fidelity referral programs. With SmartAsset, you specify the number of and type of leads you want and pay accordingly on a per-lead basis. Datalign charges on a per-lead basis based on the wealth of the prospect; a new college graduate with a starting salary may cost as little as $25, while a lead who lights his Cuban cigars with a burning $20 bill would cost $1,000. AdvisorFinder charges an annual subscription fee from advisors who want to be listed on its website.

Prospects are sorted in various ways, ranging from simply signing on that you are a believer in Ramsey’s financial philosophies (basically: debt is bad), to Datalign’s 18-question survey. Most prospects are matched up with advisors based on their AUM and physical proximity to the advisor’s offices.

Differences aside, the common value proposition is that you, the advisor, can sign up with a lead-generation service, agree to the fee schedule, and thereafter all your marketing and lead generation needs will be handled by a third party. Instead of a few client referrals a month, you’ll get a steady flow of prospects who are motivated to do business with you. No more posting on social media or conducting seminars.

Where do I sign? I get a turnkey flood of leads every month, and suddenly, that $1 billion threshold doesn’t seem so distant anymore.

The problem, of course, is that we’ve all heard anecdotally that these services don’t live up to their promises – and when I asked my Inside Information audience about their experience with turnkey lead-generation services, that was the overwhelming response. To wit:

“When we contracted with AdviceChaser, they committed to run ads in our area, targeting households with a $750K and higher portfolio. They said we would get a minimum of six scheduled discovery meetings, but in the first 12 months they had not been able to get any.”

“I worked with SmartAsset for a year and got 140 leads. I did not earn enough in that first year to cover the cost. I don’t think I would ever do it again.”

“With Paladin/WiserAdvisor, you would get a contact’s information and a notification that we were matched, and then it was hunting down ghosts for months and months before giving up. From the end-user’s [prospect’s] experience, they inquired on a website and now have a bunch of unsolicited calls (often from salespeople) who now hound them.”

“SmartAsset works well for product salesmen at brokerage firms who need fresh leads to make 20 prospecting phone calls to try to sell the consumer on the products offered by their firm. None of the leads are actually looking for a fiduciary, fee-only financial advisor.”

“This [exploring various lead generation services] was a waste of our time and our money, and was one of the most disappointing experiences of my 35-year career as a financial advisor. I hate being deceived.”

“SmartVestor is largely people who have budgeting and debt issues, since that is what Dave Ramsey is known for. We tried it and found very few traditional financial planning clients.”

There were more, a lot more, but you get the gist.

The lead generation services are not worth thinking about, right? But if lead-in doesn’t work, then how is it that the lead-generation services exist as profitable enterprises? Why is the lead-gen space growing and expanding? What’s the answer to this seeming paradox?

As I dug deeper into the services, I began to realize that the paradox may reveal a systemic dysfunction in advisory firm marketing. Because with a little digging, I was able to find some advisors who were able to make their lead-generation subscriptions work, sometimes in a big way.

What kind of firms? How? That’s where it gets complicated.

Jump-starting a practice

The overarching message I received from advisors who managed to get a significant benefit out of the lead-generation services is that it is critical to use the resource in the right ways. First, they were willing to immediately get on the phone with a lead once they received the notification from this or that or some other service. This, of course, is not very different from cold calling, something most advisors are unwilling to do.

Second, the advisors who become disenchanted with the lead-generation services tend to be rather particular about the clients they want. When they sign on for a lead-gen service, they only want to talk with people who meet their AUM minimum and aren’t willing to take the chance that the lead is unqualified and (as they see it) a waste of their time.

Put another way, successful advisory firms in slow-growth mode (who are busy working with their own clients and have little extra capacity to devote to diligent and instant follow up) are not going to experience great success with the lead-generation services as they’re presently constituted. That, of course, eliminates a huge percentage of the advisor marketplace. It also leaves out the best, most experienced advisors from the pool that the lead-generation programs are leading people to.

Who does benefit from lead-generation services? And how did they do it?

Matt Stephens, founder of AdvicePoint LLC in Wilmington, NC, was able to jump-start his new RIA practice by signing onto the Dave Ramsey program (called Endorsed Local Providers – ELP – back then, SmartVestor today) in 2013. “I had applied to be in ELP, and they selected me to be their second advisor in my small market,” he says. “At the time, I was working with Wells Fargo, and Wells compliance told me they wouldn’t approve me to be on ELP. I had five years of experience in a brutal environment, and a lot of experience making cold calls,” Stephens adds. “So I decided to leave Wells and start making warm calls instead.”

The difference between warm and cold was a relief. “It’s hard to build trust with a stranger on the phone,” says Stephens. “But people trusted Ramsey because of his personality, because they had read his books and heard him on the radio. The ELP program transferred some of that trust to me, and even better was, back then, each lead would go to just one advisor.”

