New financial sales strategies: Algorithmic matchmaking in the wealth management world

Financial Services Writer

The relationship between financial advisors and their clients requires a firm foundation of mutual trust and respect. For years, that's meant that word-of-mouth was the main driver of new client acquisition, with an advisor's client base growing in pace with his or her reputation. But embracing new financial sales strategies may be necessary as a younger, Internet-savvy generation begins to seek personalized wealth management services.

Matchmaking and wealth management: Not so different

Individuals from generations X and Y are used to putting their love lives in the hands of online algorithms, and they've shown no hesitation about doing the same with their portfolios. Several startups, including GuideVine, E.F. Hutton Gateway and AdviceMatch, have already entered the race to become the OkCupid of financial advisors. These companies are demonstrating the power of analytics in driving lead generation for wealth managers.

AlgorithmicMatchmaking_Blog.jpgMost of them have a simple model. Similar to a dating site, users fill out a portfolio and answer questions about their age, net worth, location and the life events they need to plan for, such as retirement, college funds, marriage and divorce, illness or inheritances. By analyzing these answers, the firms can winnow the pool of advisors to find the best match.

The implicit promise is that clients will be presented with advisors who are "just right" for them: their financial soul mates, so to speak. The feeling of receiving specialized attention can help embolden clients who may be intimidated by money management and encourage them to take the first step and reach out to an advisor.

Are these matches made in heaven?

The problem with these outside services and the associated opportunities for the wealth management industry may lie on the other side of the desk. The majority of advisors today consider themselves generalists, offering everything from retirement planning to college funds and curated portfolios to cover obscure emerging market funds or slow, steady blue chip bonds. Like a single who contacts any match on a dating site, they're willing to work with anyone who will say yes to them.

That can make it challenging for outside sites to truly differentiate among advisors. In many cases, the final determining factor in which advisor receives the lead comes down to simple geographic proximity to the client.

This could prove to be an insurmountable problem for advisor matching services. These sites "will live or die in the end by their ability to actually create successful matches, above and beyond what the consumer could have done on their own with freely available search tools," financial planner Michael Kitces writes on his Nerd's Eye View blog.

Better connections with advanced analytics

With advanced analytics, industry insiders have a chance to be far more successful at playing matchmaker when applying these new financial sales strategies.

Many firms are using big data and analytics to drive their marketing by segmenting their customer base and figuring out which demographics are driving growth and what messages might appeal to them. Applying those same techniques to internal teams can help managers better identify which types of core customers are likely to form successful, lasting relationships with each individual advisor. Learn more about how your firm can leverage behavior based client insight and analytics in a complimentary workshop.