Referral Reevaluation

Which referral programs offer the most value and which are not worth your time? 

Back in July, I asked readers of the Inside Information service to tell me their experiences with various non-client, non-COI referral systems.  I was hoping that we would, together, uncover a way to double or triple the flow of prospects through your doors. 

After receiving 199 pages of responses, and doing a few interviews, I’ve concluded that the most value in this article comes from helping you determine what NOT to waste your money on.  As you’ll see, that’s pretty much all the referral programs that are bombarding you with marketing messages.

Referral systems fall into several distinct categories.  Let’s start with: 

Pay-for-prospect services

     Our profession is experiencing a sudden proliferation of for-profit, pay-for-prospect services—I was frankly surprised at how many were mentioned by Inside Information readers.  Let me start by listing the programs, with a little background information on each them.  And (spoiler alert!) I should tell you up-front that none of them got very good reviews in my survey.

WiserAdvisor (www/ uses search-engine optimization, Google ads and articles placed in Motley Fool and elsewhere to attract a self-reported ten thousand prospects a month.  WiserAdvisor is unusual in this grouping because the firm charges to put your profile on the platform and it also charges a per-lead fee.

Dave Ramsey’s SmartVestor program (; formerly the Endorsed Local Provider program) is an adjunct to his radio show.  Ramsey has very definite ideas about debt and cash management, so you have to be compatible with that mindset to participate in his program.  Recently, for the first time, Ramsey is allowing fee-only planners to join his referral network.  Cost: $1,000 a month for most users.

SmartAdvisor ( is one of many systems that require prospects to fill out a questionnaire before they’re matched to a planner.  You pay a separate fee for every lead.  The firm attracts consumer interest by placing its financial modeling tools on consumer websites like (according to the website) Kiplinger’s, CNNMoney, Reuters and MarketWatch—and when people click on a calculator, they are invited to search for a financial planner.  Cost: $20 to $200 per lead, depending on the asset levels the prospect reports in the questionnaire.

Zoe Financial ( also subjects prospects to a questionnaire before selecting an advisor.  The firm says that it rejects 95% of the advisors that want to be on its platform, and appears to specialize in advisory firms that charge monthly fees (recommended range: $200-$350 a month).  You pay only when a prospect signs on as a client: 20-25% of client revenues for 3-5 years.

The Paladin Registry ( is actually an effort to help consumers; when Jack Waymire started the firm, the goal was to assist the public in the tough job of distinguishing between salespersons and real professionals.  The firm asks would-be advisor participants for information, an ADV, and does some research before you join.  Cost: $195 a month for the initial package, more for special services.

GuideVine ( has signed up advisors in 18 major metropolitan areas, and it also has a button that will take you to see NAPFA advisors.  The consumer sees your picture, name and name of firm, and that’s about it—other than buttons that commit you to providing a free consultation, another that allows the prospect to ask you questions via email, and a third that leads to your phone number. 

There’s a link to a video of you, which costs $600 for GuideVine to create.  The participation fee is roughly $2,000 a year; 300 advisors are now on the site—including advisors from LPL and Raymond James.

Wealthramp ( aspires to be the eHarmony of financial advice, matching (mating?) consumers with the perfect financial advisor.  It only lists “fiduciaries,” which appears to mean fee-only, and prospects are “prequalified” in the sense that they’ve filled out what this writer found to be a tediously long questionnaire.  This appears to be another effort to help consumers; founder Pam Krueger is a former producer of the MoneyTrack series on public television, and also produced a financial literacy video series for young teens.  She is a reformed stock broker. 

Nest Egg Zone ( bills itself as “a comprehensive directory of financial advisors and planners,” with 2,254 listings.  You go on the very same landing page that a prospect would land on looking for advisors, and click a button that would add you to the listings.  You provide your name, address and a description of your business.  (Premier advertisers apparently get a fancier listings.) 

Then you select your areas of expertise—from a list of 50 possible choices.  Some of the listings (“MBA;” “Stocks;” “Corporate Bonds”) could benefit from a re-think, but you can also choose more helpful subject areas like “401(k) rollovers;” “Charitable Planning;” and “Financial Planning.”  I suspect that selecting the optimal categories might get you better results from this venue.

Wealthminder ( was founded by Rich Ellinger, a former software engineer at Oracle who created collaborative planning software (Wealthminder Virtual Assistant) and a robo solution that is currently used by the Garrett Network—and also provides referrals to advisors who use the software. 

