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.