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Most financial advisors are good at their craft, but aren’t great at generating leads and turning them into clients. There’s one sweet-sounding alternative to generating leads: Buying them.

But buying leads won’t jumpstart your business. In reality, it can torch your reputation, flood your schedule with follow-up and lower your income–even if you make a buck or two in the short-term.

In this episode, you’ll find out the 4 reasons why buying leads is bad for your business–and how to actually get the leads you need to build the business you want.

Ready to stop being a nobody and become a trusted advisor serving grateful clients? Listen now!

Show highlights include:

  • Why buying leads puts you in the passenger seat of your own business. (7:20)
  • What bank robbers can teach you about lead generation. (9:25)
  • 2 ways lead generation companies will screw you–even if they’re “nice” people. (12:40)
  • Why you won’t find millionaires on lead lists—and where to find them. (18:13)
  • How “fake millionaires” can clog up your schedule, burn your money and ruin your business. (19:07)

If you’re looking for a way to set more appointments with qualified prospects, sign up for James’ brand new webinar about how financial advisors can get more clients with email marketing.

Go to TheAdvisorCoach.com/webinar to register today.

Ready to learn even more about becoming the successful financial advisor you know you can be? Check out these resources:





Read Full Transcript

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: Welcome to the show. Welcome to Financial Advisor Marketing.
If you haven't left a positive review or any review at all, one-star, five-star, all of it helps me. This is what I understand—if you leave a review, whether it's one-star or five-star, as far as I understand, it sends a signal to Apple's algorithm and they're like,
Hey, people are engaging with this podcast. Let's push it up a little higher. So, leave a review. I mean, one-star, two-star, three-star, four-star, five-star, red fish, blue fish, I don't care. [001:01.8]
And make sure you subscribe. If you love me, if you hate me, either way, you know you want this information. Am I wrong?

Jonathan: You're right. I don't know, didn’t we talk about it on the air? If we haven't, we should have. But I met a financial advisor at a Strategic Coach meeting and he told me how much he didn't like you. Right? I've told you this before, but the listeners haven't heard this. He told me how much he didn't like you and how he listens every week. And I'm like, What do you mean? Huh? James is going to love that.

James: Yeah, it's amazing. It blows my mind, because I personally don't do it. If I don't like someone's content, I don't bash them or do anything like that. I just don't listen, right? But there are so many people out there who just listen and don't like it. It’s like, if you don't like it, why are you listening? But I don't want to spend too much time.

Jonathan: There’s not enough meat on that bone, James. You’ve got to get more meat on that bone. [02:00.0]

James: Yeah. What he's referencing, listeners, is I got a nastygram from a financial advisor who purchased How to Get Clients With LinkedIn—and keep in mind, this is a $97-product. You keep it forever. The bonus alone is worth more than the product itself, by the way. I'm not going to mention what it is. You'll find out if you go to the sales letter—and this lady sent me one of the nastiest emails. I only screenshot it and cropped part of it, so that people didn't even see the whole email.

She was like, I was expecting more meat on the bone. But I’m at a loss for words because I don't value information by the pound, right? I value information by what it can do for me. I would rather get something that's 30 minutes long that tells me exactly what to do, how to do it, gives me a system, gives me a step-by-step checklist, whatever I need, and I’d go and implement and get the thing done, rather than tons of, quote-unquote, “meat”, like 10 hours where I just fill it and stuff it and fluff it. [03:04.3]

Because I could do that. If I really wanted to, I could create a product that's 20 hours long, talking about LinkedIn. I really could. I know that much about it. I've helped that many financial advisors with LinkedIn. I could create, seriously, a 20-hour program that I would charge $2,500 for, but I don't. I'd rather just give you exactly what it is. You pay the hundred bucks, and you go out and you get more clients, because all it takes is one-tenth of one client to pay for the darned thing. So, just something to think about.

