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Practice Management > Building Your Business > Prospect Clients

Younger Prospects Don't Need Referrals to Pick an Advisor: Survey

By Michael S. Fischer

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Today’s retirees are the last generation of investors who consider referrals necessary when selecting a financial advisor, according to survey results released this week by Ficomm Partners. 

In the next five to 10 years, effective digital marketing will matter much more to prospective clients than referrals, and its value will only continue to increase for financial advisors, the marketing firm urges.

Sixty percent of survey respondents older than 60 said they would only hire an advisor if they had a referral, while just 29% of those nearing retirement said the same. Among younger investors, the shift is even more pronounced, with only 17% of those younger than 44 saying they require a referral. 

Instead of relying on referrals, 45% of respondents nearing retirement and 57% of those younger than 44 reported that they had hired financial advisors based on digital marketing, compared with only 20% of older respondents who said they had done so.

This shift in referral behavior among younger investors suggests that the effectiveness of referrals alone for organic growth will plummet, Ficomm said.

“The survey results align with what we have heard anecdotally,” Megan Carpenter, the firm’s chief executive said in a statement. “As these cohorts age, their habits won’t change. They’re used to researching and making purchases digitally and tend to rely on social proof such as online reviews and clearly defined digital brands.”

The survey sample comprised 1,107 consumers, 52% of whom were women and 47% men. Eighty-two percent of respondents had annual income of less than $149,000, while 17% had annual income of more than $150,000.

Effective Marketing Tactics

No single digital channel was superior to another, the survey results showed. Rather, a mix of digital channels was required to generate enough touchpoints to move a prospect to take action.

According to the research, 64% of effective marketing tactics were digital, and not one tactic outshone another. Moreover, consumers required a minimum of two digital interactions before responding — with the ideal number of interactions being five or more, Ficomm said.

Referrals will remain an important lead source, Ficomm said, but can no longer be the exclusive way that leads come into the business. Advisors who want to remain competitive will need to implement an integrated, multi-tactic digital marketing strategy. 

Michael S. Fischer

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