AdviceChaser ( is in the news lately, as it has gotten extremely aggressive about contacting financial planning firms (and also this writer) with persistent invitations to join its referral program.  Advisors go through an initial interview, and then the company reviews your U4—a subtle suggestion that the firm includes a number of commission-compensated advisors.  The site refers people who define themselves as “investment advisors,” “financial planners,” “insurance professionals,” “tax experts” and “real estate agents.” 

As you’ll see below, nobody reported any actual experience with the firm in my unscientific survey.


As mentioned earlier, the reviews regarding these programs were almost uniformly negative.  “I tried SmartAdvisor at a monthly cost of $450, but after 20 leads, I have received two meetings and they weren’t qualified,” says Vincent Barbera at Newbridge Wealth Management in Berwyn, PA.  Another advisor tried the program for three months, but found that the prospects wouldn’t respond to followup contact—and this was actually the most popular complaint about all the paid-for referral programs.  “We’re two months in and will likely cancel,” adds Matthew Kelley, of Gold Medal Waters in Boulder, CO.  “The leads seem to be pretty unresponsive.”  His firm also tried WiserAdvisor, and concluded that it did not produce the right kind of leads, so he cancelled that, too.

I was hoping that my readers would have good things to say about the Paladin Registry, because it’s been around for so long, and it was founded with an enlightened motive.  The most positive review came from Bob Kargenian, of TABR Capital Management in Orange, CA.  “We’ve participated in Paladin for about seven years,” he says.  “We pay $210 a month and have tended to get from one to three leads per month in our area, and I have converted several into clients—which has more than paid for the expense.” 

However, he adds that the quality of leads seems to have declined recently, as the competition has ramped up and as more advisors join the system.  “Today, you’re always competing against three to five other advisors with the same lead, and many times the leads will complain that they were not expecting to be called by five advisors,” he says.

Rob Siegmann, of Total Wealth Planning in Cincinnati, OH thinks that Paladin’s business model might be flawed.  “When your listing doesn’t produce, they attempt to up-sell you their digital marketing services,” he says.  His experience: in ten years, he has gotten 3 clients through Paladin. 

Only one advisor commented on Zoe Financial, but it was a mildly positive review.  “I’ve been on their platform for about a year now,” says Sevasti Balafas, of Goalvest Advisory in New York city.  “So far, I’ve talked with 11 leads and two have converted to clients thus far.  A third has agreed, and I’m waiting for the client agreement.”  He says that he pays Zoe a lot less than he would have to pay a dedicated sales team or digital marketing strategist—which might be the best approach to do a cost/benefit analysis on these programs.

Speaking about Wealthramp and Nest Egg Zone, Anna Terranova, of Union Financial Partners wrote that “the candidates didn’t show up for appointments or even answer emails in response to their inquiries.  One referral I received from Nest Egg Zone,” she adds, “wasn’t interested in financial planning, but opened an account and ended up closing it less than a year later.  That’s not good business for me.”

Another advisor signed up for Wealthramp at the beginning of the year, but never got a lead.

John Middleton, of Brighton Financial in Clinton, NJ tried Wealthminder and GuideVine for several years, but only received one interesting prospect in that time frame.  “I came to the conclusion that they simply don’t have the online market presence,” he says. 

The Dave Ramsey program has a different flaw.  It seems to produce a high volume of referrals, but not many of them would qualify based on asset minimums.  “We paid $500 a month to receive about 20 referrals that either wanted free advice on the telephone, or had no money, or just couldn’t afford even an hour of my time,” says Sam Fawaz, who practices in Canton, MI.  It was, he adds, the worst paid referral system ever.

Some are less troubled by the low demographics of the Ramsay referrals.  “We received about 40 referrals in the first three weeks,” says David Herrmann, of Herrmann & Cooke Wealth Management in Danville, CA.  “Most of them have been younger people who have followed Ramsey’s program and have become debt-free, and are in the early stages of saving.  The immediate profitability is not there,” he admits, “but this dovetails with our goal of becoming established with a younger group of folks who will be terrific clients in ten years.”

“WiserAdvisor is a waste of time,” says Jessica Searcy Kmetty, who practices in Phoenix, AZ.  An anonymous advisor also tried out WiserAdvisor with little success.  “They tell you that these prospects are pre-screened,” he says.  “But I think that means they know there is a live person there who might be willing to speak with someone.  Their referrals were statistically significantly worse than our other sources.  We had a hard time getting them to respond and really couldn’t get them to a meeting.”

