You're listening to “Financial Advisor Marketing”—the best show on the planet for financial advisors who want to get more clients, without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal.
James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.
James: This is going to be a fun episode, because I'm going to chat with you a little bit about how financial advisors should pay per lead, and by extension, how much financial advisors should pay to set an appointment and how much they should pay to get a client. [00:48.1]
For starters, let me make one thing clear. You are in business, or at least you should be in business to turn dollars into more dollars. All of that other stuff is derivative. Everything else is derived from that. You make more money by serving more people better, yes, but you're taking your dollars and time and energy and resources and turning those things into service and your business model and everything else in order to make more money. So, you should be in business to turn dollars into more dollars.
One of the saddest days of my life was when I realized that not everyone is in business to make money. That was such a trip for me. I could feel my heart breaking. I realized that some people were in business to satisfy their egos, for example—and don't get me wrong, you can do whatever you want. I'm a believer in freedom. Your business is what you want to make it. If you want to do whatever it is that you want to do with your life, go ahead. More power to you. But I am interested in, for the most part, making money. [01:52.2]
Do I turn down projects? Yes. Do I turn away potential clients? Yes. But I do that partly because I know that by protecting my sanity and my energy, I can turn that into more money. So, even my seemingly irrational behavior of turning away money in the short term is because I want more money in the long term. I am following the principle of turning dollars into more dollars.
Let's get back to the question. How much should you pay per lead? The answer depends on a few key factors, but here's the main principle—it's not about how much you pay. It's about how much you make. If you're paying $1,000 per lead, and that lead nets you a client worth $50,000, then congratulations, you are crushing it. On the other hand, if you're paying $10 per lead and getting no results, you're just wasting your money.
How much are financial advisors spending to acquire clients? There are a few research reports out there about this topic and they typically say that financial advisors are spending about $2,000 to $5,000. It also depends on the marketing strategy in the business and everything else, but that tends to be the range. That range also tends to account for the financial advisors’ time, too. [03:11.3]
If you listen to the episode I did with Michael Kitces last month, you heard him talk about how marketing costs tend to go up, not down. They go up as financial advisors make more money. The reason this happens, even though it seems counterintuitive, is because the value of a financial advisor's time generally goes up as the business grows. Of course, this is not much of a problem for the financial advisors I help because I show them how to create marketing assets that operate independently of their time. However, for the financial advisors who aren't doing things the way I tell them, their marketing tends to get, yeah, more expensive over time. Of course, it does.
Also, I want to be clear, it's annoying to me when financial advisors ask about average metrics. They want to know what the average financial advisor click-through rate is or what the average financial advisor is spending on ads. What does it matter? Let's say that I tell you the average financial advisor spends $5,000 to acquire a client. [04:09.2]
Okay, now, how does your life change? Let's say I tell you the average financial advisor spends $2,000, not $5,000 but $2,000 to acquire a client. What changed in your life? Absolutely nothing, because the presupposition in that question is that you will somehow behave differently or do things differently, depending on what the answer is. That's wild to me, because my belief is that you should do your best and put your best foot forward no matter what, and if you're doing your best, then there's nothing you could do differently, so it does not matter. If you're doing your best in every situation, it doesn't matter because you can't do more.
Again, the only thing that matters is dollars in versus dollars out. If you have a terrible business and you're not profitable, the lowest cost per lead or client will only bankrupt you faster. That's why having good marketing and a good business and good systems is so important. I'll talk about that in a little bit, because I have a very important point that I'm going to share with you later in the show. [05:11.4]
But for kicks and giggles, I Googled average cost per lead for financial advisors and I found the following from a company called Skyline Social. They said the average cost per lead is $200 and typically only one out of 10 leads convert to appointment. Not clients. Appointments. That means these financial advisors who are buying leads out there are spending two grand to set a single appointment, 2,000 smackers, not even for a client, but for an appointment. What in the world?
At first glance, that seems wild. It certainly seems like a goofy marketing strategy, and if you ask me, I will tell you straight up, there are so many better alternatives. But, again, back to dollars in versus dollars out. If someone is spending $2,000 per appointment and making a ton of profit, then more power to that person. He or she should keep doing it. But I would also encourage that person to be open-minded about the alternatives. [06:16.2]
Here's an example I give very often. Even if it works, it's like cutting your lawn with scissors. Can you cut your lawn with scissors? Yes, you can technically do it and get the job done, but it will be really slow, really difficult and kind of goofy, considering that there are much better options out there. Someone with a zero-turn riding mower is going to smoke you every time.
I'll give you an example. Let's say you're one of the financial advisors spending $200 per lead. The Inner Circle that I run, the community and newsletter and everything in it, is $199 per month. Let's just say 200 and call it the same. It's $1 off. You get a proven marketing roadmap in the newsletter, plus, office hours every single month for the same cost as one lead per month. [07:06.6]
Remember, according to Skyline Social—this isn't me saying this. I'm citing my source—only one out of 10 leads convert to appointments, which means you could be an Inner Circle member for 10 entire months for what some poor souls are spending to get a single appointment. Let's compare. In those 10 months as an Inner Circle member, you're not just going to get random leads. You're getting the tools, strategies and personal guidance to attract high-quality prospects who are more likely to convert into clients. That is what I do. That is my life's work. I do it every single day. I eat, sleep and breathe financial advisor marketing.
