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Adviser directories challenged over value and quality of referrals

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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.

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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.

Cashing in

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.”

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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.”

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Having used both Unbiased and Vouched For, and for a period of time , i can confirm the leadsa are not exclusive, the type of client they both attract is the ‘how much’ type of client. I ve had numerous enquires where they said “adviser A is charging X , can you beat it? ” I dont want to be in a race to the bottom as such.
    If the people above can run a business on 0.95% then good luck to them now and when/if they can a complaint as the cost of paying out a complaint will 9/10 times exceed the advice cost.

  2. I have a real issue with any so-called independent directory promoting only those who subscribe – that needs to be made crystal clear to the public who refer to them. I believe that the FCA has looked at other comparison websites and needs to look carefully these.

  3. Hi Mike

    Thanks for your comment.

    My research shows me that enquiries are exclusive i.e. neither directory sells the same enquiry to multiple advisers. My report deals with this issue in some detal.

    Phil

  4. Got to admit I have cancelled all my directories.

    I have been watching this closely for 18 months now and the leading referral sources are 1. existing clients, 2. local PR and 3.social media/our website! Who knew an oil worker off the African coast searches Face Book for an IFA in Lancashire. Weird but shows how the web is changing the world and how people use information.

    I think Unbiased for example was taking the mick when we have been with them for 15 years but suddenly started ‘guiding’ any new clients to their online form and then the IFA buys the lead. The older system of leaving the client to look at IFAs locally, click easily to their website and back and then allow the client to choose is far better, not only for the IFA but better for the client. Sometimes you can be too commercial and it backfires…….

  5. The only people who find these directories huge value is the CMC companies not prospective clients !

    I know for a fact CMC’s target this information to go fishing !

    You pay to get spurious complaints ! that’s great value for money !

  6. Thanks DH, interesting angle.

    However, I know plenty of advisers who do get value from these directories. If they didn’t surely they would cancel their membership and Unbiased / VouchedFor would quickly be out of business?

    I have also never heard another adviser raise the issue that complaints rates are higher from clients who have come from directories. A question for the next survey, but so far, there is no evidence that this is an issue.

    • I forgot to add Phillip the best (and only way IMHO to get new clients) is personal recommendations

      I did many moons ago pay for a directory listing and got nothing but rubbish and lighter pockets, and I have not seen or heard why my attitude may change

      A personal recommendation is free and 99.9% of the time you get a fantastic client and friend for life….. but that again is just my personal experience !

  7. The only directories that should be used are the ‘free’ ones such as FCA & PFS. However when companies like Prudential actually promote Unbiased, which is not, then these sort of ‘pay for, pay more’ companies will never go away.

  8. Nicholas Pleasure 7th October 2016 at 12:33 pm

    When I first set up I tried them all and none of them work. I also tried the wizzy website and lots of SEO. Got lots of enquiries but virtually no clients.

    You need to build a network of local professionals that trust each other – that’s the way to get quality business.

    • Nicholas, thanks for taking the time to comment. Our research shows clearly that directories can work; this is the case for circa 25% of advisers. The key is to help the other 75% learn from the 25%, which hopefully we have gone some way to doing with the best practice guide at the end of the report.

  9. Is it just me or have you got ‘mickey takers’ posting on here as ‘Mike Hunt’ and ‘Nicholas Pleasure’…..

  10. Having used both Unbiased and VouchedFor for the past 4 years I have found the Unbiased enquiries more people looking for the best deal and very fixated on cost and sometime just a free initial meeting. VouchedFor I have found very good and had well over 30 clients who are now fee paying clients. For the enquiries that havent fitted my criteria or didnt need advice I have managed to obtain a refund from VouchedFor. For me personally I have found VouchedFor a great way to advertise our services and I think they have thought about the additional things they can do to promote IFA’s as well as passing on clients looking for advice. All I can say it has worked for me and alot of clients had commented how useful they have found the website.

  11. There are no results on the FCA Register for Nicholas Pleasure, whilst Mike Hunt clearly is a piss-take. There was a thoroughly dislikeable bloke at my school called Michael Hunt, but somehow we never twigged at the time the comic possibilities. He may have had a brother called Isaac.

  12. I work for a Wealth Management company with average client portfolios of £450k. We have a small number of clients with large portfolios. This makes it difficult for us to get large numbers of reviews on websites such as VouchedFor. Combine this with the fact that that the average client age is around 70 and many of our clients still use letters as their preferred correspondence, and you can see why these kind of sites don’t work for us.
    We would like to reduce our average client age but to do this we must first encourage our existing client base to use computers to place reviews on these sites.
    This is a lot of effort when you consider that very few of the referrals will amount to anything.
    I have also found that these sites are awful for location. If a client types in an exact location and you are the only adviser in that location they will still see advisers that are miles away first because they have more reviews!
    These sites need to be reviewed as they have become biased to those who have paid premiums and who have a large number of bogus reviews.

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