Recent warnings about advisers being approached by lead generators on LinkedIn will likely resonate with many in the profession. As competition for new clients increases, more advisers are turning to marketing firms promising introductions to prospective customers.

 

But the reality is that the risks highlighted are not confined to LinkedIn.
Anyone working in financial services marketing will know that these types of offers are now everywhere. In fact, it is something I see almost daily while scrolling through Facebook and Instagram. Given that my own search profile is heavily centred around financial services, I am an obvious target for these advertisers. The algorithms know exactly who to show them to.

 

And the promises are often extraordinary.

 

Many of these unregulated “marketing companies” claim they can generate enormous returns on investment for advisers — sometimes promising pipelines of high-net-worth clients or guaranteed appointments.

The problem is that very few of these businesses are subject to any meaningful oversight and there is a growing number of unregulated operators entering the space.

The barriers to entry for creating a “lead generation company” are extremely low. Anyone can build a website, run a few social media adverts and start approaching advisers with promises of client introductions.

There are, however, some simple checks that advisers can carry out before engaging with a marketing provider.

 

First, firms should be extremely cautious about paying significant sums of money upfront. Legitimate lead generation businesses typically structure their pricing around performance or delivered leads.

 

Second, advisers should always carry out basic background checks on any marketing company they are considering working with. A quick search on Companies House can provide useful information about how long the business has been operating and whether it has an established track record.
Finally, advisers should think carefully about whether the company they are dealing with operates within a regulated framework. Financial services is an industry built on trust and consumer protection, and any marketing activity that feeds into the advice process should reflect those standards.

 

In my view, advertising within financial services should be subject to proper regulatory oversight. Unfortunately, that is not currently the case. Despite the scale of activity in this space, we are aware of only three companies operating in financial services lead generation that are actually regulated, with one of the largest and most well-known operators notably not among them. With the direction of travel from platforms such as Google increasingly suggesting that only directly regulated firms will be able to advertise against financial services terms, there is hope that standards across the sector may eventually begin to rise. That said, experience suggests the industry may take some time to get there.