Think about it. Would you rather roll the dice on overpriced leads? Actually, I shouldn't say overpriced, because, again, it depends on dollars in versus dollars out. But would you rather roll the dice on a poor alternative of buying leads that might not even result in a single client or invest in a proven system that helps you build sustainable long-term growth. It should be obvious. [08:12.3]
Financial advisors who actively choose not to be Inner Circle members are essentially saying, “I prefer cutting my loan with scissors. No thanks. I don't need that zero-turn riding mower with ventilated seats and cup holders. I'm fine with my scissors. I'll just clip, clip, clip with these scissors.” It's absurd, when you think about it. Why struggle, waste time and exhaust yourself with inefficient methods when you could be cruising along on that zero turn? Yet so many people do it in their businesses.
Another reason why I'm not a fan of financial advisors paying for leads is because there's an extreme lack of control. When you pay for leads, you're essentially putting the success of your business, your baby in someone else's hands. You're relying on a third party to generate the leads, vet their quality and deliver them to you, and at every step of the way, things could go wrong. They could screw it up. Things could happen. [09:07.8]
Let's be honest, their main goal is not to help you. It's to make money for themselves. Can they do it by helping you? Sure, yes, I understand it. Some people are in business to serve others, but I don't know, I'm just not comfortable with it.
Here's the problem, when I talk about lack of control. You don't control the quality, because the leads might be unqualified, uninterested or even recycled from other campaigns. You have no idea how motivated they are or if they even match your ideal client profile. You don't control the process. You don't get to decide how the leads are acquired, the messaging they see or the expectations they have when they contact you. This means you are stuck with whatever systems the lead providers have, even if they don't align with your brand or your goals, and you do not control the follow-up. [09:57.3]
Sure, you can send emails, you can make calls, but if the leads aren't warm or properly nurtured beforehand, your follow-up efforts could be wasted. You're left trying to salvage leads that may not have even been a good fit to begin with. You're just throwing good money after bad when you follow up and the worst part, you're paying for everything. You're paying for every step along the way.
Listen up, financial advisors. This is something special I'm doing exclusively for people who listen to this podcast. If you subscribe to the Inner Circle Newsletter over at TheAdvisorCoach.com/coaching, I will send you a collection of seven copyright-free emails, personally written by me, that you can use right away to begin getting more clients.
I call these my “objection-busting” emails, because they are designed to overcome the biggest objections financial advisors face. All you have to do is send me an email letting me know you’ve subscribed and I will reply with a link where you can download them for free.
I originally offered these in the May 2024 Inner Circle Newsletter issue, and it was one of the most popular bonuses I've ever given away. Today, these seven objection-busting, copyright-free emails are only available to listeners of this podcast, because I'm not mentioning them anywhere else. Go to TheAdvisorCoach.com/coaching to subscribe today. Now, back to the show.
I believe that instead of handing over your money and hoping for the best, you should invest in systems and marketing assets you control. I'll give you a few examples. I'm not just going to say, “Invest in marketing assets,” and then say, “See ya.” I'm going to give you some examples.
Let's say you set up an email marketing sequence and you start building your email list. Let's ignore the fact that you likely already have a goldmine of potential subscribers in your social media fees. Let's ignore that, because you likely do, but let's just say that you don't and I'm going to make this situation as difficult as possible for me to justify. Let's assume that you pay for 100% of all the email subscribers you acquire through something like online ads, and we'll say each email subscriber costs you $5. Okay, so you spend $5 each to get 100 people on your email list. That's $500 total. [12:12.3]
Now, how many people will set appointments with you? It depends. But consider this, if you're clear about who you want from the very beginning, like all the way back in your ad, then you should easily be able to set something like five appointments from those 100 people. Why? Because they will already know you're a financial advisor, and if you serve a niche, then they will likely already know that you serve that niche.
If you're a financial advisor and you serve dentists, then you could probably see how it is not that big of a stretch to think that a mere five out of 100 dentists will set an appointment with you, especially because they were the ones who subscribed to an email list run by a financial advisor who serves dentists. How much are you paying for appointments in that scenario? $100. [13:02.7]
Okay, let's double that. Let's assume that I'm wrong, that I have made grave errors and miscalculations and I've made mistakes. Let's double it. Okay, that's still $200 per appointment. That's still one-tenth, yes, one-tenth of what Skyline Social said.
Let's try another one, except now I won't use any dollars per se. I'll only consider your time. Let's say you're a financial advisor and you go hard on LinkedIn for one hour every single work day, every single business day. Typically, you can get a lot done in 20 minutes, but I'll be conservative and say you spend an hour.