Stephens says that, in retrospect, he was uniquely qualified to benefit from a lead-generation service: He had experience bonding with a person over the phone due to years of cold calling, and he had the capacity to jump on those leads immediately, before the prospect had forgotten why they were looking for an advisor.

“I very quickly found that the earlier I reached out, the better,” he says. “If a lead came through, as soon as I got the email, I was on the phone fast, often within five minutes of when they had requested an advisor. Some people found that to be a bit off-putting,” Stephens admits. “But 90% of them thought it was amazing. Wow! I just submitted my information. I’m absolutely ready to talk about this.”

Stephens’ sales training had also taught him to be persistent. “According to the cold-call trainers, most brokers give up after they reach out three times,” he says. “But most prospects don’t respond until eight or 10 or 12 calls. That third or fourth call is awkward,” he concedes. “What do I say now? But it really didn’t matter what I said; it just mattered that I was consistent.”

Most advisors who sign up for a lead-generation program will lack the cold-call training that had taught Stephens how to make an authentic connection with the person on the other end of the line and convey that he genuinely wanted to help. That might be an inauthentic skill in a brokerage salesperson, but it’s a skill that is required when trying to convert a lead into a prospect and then into a client.

Results? Stephens says that in the first year he received 86 leads from ELP and spoke with 80 of them. He scheduled meetings with 50, 44 showed up, and 31 became clients. The next year: 86 referrals, he spoke with 65 and had 35 meetings to get 25 clients. The following year, Ramsey switched from ELP to SmartVestor; the big difference was that instead of giving a lead to one advisor, each prospect lead was given to three – which meant that Stephens had to try to be the first to contact them. That year, the numbers fell to 74 leads, he got 45 of them on the phone, which led to 21 meetings, and 10 clients.

And what kind of leads were those? “Remember that people look to Ramsey for advice on getting out of debt,” says Stephens. “Those clients were mostly younger, some literally starting out, most with $50,000 to $100,000 in assets, and maybe one in 20 would be somebody a typically advisory firm would find attractive.”

As Stephens grew his firm and took on more clients, he became less interested in these less wealthy leads and shut down his involvement in SmartVestor after the third year.

To move upscale, Stephens tried SmartAsset and quickly became disenchanted. “I’d get a lead and make the call, but it wasn’t the kind of warm lead I was accustomed to,” he says. “I’d say, you requested help through SmartAsset, and they would be, like, who are you? What are you talking about? What are you saying I signed up for?”

Stephens says that if an advisor is established – as he, himself, is now – and has minimums – as he does now – and capacity too limited to follow up on every lead – as is the case with him now – then the lead-generation programs are not a great fit. “What I can say about ELP and SmartVestor is that they got me to the end result where I want to be,” he says.

The fine art of turning leads into clients

Other advisors I talked with told a similar story. Bryan Wisda started Almega Wealth Management in Scottsdale, AZ in 2021, after having sold a planning business in 2015 to work in law enforcement. He signed up with Zoe Financial in February 2022, hoping it would help him jump-start the new business. He went through what he describes as a thorough vetting process and, like Stephens, didn’t specify a minimum on the platform. “I’ve always felt that if I can have a significant impact, then I’ll take you on,” he says. Prospect leads have ranged from $250,000 in investable assets up to $6 million, with most in the $500,000 to $1 million range.

Wisda estimates that in the past two years, he has closed 25% of the leads that Zoe provided, for a total of 50 clients. But his process is rigorous and more time-consuming than one can imagine a successful financial advisor going through.

Unlike most programs, Zoe doesn’t require that cold call for the advisor to get an appointment. “Clients are either self-scheduling on Calendly or the Zoe concierge team will schedule them for you,” says Wisda. “I don’t call, email or text them ahead of the intro meeting. I haven’t had a week go by where I haven’t had at least three or four initial appointments if my week is open.”

Those first meetings are handled via Zoom, largely because the leads come from all parts of the country. “I’ve probably only gotten three people in Arizona,” says Wisda. “The rest have all been nationwide.”

If this sounds easy, well, Wisda says that there’s an art to turning that lead into a client in that initial meeting.

“My very first question is: Who are you?” Wisda explains. “Then: Tell me what’s going on in your life. What prompted you to reach out? What questions are looming in your head? I don’t start with: How much money do you have and show me your statements,” adds Wisda. “The goal is to create a deep psychological connection before we get into any of the planning work. My best advice is: If you look and sound like every advisor, you’re not going to do well on any lead-generation program. You have to draw them in and make them say: Hey, this dude’s special; this gal’s special.”

A third of those prospects will sign on for a discovery meeting, where Wisda will give them 2-3 hours of his time, and the majority of those will sign on as clients. Zoe’s cost from there is 25 basis points on the first $2 million of revenue generated from that client relationship – for as long as the relationship endures.

Wisda says – and I confirmed this with Zoe – that the Zoe program has undergone a significant change recently, which he thinks will make it more valuable to him.