I got criticized for that, just like I'm probably going to get criticized for this episode, because the title should be “Four Reasons Why Burning Leads Is Like Burning Money,” and I know people are going to email complaining about how I'm so wrong, but every so often I'll hear from advisors who want to buy leads and it's no surprise. It's a big thing in the financial services industry, especially in insurance, even though my audience isn't necessarily in insurance. [04:02.6]

They're typically shocked when I tell them that buying a leads list is probably … it's not the number one dumbest thing they could do, but it's up there. It's in the top three, and I tell you why—but fair warning, and I'm being serious here, this episode is not going to be nice. I'm not going to pull any punches. I probably will offend a lot of people, especially the financial advisors who are addicted to leads like caffeine junkies are addicted to Starbucks. So, if you don't think you can handle this, then please stop listening right now.

To give the weak-minded financial advisors an opportunity to leave, I want to tell you about my free webinars showing financial advisors how to get more clients with email marketing. If you're interested in that kind of thing, go to TheAdvisorCoach.com/webinar.

All right, everyone should be going now, so let’s pull the hinges off this thing.
Because I run the Advisor Coach—and I've got the AdviserCoach.com. It’s the Advisor Coach LLC. You've got the Financial Advisor Marketing podcast, the newsletter. A bunch of stuff—I have had several offers from major lead-generation companies, and minor lead-generation companies, to do business with them. [05:16.5]

I've even had individuals approach me to ask if I would form a new company with them that basically got leads and sold them to financial advisors. It would have been very easy for me to just create a new company, use my leverage. I've already got the audience. I've already got the newsletter, already got the email list, already got the social, already got the podcast. Right?
I'm just being completely transparent with you because I want you to understand where I'm coming from. I am really the watchdog for financial advisors. I am really the real deal. I honestly care about you. I'm telling you what it is: I could have made a boatload of money.

You’ve got to do the math. Let's say, I only had 10,000 financial advisors in my audience and that was it. Just 10,000. And let's say that I only got 1 percent of that small audience to sign up for a lead-generation service. That is 100 financial advisors. [06:13.1]

Now, let's say that the average lead cost is, I don’t know, $45, and we sold them, let's say, 15 a month times a hundred. That's $67,500 with just 100 financial advisors that I could have added to the bottom line every single month. $67,500 is how much per year? That's $810,000, and that would have been very easy, first month in business, lead generation. I would've mentioned it on the podcast. I would have sent out an email and about that much, conservatively speaking, I would have signed up, and I would have added close to a million dollars to the bottom line per year right away.

So, big numbers. But there's a very big reason why I didn't do it and it's because buying leads is like burning money, and I want to talk about this because I get asked about it all the freaking time. They're like, Can I have some more leads? Do you know any lead-generation companies? [07:12.4]

You've got to do it yourself. The first big reason is that you're not in control. This is by far—by far—the biggest reason why financial advisors should not buy a leads list. They should not buy any leads whatsoever, and I mean from a lead-generation company. If you're getting a direct mail list or something like that, that is different. But I mean for a company to be the source of your leads, you don't want to do that because you are not in control. The company is in control.

This is like riding in the bed of a pickup truck while somebody else is driving. You are the one who is subject to the harsh bumps. If they go over a pothole, you are bouncing up and down, and you're getting scraped and bruised. They are not. They are in the cabin. It's air-conditioned. It's nice. The shocks work. They’ve got the seatbelt on. They're in control. They're driving the truck. They're comfortable. You're in the backseat or in the bed of the pickup truck and you are not comfortable. I hope that is a strong visual for financial advisors, because that's exactly what is happening. [08:16.9]

Now, before people start whining and bellyaching, I want to point out that the keyword here is “dependent” because, if you're buying leads and it's a really small part of your business, and you're just consistently profiting from those leads and you can just turn off at any point in time, more power to you. You're doing it right. You understand that you need multiple marketing strategies and you're not dependent on a lead-generation company. Yes, you're buying them. Yes, it is a mistake, but it's a very small mistake in comparison to your entire business.

But there are some financial advisors out there who desperately seek out leads like a zombie seeks out brains. They are going around like … I'm trying to use strong visuals here, Jonathan?

