When something seems too good to be true, chances are it probably is. Financial advisors play a critical role in helping individuals and businesses manage their finances and investments. As a financial advisor, you are continuously looking for new ways to attract clients and grow your business. 

One method that some financial advisors use is purchasing leads. However, we like to say that purchasing leads is essentially like playing the lottery. Purchasing leads can be a risky and ineffective lead-generation strategy. In this blog, we’ll explore why financial advisors should think twice before buying a list of leads. 

First, let’s define what we mean by purchasing leads. When you purchase leads, you are essentially buying contact information for individuals who have expressed interest in financial planning or investment services. These leads are often generated through various marketing channels, such as online forms, surveys, or contests. The idea is that by purchasing these leads, financial advisors can quickly expand their client base and generate more business. 

However, there are several reasons why purchasing leads is a risky idea:

1. Lack of Control: When you purchase a list of leads, you have no control over the quality of the leads you receive. Plus, you don’t always know how the leads are being sourced. Some lead generation companies may use deceptive tactics to obtain contact information, such as offering freebies or misleading advertisements. As a result, you may end up with leads that have no real interest in your services or are not qualified to be your clients. So, keep in mind, the only way for lead-generation companies to grow their business is to sell more, which often leads to poor quality. 

2. Unresponsive Leads: Even if the leads you purchase are legitimate, they may not be responsive to your marketing efforts. A recent study found that 75% of Americans never answer the phone if they do not recognize the number, and the average cold email response rate is only 1-5%. Furthermore, the leads you purchase may have been bombarded with offers from other financial advisors or simply may not be ready to make a decision about their finances. This means you’ll have to spend a lot of time and resources trying to convert these leads into actual clients. 

3. Quantity Over Quality: Buying leads can be expensive and not very effective. Lead companies must constantly find new audiences and placements to keep up with demand, and very few high-net-worth individuals find their financial advisor through a list of sales leads. Even if you do find a list of high-net-worth individuals, there’s no guarantee that the self-reported information is accurate.  

4. Reputation Damage: Finally, purchasing leads can damage your reputation as a financial advisor. Clients want to work with advisors who are trustworthy and have a track record of helping people with their finances. When contacting a purchased list of leads, your outreach may be viewed as intrusive or even spammy, undermining your credibility and damaging their perception as you. If potential clients discover that you’re purchasing leads, they may view you as a desperate or unprofessional advisor. So, don’t be one of those advisors that is calling these repeated and recycled prospects. 

If purchasing leads is not the best way to acquire new clients, what can financial advisors do instead? The answer is simple: focus on building relationships. We like to use this as a general rule, names or contacts can be purchased, leads cannot. A lead is earned. Building relationships with potential clients takes time and effort, but it’s a much more effective way to generate business in the long run. 

While it may be tempting to purchase leads as a quick way to grow your business, it’s not a sustainable or effective strategy for financial advisors. Instead, focus on investing your time and sources in cultivating relationships with potential clients through valuable content, in-person events, networking and referrals. By doing so, you’ll establish yourself as a trusted advisor and generate business for years to come.

This article comes from NAIFA marketing partner, White Glove. To read the original article, visit their website. Members can learn more about how White Glove can help their business in the Member Portal.