An advisor who prefers to remain anonymous asked SmartAsset for the names of advisors who have been successful with the program.  “They provided me with one advisor who has not yet landed a new client,” he says.  “I requested to visit with another advisor who is experiencing success, but they declined my request.  It seemed,” he says, “like a reasonable request on my end.”

Randy Brunson, of Centurion Advisory Group in Duluth, GA has experienced a variety of these paid-for referral sources over the years, and he hasn’t been impressed.  He tried WiserAdvisor from 2014-15.  “We paid a per-lead charge, but the lead was also made available to three or four other advisors in a given area,” he reports.  “The price of the lead was based on how much money the investor said they had,” Brunson adds—the price ranging from $75 to $200. 

Results: Two meetings, many voicemails and unanswered emails, zero clients.

Then Brunson tried Dave Ramsey’s program. “We paid a flat monthly fee, $950 a month, for a territory—in our case, east Atlanta, which is a premium market and costs more,” he says.  People looking for an advisor who doesn’t believe in debt could go to Ramsey’s website to input their email, phone number and zip code.  They could click a button, and the site would contact the advisor on the prospect’s behalf.

Results: a remarkable 60 cold leads a month.  Of that total, only about 10 would respond to followup contact, seven of those would not be qualified for various reasons that Brunson didn’t elaborate on, and three would actually come into the office for a meeting.

“Typically, those that we met with were also meeting with two other advisors,” says Brunson.  “They would have somewhere between $150,000 to $350,000 to invest.  Their situations weren’t complicated enough to demand advanced planning.”

Brunson’s conclusion:  “We tied up a lot of calendar time, which caused us to forego work for existing clients, to have meetings with people who weren’t really a good fit to start with, and who were ‘shopping’ advisors.”  He quit the program last year.  “The time and energy required to respond to so many leads, with such little quality response, wasn’t a good fit for us,” he says.

Matt Stephens, of The WealthPlan Company in Wilmington, NC, has also sampled a number of these paid-for-referral programs.  Similar to Brunson, he is receiving a high number of referrals (15-20 a month) from the Dave Ramsey program.  Most of them, he says, are unwealthy households, but there have been occasional qualified clients in the mix. 

Six months ago, he joined the Paladin Registry.  “The only lead I’ve gotten from them has been a prospect that I sent to the Paladin Registry so he could see my profile,” Stephens says.

He also tried SmartAdvisor and discovered that he was the only advisor in his area currently on the platform.  “I’ve received 27 leads in the last six months,” Stephens reports, “but I’ve only met with three of those leads, and only one has actually become a client—a one-time planning engagement.” 

Many of the prospects, Stephens says, had a do-it-yourself mindset.  He estimates the total cost to be around $400 a month, factoring in the per-lead expenses.

Stephens is currently intrigued by a marketing program I didn’t mention above: Snappy Kraken’s Seminar Freedom program.  You get a 10-minute webinar, and pay the company $650 a month to market it.  “The leads that come to me will have already seen me talking about a planning topic,” says Stephens.  “I may not get the same quantity of leads as other programs, but I imagine that they will be better quality.”

Finally, Phillip Weiss, of Apprise Wealth Management in Phoenix, MD, has done some research on a variety of pay-for-prospect programs.  He paid $1,000 a month to the Dave Ramsey program for his (Baltimore) market area.  But he dropped out after discovering that many of the advisors in the program were primarily selling products. 

Weiss then subscribed to the Paladin Registry for about five months before dropping it as well. “You pay a flat monthly fee based on the minimum account size I would be willing to take,” Weiss reports.  “They provide a whole set of guidelines for how to respond to leads,” he adds.  “I followed them, with little success.  Most of the time I called, emailed, and I got no response at all.” 

Weiss is still investigating WiserAdvisor, AdviceChaser and SmartAsset, but has concluded that his money is better spent working with a marketing firm that will help him reach out directly to prospects.

Richard Archer, of Archer Investment Management in Austin, TX, has tested the Paladin Registry, WiserAdvisor, GuideVine and SmartAsset over the years, and has little to show for it.  “The prospects were do-it-yourselfers and people who were completely clueless about financial planning and investment management,” he says.

The bottom line here is that really none of these pay-for-prospects sites seem to offer a lot of value.  There may be a couple of structural problems that doom this kind of program from the start.

1) The search engine optimization and online tools approach to attracting potential clients tends to attract do-it-yourselfers who are researching online calculators to help them manage their own finances. 

