What is the best way to attract new clients? Is it professional connections? Direct marketing? Word of mouth? Whichever way you cut it, any sustainable advice firm needs to have a reliable way to generate leads. Adviser directories Unbiased and VouchedFor have both upped their efforts to convince advisers why their search and ranking engines are the best way to connect financial planners with clients.
VouchedFor recently launched a national television advertising campaign, an Accelerator initiative for young advice firms and a “free financial plan” option.
Unbiased, meanwhile, has launched a feature called Location Plus, where advisers can pay an additional fee for greater prominence in their postcode.
But advisers remain unconvinced about the merits of both directories. Exclusive research from network Sense, obtained by Money Marketing, shows their concerns range from the cost of listing on the sites to the suitability of the clients referred to them.
Taking the lead?
Firms that do not use an adviser directory to attract new clients may be in the minority. Based on a survey of over 440 advisers, Sense found 63 per cent of those polled used Unbiased and 37 per cent used VouchedFor. One in five advisers used both directories, while four in 10 used neither.
On the face of it, the average cost of client enquiries looks relatively small, with Unbiased at £49 and VouchedFor at £99.
But the research reveals poor conversion rates from enquiries or leads to advisers taking these individuals on as clients. Forty per cent of advisers reported only one in 10 enquiries become clients.
Nearly 60 per cent of users admitted to feeling less positive about adviser directories over the past six months. Perhaps more alarmingly, around a third of Unbiased subscribers and over 40 per cent of VouchedFor members plan to spend less or cancel their membership over the next six months.
The top reasons advisers cited for not using the directories were that there are more effective ways to attract new clients and that they represent poor value for money. Yet around a quarter of directory users were able to turn at least half of their leads into new clients.
Postcard Planning director Rohan Sivajoti recently reviewed his Unbiased subscription. He decided to renew the roughly £700 a year package after working out it paid for itself eight times over. His conversion rate from enquiry to client is around 75 per cent.
Sivajoti says: “The return on investment is extremely good, so I’m happy to continue paying it.”
Two of Sivajoti’s largest clients have come through the directory, netting his firm £5,000 and £3,000 respectively in fixed fee deals.
Sivajoti does not use VouchedFor. This is partly because his firm is just over a year old and would be disadvantaged by having fewer reviews on the site. But it is also because VouchedFor’s Accelerator programme, designed to attract fledgling firms to the directory, charges 2 per cent of the first £100,000 of new funds invested, plus another 1 per cent on amounts above that. In return, VouchedFor aims to generate 100 new enquiries over an initial six-month period, for which the adviser only pays when the enquiry becomes a client.
Sivajoti says: “I only charge 0.95 per cent, so how can I be paying VouchedFor 2 per cent? It’s bad business. I guess you could look at longevity of the client and the fees in the end, but for someone starting out it’s not good at all and is really expensive for the consumer.”
Penguin Wealth managing partner Craig Palfrey says: “I don’t like what VouchedFor is doing for new advisers. They guarantee to fill their diaries but want to keep half of their fees.”
Palfrey says his firm picks up around one in three referrals from Unbiased and VouchedFor as clients. He says those with lower hit rates are not swift enough to respond to new prospects or do not present themselves properly in their listing.
He says: “Follow-up is key. A lot of people don’t do that enough. I wouldn’t want people to be aggressive, but they’re not on it enough.
“Most advisers don’t get marketing, they think people will just knock on your door and ask you to help them. You have got to get yourself out in front of people because if you kiss enough frogs…”
This is backed up the Sense res-earch, which found around 5 per cent of advisers who used the directories did not have a way to monitor how many clients they were getting.
Back to the old school
The jury is still out on whether directory listings are a necessity for a modern advice firm.
Apfa has in the past supported the development of adviser directories, including the Money Advice Service’s retirement adviser directory.
Apfa senior policy adviser Caroline Escott says: “As long as the directory can be relied upon and charges are reasonable, anything that makes it easier for people to find an adviser and filters potential clients is a good thing.”
Yvonne Goodwin Wealth Management managing director Yvonne Goodwin uses neither Unbiased or VouchedFor, instead trusting in word of mouth. She says: “Efficiency-wise, our existing clients know exactly what we do and exactly what clients we take, which is long-term financial planning clients, rather than just anyone who seems appropriate on the internet. I would have to do something catastrophic to upset every one of my clients in one go and start again.”
An Unbiased spokesman says: “Balancing the interests of advisers and consumers is always a challenge and demands an evolutionary process. We continually monitor the effectiveness of Unbiased, enabling us to deliver premium value enquiries at the best market cost. We’ve found the advisers who engage most fully tend to benefit most.”
VouchedFor founder Adam Price says: “As a marketplace we can only control so much, and VouchedFor is designed to reward those who put the most into helping clients. We work hard to share best practice, have a team of ‘member coaches’ and a comprehensive help section. The
financial risks of trying VouchedFor are minimal.”