The challenge of client acquisition for financial advisors is a continuous struggle, with the average independent RIA’s growth rate standing at just 5.1% over the past five years, according to the 2022 Schwab Benchmarking study. This challenge has led to the rise of inorganic growth and paid lead generation services, such as SmartAsset’s SmartAdvisor and Zoe Financial, among others. The recent emergence of AdvisorFinder, a new financial advisor lead generation service, offers a unique approach by matching advisors based on their specialization and typical clientele, rather than location or compensation model. However, while its $249/year subscription fee may be appealing, its ability to deliver a scalable marketing strategy and generate sufficient leads for advisors remains to be seen.
The Challenge of Client Acquisition for Financial Advisors
For financial advisors, it’s tough getting new clients. Not because financial advisors aren’t well-priced and offering a strong value proposition – as the typical financial advisor’s sky-high 90%+ (often 95%+, sometimes 97%+) retention rates can attest, the overwhelming majority of clients appear to be very happy with what they’re getting. The challenge is getting the attention of prospective new clients and standing out as a financial advisor from all the others pursuing the same lucrative long-term client opportunities. As a result, according to the recent 2022 Schwab Benchmarking study, the average independent RIA grew its client base at an average annual growth rate of just 5.1% over the past 5 years.
The Rise of Inorganic Growth and Paid Lead Generation Services
The struggle of advisors to drive organic growth has led to a number of other emerging trends around advisor growth strategies over the past decade. It has led to an immense rise in inorganic growth, as the DeVoe RIA Deal Book shows that advisor mergers and acquisitions are up more than double over the past 5 years and over 6X in the past 10. The demand for M&A – coupled with rising valuations as a result of the demand outstripping the supply – has led to a shift of advisor budgets towards marketing, resulting in the emergence of a new crop of paid lead generation services for advisors from SmartAsset’s SmartAdvisor to Zoe Financial to IndyFin to WealthRamp and more.
The High Cost of Client Acquisition and the Emergence of AdvisorFinder
The caveat, though, is that it still takes a lot to get the attention of consumers. In fact, a recent Kitces Research study on Advisor Marketing found that for established financial advisors, the average Client Acquisition Cost for a single new client is $4,056. In this context, it’s notable that this month, another new lead generation service for advisors – AdvisorFinder – entered the fray. AdvisorFinder offers a consumer-facing portal where individuals can come and find the ‘right’ financial advisor for themselves, filtered by various search criteria, and then reach out to contact the advisors they find of interest.
The Unique Approach of AdvisorFinder
What is perhaps more notable, though, is the unique way that AdvisorFinder is currently filtering the advisors in its marketplace for consumers to select – based not on where the advisor is located, nor based on the advisor’s compensation model. Instead, advisors are filtered primarily by their specialization or their typical clientele. AdvisorFinder is not matching advisors based on where they are and what they charge, but instead based on who they serve and the kinds of problems they solve.
The Appeal and Challenges of AdvisorFinder
From the advisor perspective, the biggest appeal for AdvisorFinder may simply be its price – which launched initially with a $249/year subscription fee. The service is substantially less costly than others that charge advisors by the lead or under a revenue-sharing agreement. However, AdvisorFinder does have to produce at least a client for each and every advisor on the platform to make it worthwhile for them to keep paying at all. The jury is still out on whether AdvisorFinder will be able to find a scalable marketing strategy to deliver, especially at its arguably-below-market price point that may not give the company enough cash to invest into its own marketing.
Upcoming Appearance of AdvisorFinder on the Fervent Four Show
You can catch AdvisorFinder live on the Fervent Four Show on April 6th at 11:00 am. The podcast will be released on your favorite podcast player later that afternoon.
Question & Answer
What is the average growth rate of independent RIAs in client acquisition over the past five years?
The average growth rate of independent RIAs in client acquisition over the past five years stands at just 5.1%, according to the 2022 Schwab Benchmarking study.
What are some examples of paid lead generation services for financial advisors?
Some examples of paid lead generation services for financial advisors include SmartAsset’s SmartAdvisor, Zoe Financial, IndyFin, and WealthRamp.
How does AdvisorFinder differentiate itself from other lead generation services?
AdvisorFinder differentiates itself by matching advisors based on their specialization and typical clientele, rather than location or compensation model.
What is the subscription fee for AdvisorFinder?
AdvisorFinder initially launched with a $249/year subscription fee, making it substantially less costly than other lead generation services.