2) Even if they generate leads, these referral systems put their participating advisors in a less-than-professional position, not unlike the Bachelor or Bachelorette TV series, where the prospect has the power to interview a number of different advisors and the advisors are the supplicants hoping they’ll win the rose. 

“Prospects that came in from these programs are interviewing a number of advisors,” says Bob Tankesley, of Unify Wealth in Alpharetta, GA.  “The programs give the prospects the impression that they have the upper hand in the relationship.”

3) There’s also some question about whether this is a sound way for a consumer to find an advisor.  “How do you explain to your spouse that you want to entrust your $2 million retirement account to a financial advisor who was matched to you by a ‘dating/matching’ service,” says an anonymous advisor who has tried several of the programs.  “I think there is kind of a stigma to the whole idea.”

4) And worst of all, it’s a numbers game—something most advisors are loath to participate in, especially if they have other things to do around the office.

“Lead gen is tough,” says Brent Weiss, at Facet Wealth in Baltimore, MD.  “It requires a real commitment to achieve success, which is why I think so many firms struggle with it.” 

What kind of commitment?  When Weiss ran the outreach campaign for his firm, working with several of the aforementioned pay-for-prospects sites, he found himself making 50 calls a day, and maybe 1,500 unique outreaches a month.  “It can be frustrating,” he admits, “as most either never respond or flake out during the process and simply go silent—even if they scheduled an interview.”

Custodial programs

Based on the responses, this category relates mostly to Schwab Advisor Services (whose referral program is called Schwab Advisor Network) and TD Ameritrade Institutional (AdvisorDirect).  I received only one comment about another custodial program: an advisor who prefers to remain anonymous says that he paid a fee to be on the Fidelity platform, and was also required to buy some additional E&O insurance—with minimal results.  “I think in all that time we got one referral who ended up being a client,” he says, “and he was an old basketball friend of mine.”

An advisor who responded anonymously (but at great length) participates in the Schwab Advisor Services and TD Ameritrade Institutional programs, and pays 25% of his fees to Schwab, 25 basis points to TD Ameritrade, every year, on all the assets for clients he is able to close.

He prefers one over the other. 

“Schwab is better than TD in terms of number of referrals and the quality of the referrals,” he says.  Overall, bigger picture, he thinks the quality of the custodial referral process is better than the pay-for-prospects referral programs.  He points out that when a custodian makes a referral, it happens between somebody at the branch office and the prospect, often face-to-face.

And the tracking is better.  “We get statistics from Schwab and TDA showing how many referrals we got and conversions, plus data on the referrals that were made in the past quarter in our region,” he says.  “We can see if we’re ‘missing out’ on referrals, and we can compare our conversion and retention rates with other sources.”

DFA — the passive management mutual fund shop—also has a referral program that several respondents belong to, but aren’t getting much out of.  “I’m on DFA’s site, and a few referrals have come in,” says one advisor.  “But the few that have opened accounts with me didn’t stick.  They were not interested in financial planning.”

There are several issues here which advisors who are interested in custodial referrals should take note of. 

1) Only larger firms qualify to receive any referrals at all.  Both TD Ameritrade and Schwab have strict asset limits.  TD Ameritrade’s limit is $100 million under management, with two principals, good E&O insurance and a clean compliance record.  Schwab’s program appears to accept based on the volume of business advisory firms do with Schwab Advisor Services.  (I contacted Schwab about minimums and the overall selection process, and engaged in a back-and-forth with the PR department, but never quite got answers back.) 

Another advisor who participated in both programs reports that an estimated 95% of TD Ameritrade Institutional’s referrals—apparently per published reports by Mark Hurley—go to just four very large firms.  “Those are the firms that will accept anyone, and they have conversion teams that camp out in the local retail offices,” she says.   

2) There appears to be a significant labor cost—and possible financial cost—to tending and maintaining this referral pipeline.

All of the lurid responses to my survey related to this issue.  My favorite: “We were involved in [a custodial firm’s] referral program in 2004-5,” wrote Jessica Searcy Kmetty, who practices in Phoenix, AZ.  “After two years and only receiving three referrals, we dropped out of the program,” she says—this “despite our efforts to stay connected with the local branches and pop by with appropriate treats periodically (bagels, cookies, etc.).”

Kmetty later discovered that her firm had been dramatically outbid for referrals by a more aggressive courting process.  “We learned that a competitor was taking the local branch staff on trips and wined and dined them, and ultimately hired several of them,” she says ruefully.  She mentions one of those trips being a cruise.

