Testimonials are a marketing weapon, even for securities-licensed advisors. Learn how to use them to maximum effect while still playing within the rules.
Asked to assess the various promotional tools advisors have at their disposal, marketing experts such as Maribeth Kuzmeski will readily testify to the power of testimonials. "What better way to market yourself than have somebody else talk positively about your strengths and skills as an advisor?" asks Kuzmeski, who provides consulting services to advisors via her Chicago-based firm, Red Zone Marketing.
The power of a testimonial lies largely in its ability to influence the mindset of the target audience, says John Comer, CFP, whose Plymouth, Minn.-based firm, Comer Consulting, LLC, offers strategic consulting services for advisors. "If we walk into a situation expecting it to be fabulous, it's more likely to be fabulous, simply because that's what we were led to expect."
These days, due largely to the rise of social media and to longstanding regulations that limit how securities-licensed advisors can use testimonials to market to the public, testimonials come in creatively packaged formats well beyond the traditional client statements that advisors have long used in their marketing materials. While traditional testimonials can still pack a promotional wallop, advisors are finding new ways to use the words of others to effectively promote their own skills and services, because as Kuzmeski asserts, "It's so much better to talk about what somebody else said about you than just to talk about yourself, which can come across as braggadocio."
Within the rules:
Testimonials for securities-licensed advisors
Securities-licensed advisors likely are familiar with Rule 206(4)-1(a)(1), a Securities and Exchange Commission-enforced provision of the Investment Advisers Act of 1940 that essentially bans the use of "any testimonial of any kind concerning the investment adviser or concerning any advice, analysis, report or other service rendered by such investment adviser."
While that prohibition represents a "huge handicap" for the advisors to whom it applies, Kuzmeski says there are other ways for them to put the words of others to work on their behalf, without crossing the regulatory line. Here are just a few.
Client referrals are similar to, but often more impactful than, testimonials, says Nolan Baker, CSA, a securities-licensed advisor at Retirement Specialists of Northwest Ohio in Sylvania, Ohio. "I really encourage my clients to share by word of mouth and help make personal introductions to me," he explains. "And I try to think outside the box about ways to make it easy for people to share information about me and my firm."
One way he does so is by giving clients issue-specific CDs he's produced on subjects such as "how to choose a financial advisor" to pass on to their contacts. He also invites satisfied clients to workshops and seminars he hosts, seating them strategically next to prospects.
Seminars and other live events give advisors a chance to use what Kuzmeski terms "verbal vignettes" on an audience—an anecdote about a client's positive experience with the advisor that speaks to "what a client said about you that really captures what you do and how you impacted their life."
Advisors who earn professional or community awards and accolades should consider using them as a form of implied testimonial from the organization handing out the honor. Displaying a Better Business Bureau Torch Award prominently in the office for clients to see—and issuing a press release about landing such an award—would be an example of that, says Baker.
Then there's the social media frontier. While there's been some fuzziness about how the SEC applies its testimonial restrictions to client comments and recommendations posted on sites such as Facebook and LinkedIn, Kuzmeski says it's an issue that advisors should explore with their broker-dealer. "When people can go in and 'like' your business's Facebook fan page, that can be very powerful. It's like a referral."