Jonathan: I like it.

James: Sure. They're like, Leads, leads, do you have any leads? These advisors. They're a sad bunch, because with all of that time and money that they spend buying leads, they could have built a business 10 times the size of what they currently have. [09:15.0]

I remember being a kid and my mom would see bank robberies and stuff would be on the news. My mom would be like, You know what? It takes a lot of talent to rob a bank and a lot of planning, and it's a major heist. If they used that talent for something else, they could have added a net positive to society. They could have been productive.
My mom had a really good point, Producer Jonathan.

Jonathan: She did.

James: Yeah. I was watching Dr. Phil about a couple months ago and they did an episode where there were the Nigerian princes that were just scamming people, and they had these massive databases and they were emailing people. You know the Nigerian Prince, you send $1 million or we've got them.

Jonathan: Has a million.

James: Right. He was exposing the people that did this. They had a whole business. They were emailing people. They were corresponding with people, paperwork, going back and forth. It was all like it was a system. [10:13.0]
I can't help but think, if they took that much time and they took that much effort, that dedication and the ingenuity that goes into that, and all the effort, it's real effort. No one can deny that. If they took that and applied it to something else, they could benefit society.

This is just like with financial advisors who buy leads because they could take that same time, that same money to build a bigger business to help more people. But, instead, they'll spend the rest of their days fulfilling their lead-generation addiction, while all of the smart financial advisors remain in control.
Why? Because successful financial advisors know that the real money comes from control. That is one of the biggest keys. That's a quotable for this episode, Jonathan. The real money, the big money comes from control. [11:02.1]

Because what happens if the lead-generation company goes out of business? Then what will you do? If you've hitched your wagon to their star, you are royally screwed because you have never learned how to generate leads yourself. You'll always be dependent on buying leads.

This is like the “give a man a fish” problem. If you give someone a fish, that person will only eat for a day, but if you teach that person to actually fish, that person will eat for a lifetime. So, stop depending on stinky fish handouts.

Hey, financial advisors. If you're looking for a way to set more appointments with qualified prospects, I invite you to sign up for James' brand new webinar about how financial advisors can get more clients with email marketing. Go to TheAdvisorCoach.com/webinar to register today.

On this webinar, you'll discover why email marketing is able to generate upwards of 4,400% ROI for smart financial advisors, three fatal mistakes nearly all financial advisors make with their emails, and the proven three-step process for converting prospects into booked appointments using email. All you have to do is head on over to TheAdvisorCoach.com/webinar and register today.

James: Grab your reel baby. Grab that thing. Cash it in the water. Get your own fish. [12:19.2]
It’s like, What happens if they go out of business? What happens if they jack up their prices? That has happened. Let's say, I started the lead-generation business, and I get 100, 200 or 300, and I'm maxing out capacity. I just don't have that many leads to go around, and I started out with a hundred advisors and I charge $45 per lead, just to keep it nice and simple.

Let’s say, I get 200 and I don't have enough leads to go around 200 financial advisors. Guess what I'm going to do? I'm going to raise the price of the leads, and there will be some financial advisors who will suffer because of that. That’s what happens. It’s not just me. It’s not just me as an individual that would do that. That's how business is done. That's how lead-generation companies operate. [13:00.0]

If they jack up the prices, you are impacted by it and there's nothing stopping them from doing it because they have an incentive to grow their business, just as much as you have an incentive to grow your business. It’s just people operating in the free market. You've got to take your blinders off and see what the heck is going on here. What would you do?

What would you do if they decreased the quality of the leads? Let's say, they don't jack up their prices. Let's say, they have a little board meeting and they get together, and they say, We've got 200 more financial advisors. What are we going to do? It's like, We’ve got to get more leads. So, they expand the reach a little bit more. They expand their targeting. And, yes, they get more leads, but those leads are not the same quality, and they're charging you the same price for lower-quality leads. What are you going to do then?