These competitions can apparently heat up quickly.  One advisor reports joining the Schwab program early on, and then realized that it was taking more and more of his firm’s staff time to, as he put it, “service the relationship” by spending hours in the local offices.  Other advisory firms would ramp up their attention to the branch office, requiring his firm to follow suit, raising the ante all over again.  “It felt a bit like being a wholesaler,” he says.

The anonymous advisor referenced above says that buying lunches and dinners at the local office had been a good strategy for her.  But she warns that you also have to stay on top of how referrals are handed out, since the compensation structure for branch office staff changes periodically. 

“At one time, they were being paid a certain amount if a client transferred $1 million to an advisory firm,” she says.  “So we saw instances where they would refer a client with a $3 million portfolio to three different advisory firms, and recommend that they give each $1 million.”

I raised this issue in an interview with Jay Keller, TD Ameritrade Institutional’s Senior Program Manager for Advisor Direct, and Matt Judge, TD Ameritrade Institutional’s managing director of wealth management.  They acknowledged that advisory firms DO have to spend time educating the local branch so that the referral will meet the specific needs of the client.  They also told me that several years ago, the company strengthened existing policies on what advisory firms are permitted to do with the branch associates, and those policies specifically forbid gifts or trips.

Another challenge, according to Joe Gordon of Gordon Asset Management in Durham, NC, is that the branch offices tend to have high turnover, which means you are constantly reintroducing yourself to the people who would be making the decision about who to refer someone to.

And even after you win over the local branch reps, you still have to have an all-hands-on-deck mentality when you receive a custodial referral.  “You should have a sales process that prospects get moved through fairly quickly,” says Mike Leonetti, of Leonetti & Associates in Buffalo Grove, IL.  “Why?  Because closing these within a certain amount of time affects the compensation to the rep.”

That was a problem for him.  “Our process is planning-driven, so it’s a slower process which doesn’t get the AUM in as quickly as with some other programs,” Leonetti explains.  “We decided it wasn’t a good fit, and eventually decided to leave the program.  If you are primarily an asset gatherer, can close quickly and keep the clients and reps happy,” he adds, “then you can probably do well in a custodial referral program.”

3) Many custodial referrals are responding to a mention in the press related to investment and trading issues (on the retail end, Schwab and TD Ameritrade are discount brokerage operations) and therefore the prospects have tended to be investment-oriented rather than planning-oriented.  That means they are looking for above-the-market returns, which can be a nightmare relationship for real planning professionals.  “The referrals we received were very investment-oriented and not a good fit,” said one advisor, referring to the Schwab referral program.

4) The ongoing revenue-sharing arrangement greatly favors the custodian. 

The number I was given for Schwab (unconfirmed by the company itself) is 25% of the revenues that the advisor is earning on each referred client’s asset management account.  This is assessed even on any additional assets the advisor managed to to uncover or that accumulating clients contribute to their portfolios.

In perpetuity; until you lose the client.

This was also TD Ameritrade’s referral fee structure up until June of 2017, when the firm decided to eliminate the conflicts of interest associated with a fee based on what an advisor charges.  Keller noted that there would have been an incentive to favor a firm that was charging 120 basis points a year over another firm, just as good, that was charging 80.  So the current fee structure for AdvisorDirect is a flat 25 basis points on the first $2 million of total client assets, going down to 10 basis points up to $10 million, and down to 5 basis over that amount.

I’m not always good at math, but it seems obvious that, under the Schwab system, you have to be more than 25% profitable on any client you get by this referral vector, every year, before you start earning a dime on that relationship.  If you charge 100 basis points or less and the client accounts come to less than $2 million, the same would be true of TD Ameritrade; in fact, advisors who charge less than 100 basis points would be paying more to TDA Institutional than they would have been paying Schwab. 

I don’t think any advisor would consider acquiring another firm, if it was required to pay that firm owner 25% of revenues, or 25 basis points on the assets, every year forever.  Moreover, under both referral structures, there is still a lingering conflict-of-interest issue.  In order to maintain a reasonable profit margin, firms that accept these custodial referrals are tempted to charge more than their peers, and might be inclined to charge more to clients who have been referred.

It looks, to me, like the profession did a poor job of negotiating these terms, which the custodians then happily turned into an industry standard. 

Let’s examine the terms a little more closely, and see if we can propose a more equitable arrangement.

