Yelp-style online reviews for advisors are here
The decision by the Securities and Exchange Commission to allow advisors to use testimonials in their marketing materials opens the door to a whole new world of online marketing that will allow their clients to rate and evaluate them online from a perspective. similar to Yelp-style restaurant reviews.
Over the past two decades, research firms like Morningstar and Dalbar have pioneered the concept of rating advisers. Their proposals were met with contempt by the advisers, who argued that their services are far too personal and subjective to be distilled into ratings and rankings like mutual funds are.
But the SEC’s decision to allow testimonials changes the whole ball game, creating a more open platform for customers to share their views, both positive and negative, about the services they receive from them. advisers for all to see. This change promises to modernize advisor marketing in a way that is both exciting and threatening to the traditional referral model that has governed the client acquisition process for decades.
Prior to the advent of the new rule, advisor referral networks were “limited to the people their clients had come into contact with,” says Susan Theder, director of marketing and experience at FMG Suite. “Now the outlook will be swayed by complete strangers.”
This could significantly expand their network of prospects, but it also brings them into a much larger world over which they have much less control. There is a set of rules that counselors will need to follow, lest they face discipline.
For example, it won’t be successful if advisors pick testimonials from a handful of top clients while ignoring the rest. This means they can’t email their top customers and ask them to provide a review. However, they can email all customers to request a review or add a request to their email signature. They should also use consistent messages and language to avoid bias.
Advisors must demonstrate that their process allows all customers to share their opinions, says David Christensen, head of product development at FMG Suite. His software company is building a system, currently in beta testing with RIAs, to help advisors manage the process.
Advisors can feature complimentary testimonials on their homepages as long as they link to all reviews elsewhere on their websites. Christensen says the system needs to cover all customers and ask them consistent questions.
“The SEC realizes that financial advisers operate with one hand tied behind their back,” says Christensen. The agency “says this is how clients want to choose” advisers, he adds.
He maintains that the SEC’s long-standing ban on testimonials has left the advisor selection / client acquisition process far behind other sectors of the financial services industry. Insurance companies “live and die according to online reviews,” he says.
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