Zoe is weeding out advisors who are, in its eyes, wasting their leads – those advisors who are complaining that they haven’t converted anybody into a client. This makes sense for a program that only collects revenues if the lead becomes a client. The program now has 100 accepted advisors, down from 700 at the peak. “Our ideal RIA is growth-oriented and better at converting clients,” says Jeff Neikrie, Zoe’s VP of business development.

Second, says Wisda, advisors are expected to put some (if not all) client assets on Zoe’s new TAMP, which costs 20 basis points, scaled down as accounts become larger. Zoe markets this as an added convenience for the advisors on its platform, and not all clients and not all assets will be on the platform. But it’s clearly an additional revenue source.

Nevertheless, Wisda is willing to play by the rules. “They need to make their revenues and for what they’ve provided to me, the cost has definitely been worth it.”

Capacity-first marketing, and a willingness to kiss frogs

Looking for a more comprehensive picture of the nascent advisor lead-generation industry (and its relationship with advisors), I reached out to several practice-management consultants I’ve worked with over the years. I discovered that most of them aren’t paying much attention to this aspect of advisor marketing. One exception is Angie Herbers of Herbers & Company, who not only agreed to an interview but was eager to talk about the dysfunctional way most advisors are using these turnkey marketing services.

“If a firm is using a lead-generation service, it’s going to be a worthless expenditure unless the firms have capacity,” she says. “Capacity is the root of all issues related to lead generation. If leads come in from the referral source and they get ignored or not followed up on, because the advisor doesn’t have time to do it, then they are going to be unsuccessful and conclude that the lead-generation service is worthless. The main thing that helps you close a prospect,” she adds, “is having time to talk with the prospect.”

On top of that, those leads and prospective clients want to talk with the lead advisor, not a marketing intern who is hired simply to follow up on leads.

On top of that, Herbers says, “If the advisor does follow up with the lead but isn’t that interested in taking on less-than-ideal clients, they will unconsciously squash the close. If you run everybody through a pre-screening tool to make sure they’re a qualified referral,” she adds, “then you are not going to be able to create the true connection you need to turn that referral into a client.”

Her solution to getting value from the lead-generation services is to hire first, and transfer enough clients to other lead advisors that the primary lead advisor will have the time and patience, to, in Herbers’ words, ”kiss a lot of frogs.”

“When we work with client firms, we tell them to turn off those screens and talk with every prospect, even if they aren’t qualified to work with that particular firm or not,” adds Herbers. “You want those prospects to walk away from the conversation feeling good, even if you aren’t going to work with them.”

And here’s the astonishing part. Herbers says that advisors who put in the effort and do what younger, hungry advisors do, and agree to talk with and even meet with all the leads that are generated by these lead-gen services, will start getting referrals from some of the people they turned away. The advisor may not have gotten a client, but they may have created a new referral source.

All of these ”on top ofs” point back to the overarching insight about lead gen, which fit the profile that Wisda and Stephens presented. To get benefits from a lead-generation program, you need to have a lot of excess time on your hands to spend quality time with every lead (which is most likely a characteristic of a startup, least likely to be a characteristic of an established firm), and you need to be willing to take on less-wealthy clients to make the expenditure pay off (which, of course, is also more likely to be a characteristic of startups than established firms).

That explains the paradox at the beginning of the article. Established firms that give the lead-generation services a try are misunderstanding or underestimating the time commitment they require.

Most of those advisors haven’t been trained in cold calling, or if they have, they’ve forgotten the skill over time. Established advisory firms tend to be picky about who they let into their family of clients, and many have gotten into the habit of pre-qualifying people who are knocking on their door. That is off-putting to somebody who clicked into a website with a tentative desire to find out if an advisor relationship is right for them.

The buzz around the profession, particularly in its upper echelons, is: Don’t waste your time and money. These things never worked out for me. At the same time, the buzz in the research and consulting world is: Advisory firms are experiencing minuscule organic growth beyond what the market is giving them. The two would seem to be connected.

A better, more nuanced view of lead-gen services isn’t that they’re good or bad, worthwhile or worthless. It is that there is a formula for getting the most out of the proliferation of services that attract the attention of the consumer marketplace – and in its purest essence, it’s the same formula for all successful marketing: Go back to being lean, hungry and open to any type of client relationship that you can grow and benefit. Despite the too-high expectations, lead-gen services are not turnkey; they require that advisors spend part of their day talking with strangers instead of clients. They require sales skills that some experienced advisors think they’ve left behind. And they draw advisors, uncomfortably, into shallower waters of the blue ocean of less wealthy clients – which happens to be where the future growth of the profession lies.

It’s just possible that these are things that advisory firms need to re-acquire or adopt if we are ever going to move the profession out of its current state of stalled marketing and limited growth. The complaints about the lead-gen programs are a symptom of something much, much larger.

Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com.

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