Let's say you value your time at $100 per hour and you do this again every business day. For easy math, I'll say there are 20 business days in a month. I know it varies, but we'll say 20. Twenty business days multiplied by $100 per day equals $2,000. Huh, that's the same figure, again, as the one in Skyline Social for one appointment. [14:05.6]
Don't you think that you stand a better chance of setting one appointment, at least one, with a highly qualified individual, in that scenario when you're going hard on LinkedIn? Wouldn't you rather control the process from start to finish, instead of depending on leads? We haven't even addressed the elephant in the room, because the leads you control are also far more likely to convert into clients. Again, why? Because they will know you from start to finish.
Go back to the email example. They will opt in to your email list. They will read emails from you. They will build a relationship with you. The conversion rate there will be so much higher, which means you'll get more clients. You'll make more money. You'll have more profit, and all that fun stuff, all else being equal.
The same is true. On LinkedIn, people will see your profile photo, your headline, your profile itself, your content and whatever else you share on there that's powerful. That's so much better than someone going to a third party and getting his or her information passed along to you. [15:08.1]
Let's do another one. Let's say you took that $2,000 and invested it in something like direct mail. Back in December, I literally gave my Inner Circle members two prewritten direct mail templates they could use right away. I also gave them a video showing them how to write their own direct mailers, so not only did I give them fish, but I taught them how to fish.
Now, the gist of my direct mail philosophy is this. You should send simple letters that build trust, credibility and rapport for the price of a single stamp. You can send three pages printed front and back. Yes, that's six entire pages of whatever message you choose to send anywhere in the United States. How much does each mailing cost? About $1.
Okay, are you following me now? With that same $2,000 you could send 2,000 direct mailers to people, and each one would have six entire pages with information about who you are, how you help, why they should trust you, and so much more, whatever you want to put in there. Don't you think that's more powerful than paying that much for a bunch of leads and only getting one appointment? [16:20.1]
Let's get even more conservative. Let's double that cost. We'll say you can only send 1,000 mailers for $2,000 instead of 2,000 mailers, because let's say you rent a mailing list and you pay $1 per person on that list, or maybe you pay someone to send it out for you. whatever. We're going to double the cost. What will your response rate likely be on that mailing?
Again, I'm not a fan of averages, but I know people are thinking about them all the time, so we'll say it's 2%. You mail 1,000 people and 20 of them get back to you in some way, shape or form. I'm not even going to say they set appointments with you. I'll chop that number in half again and say only 10 people set appointments with you. [16:59.1]
Even though I'm being doubly conservative, the results are still, catch this, really get this, the results are still literally 10 times better than purchased leads, 10 times better, even though I cut the results in half and then I cut the results in half again.
With all that said, I want to leave you with this powerful lesson. This is the biggest takeaway from the entire podcast episode. There are no bad metrics; only bad economics. Because let's say you do all the marketing strategies I told you about. You do email marketing and LinkedIn marketing, and direct mail marketing, and even so much more that you learn about in these podcast episodes and the blog posts that I have in my emails and the social media, the little social media that I do, and if you're an Inner Circle member, you know we talk about stuff that is just far beyond any of this.
You get results that are 10 times better than buying leads. But, unfortunately, that still doesn't guarantee you'll be profitable, because profitability depends on how you've structured your business, who you serve, your client lifetime value, and so much more. Again, this is a takeaway—there are no bad metrics; only bad economics. [18:12.3]
You could convert 100% of all the leads you buy, but if you don't make enough money from those leads to cover your cost, you have bad economics. Likewise, you could practically set money on fire. You could be so inefficient, but if you make a ton of money on the back end, it won't matter. You would still be profitable. The only question is, how profitable do you want to be? Because if you're profitable cutting your lawn with scissors, you can become absurdly disgustingly profitable with that metaphorical riding lawn mower.
I'll give you a decent rule of thumb to help you decide if you are a good fit for someone like me or not. Generally speaking, if you're a financial advisor who makes at least $2,500 or so per client, then I can probably help you make far more money than you give me, especially with the Inner Circle, because that's $199 per month, which works out to be $2,388 per year. That means it pretty much pays for itself by getting you one client per year. [19:14.8]
If you make $5,000 or more per client on average, then allowing me to help you will probably be the best business decision you have ever made in your entire life. I know that might seem kind of cocky, arrogant or pompous, but it is true. I mean, the numbers and my results speak for themselves. If you have a higher client lifetime value, it is just going to be ridiculous if you let someone like me help you.
At the time of this recording, the churn rate for my Inner Circle is a mind-melting, this is insane, 1.2%. That means 98.8% of financial advisors stick around month after month. Think about that for a second. These are some of the busiest, most results-driven professionals out there. They're not spending their hard earned money on something that doesn't deliver. They stay because it works, period. You don't get to a 1.2% churn rate, or, in other words, a 98.8% retention rate accidentally or by having a poor-quality product or not delivering. [20:14.2]
So, if you're interested in learning more about the Inner Circle, I'm not really going to pitch it that hard. I'm just going to tell you, if you make $2,500 per client on average or more, then it's probably a good fit. If you're $5,000 per client and more, it's just insane what we can do together. Go to TheAdvisorCoach.com/coaching to learn more. Once again, that's TheAdvisorCoach.com/coaching. Otherwise, I'll catch you next week. [20:39.8]
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