You can't really do anything because you don't know how to generate your own leads. You don't know how to generate your own business. You're not in control. Does that make sense, Jonathan?

Jonathan: You know it.

James: You've got to be in control. You've got to be in the driver's seat.
Number two. The second reason why buying leads is like burning money is that most leads companies don't have your best interest at heart. [14:07.5]

I'm not bashing them, not saying they're evil. I'm not saying that they're manipulating you. They are legitimate, honest companies, who are just trying to make money. They're trying to earn a profit. But to do so, they don't necessarily have your best interest at heart because, on paper, the idea of using a lead-generation company as a financial advisor seems like a good idea, because if the lead-generation company doesn't send you any leads, they don't get paid. Right?

Jonathan: Yeah.

James: Wrong. Completely wrong, because some companies will charge a fee just to join their network, and then they'll make it their mission to generate as many leads as possible to send to financial advisors in the network, regardless of the quality of those leads, because they want to maintain the reputation. They want to say that they're generating leads.

And I don't blame them for doing this. I am not bashing lead-generation companies whatsoever. I'm just pointing out the obvious. I don't blame them for doing this because they're simply trying to grow their businesses, just like financial advisors are trying to grow their businesses. [15:11.7]

But here's the thing. If the leads don't convert, that's not their problem. They gave you the leads. If the leads don't convert, it is your problem. To an extent, it is true that it's up to you to convert your leads, but the only way for lead-generation companies to grow is to sell more and more and more leads, and have more financial advisors in their network, have more people buying those leads, and this inevitably leads to poor quality.

And here is exactly how the process plays out. I'm trying to give you the steps. I'm trying to explain it as clearly as I can because I know that this is a complex topic. It involves a lot of variables, a lot of moving parts, but I'm trying to simplify this.
Here's what happens. First, a lead-generation company is born, and this happens because they find some lead source and maybe it's untapped. Maybe they find a lucrative interest group in Facebook, something like that. So, they run ads to get a bunch of leads and then they sell those leads to financial buyers. That’s what happens. [16:17.2]

But eventually that lead source gets tapped out—the audience on Facebook may only have 35,000 people. The Google Ads audience may only have 40,000 people. They tap that audience out because they burn it out. They just show their ads too many times. They've sold all the interested leads.

But the lead-generation company still needs to make money. They still need to maintain their business. Again, I don't blame them, but what happens is they look for other lead sources.

Now, when that happens, the new lead sources aren't as good because they’ve started out in business because they had this advantage. They found a new untapped lead source. Everything was great. They made a lot of money right off the bat. But as they expand, the quality starts to get a little lower.

Or let's just say that they somehow managed to keep the quality just as high, but in order to do that, the cost to them to generate those leads is higher, which means financial advisors have to pay more because the cost gets passed on to financial advisors. [17:15.7]

As this happens over years, the financial advisors pay more and more money for the same quality of lead or they pay the same amount and the quality goes down. That is literally the business model. This is literally the only thing that can happen. I'm talking to you not as the Advisor Coach, but I'm talking to you as someone who advertises on all major platforms for four different businesses and for my own business. I've seen it happen with Google. I've seen it with Facebook. I've seen it with all these different places where people generate leads. It’s an inevitable truth of lead generation.

Then, number three: not all leads are created equal. If you've ever purchased leads in your life, you know this is true. It's related to the problem that I just tried to explain and tried to keep it simple. [18:02.5]

Lead companies constantly have to look for new lead sources. They've got to feed the growing demand from financial advisors and in order to do that, they’ve got to seek out new audiences and new placements.

Besides, people who hire a financial advisor often do so by evaluating the financial advisor's website. They look at the financial advisor’s social media accounts. They do that first or they seek out referrals from friends and family members. Very, very few high net-worth individuals find the financial advisors as a result of being in a list of leads. You've got to realize that. If you do somehow manage to find a list of high net-worth individual leads, you are going to pay for it, which means it can get expensive fast.

Now, let's do a little bit of math here. Let's say that you pay upwards of $200 per lead for someone who says—not necessarily true; it’s not necessarily by verified, it's just that this person says—he or she has investible assets of $1 million or more. Because a lot of these lead generation sites and companies, they're just like contact forms where people can say whatever they want, this leads to lower-quality leads as well. [19:08.6]

It's self-reported, and just because someone says that they have $1 million of investible assets, it doesn't mean it's true. They may be thinking net worth. They may think, Oh yeah, I have $1 million net worth, not realizing that it's their house and their car, and it's not liquid cash, and as a financial advisor, that's what you need. You need liquid investible assets. What you will do because the leads are so expensive is you'll burn through so much money just trying to get these people out of the way. It's just math.

Let's say, you're spending $200 per lead and all of the leads are a hundred percent legit. Every single thing they tell you is true. Every single person who says they have $1 million in investible assets, it's true. It's verifiable. Let's say, you go through 20 leads to get one client. That means you're paying $4,000 to get one client.

If that's profitable for you and it should be, more power to you. That's great for you. But if you really want to succeed in business, you've got to master capital allocation and, quite frankly, $4,000 to shell out for one client when it may or may not happen for a lead-generation company and you don't maintain control, that, in my opinion, is not the best use of your capital. [20:18.6]

Finally, number four, the fourth reason why burning money is happening every time financial advisors buy leads is that converting purchased leads is difficult. This is especially true if the leads are exclusive, and exclusive basically means that they only go to you and they don't go to anyone else. If a lead is exclusive, nobody gets it but you, and if they're exclusive, you are going to pay out of the nose for them.

Most financial advisor leads are non-exclusive, which means that by the time you make contact with your leads, you may find the two or three other financial advisors have already beaten you to the punch. And unless you work with a specific niche, which you should, and you're buying leads in that niche, which is darned near impossible, you won't have any way to differentiate yourself from the other financial advisors who called the prospect or email the prospect before you did. Good luck fighting that battle. Good luck. [21:18.3]

It doesn't work and there have studies that have been done that found that nearly 90 percent of consumers don't even answer the phone. They don't answer the phone because they're busy. Phone calls take too long. They don't like hearing people on their phone. Phone calls are intrusive. They give all these reasons for why they won't answer the phone, and lead-generation companies sell you these leads and they expect you to call the prospect right away, and even if you do, they may not answer the phone.

So, take that for which you will. This is my rant episode. If I ever did any educational episode, because I know I hate on educational prospects or whatever, this would be mine. This is my public service announcement, because it's just dumb. It's just dumb. [22:05.6]

The better alternative is to do the stuff yourself. There's literally no excuse for not being able to generate your own leads anymore. For example, if you type in “financial advisor near me” into a search engine, those results are dominated by crappy lead-generation companies whose sole purpose in life is to be able to extract data from consumers. You, on the other hand, could rank for similar terms by providing content to people. Nice blog posts, videos, you put it on your website. Once visitors get to your site, a certain percentage of those people will reach out to you for more information. It's just simple math. It's the same exact process that lead-generation companies follow. You can integrate that into your own business.

You should be doing a healthy mix of outbound and inbound marketing, which means generating your own leads, and when you build your marketing machine, you're building a system that will continue to work for you throughout your career. [23:00.6]

Once you buy a lead from a lead-generation company, the transaction is over. You have no equity in the deal. When you generate your own leads, you are building equity and isn't it better to spend your valuable time working on building a business that is sustainable and repeatable?

That's what I want you to think about this week. Don't just buy leads. Build a business, and that's it, Producer Jonathan.

Jonathan: Love it, man. What's coming up next time?

James: Next week I'm going to talk about how financial advisors can stop being mind-numbingly boring … I'm happy that we're ending this podcast episode on a lighter note, but it's true. One of the reasons that financial advisors struggle to generate their own leads and build their business is that they're so boring, so I'm going to help them with that.
Jonathan: All right. You heard that. Next week you will find out how not to be boring AF. We will be back in your ear buds next time. Thank you for tuning in, fam. [24:08.8]

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