In the first year, that 25% payment represents a split between the custodian’s marketing cost to bring that referral to the advisory firm’s attention (here assumed to be 25% of the first year’s revenues from this relationship, whatever that happens to be in dollars), and the revenue to the advisory firm (here assumed to be 75% of those first year revenues) of going through the courting process before ultimately signing on the client. 

A rigorous examination of the fairness of this first-year split would take into account the staff and financial cost to the custodian for marketing on behalf of advisors, and the internal costs of landing a client at the typical advisory firm.  Until we do that analysis, I have to say that this somewhat arbitrary split seems reasonably fair.

Second and subsequent years, still 25% of those client revenues are being paid to the custodian, 75% to the advisor.  Once again, I’m not good at math, but it looks to me like, in all of these out years, 100% of the cost of maintaining and servicing that client relationship falls on the advisory firm.  You could argue that the custodian is also servicing that account, but remember that the custodian is being paid its normal transaction and other fees for providing exactly the same services as it is getting paid to perform for all advisory firm clients.

In fact, you could argue that the advisor closing the referral and maintaining the relationship, all by itself, represents an important benefit to the custodian.  Using the advisor, the custodian has conserved assets that might have flowed out to a rival custodian, broker-dealer or wirehouse. 

I’m not willing to propose, in this venue, that the custodians be required to rebate some of the normal transaction income they receive from these referred, conserved relationships back to the advisory firm.  That would be negotiating too hard. 

Instead, perhaps it makes sense for the advisory firm to pay a scaled back amount to the referring custodian in year two (15%?), scaling back further in year three (5%) and nothing thereafter.  My guess is that if the profession were to go back to the negotiating table one more time, that’s what would come out of it, much like the earn-out arrangements when one advisory firm buys the client relationships of another. 

I actually don’t see any economic justification for those second and third year payments—but the point is that this is very different, economically, from paying 25% or 25 basis points forever, and takes us closer to what would seem to be a fairer balance.


In the survey, I heard from advisors who were currently receiving referrals in a program, plus a somewhat greater number who had been in a program but dropped out, and (the greatest number) who said they were not interested in paying the going rate.  The reviews tended to be cautiously positive.  “We have been in the Schwab referral program for about 15 years,” said an advisor who preferred to remain anonymous.  She says that the cost of these programs is definitely too high, and resents the fact that the fee applies to any new money she brings in from a client.  “Also, their record keeping is constantly wrong and needs to be checked and corrected by our team,” she adds.

In her view, a profile that focuses on highly-technical tax planning and creative strategies—and a reputation for having that expertise—is beneficial.  “Schwab’s in-house financial consultants don’t have those skills,” she says.  “They have 300-400 clients each, so it’s all about getting assets, not about giving value-added advice.” 

At the end, she said that she would never want custodial referrals to make up more than 15% of the firm’s new business.

Bill Bolen, at Homrich & Berg in Atlanta, represents one of the larger firms in his market, and has advice for those who participate in the custodial programs.  “You have to dedicate someone to spend the time to build the relationships with the retail representatives at each branch,” he says, “and especially to educate them on the types of clients that would be a good referral to your firm.”

The advisors who told me they were not interested basically said they perceived the costs to be unfair and that in any case it would be too much work to court the local custodial branch team.  “A high percent of revenue from a client every year is not a good deal for advisors,” wrote Bill Ramsay, of Financial Symmetry in Raleigh, NC, who then referred me to a relevant analysis penned by Mark Tibergien at Pershing Advisor Solutions (

Ramsay offered a creative alternative to the ongoing 25% sharing structure.  Why not, he says, alter the agreement so that, after that first year, each of the referred clients would be targeted to provide some minimum revenue to the custodian?  If it falls short of that amount, then the advisory firm would pay the difference—kind of like a contingent referral fee, if that makes any sense.

Credentialing Organization Referrals

This covers two organizations: the CFP Board and Ed Slott’s Elite IRA Advisor Group.  Yes, I know the two are very different, but they both seem to fit into this broad category. 

I thought it was interesting that I didn’t hear of any other programs where designation holders were receiving referrals from the organization conferring the designation.  (Yes, I know there are bogus designations you can earn in a matter of hours, which promise referrals to, for example, “qualified seniors,” but I’m not counting them as legitimate sources.  And nobody mentioned them anyway.)

The CFP Board’s “Find a Planner” tool is linked to the “Let’s Make a Plan” advertising and marketing campaign, designed to tout the benefits of working with a CFP-credentialed professional.  People who see one of the ads or videos can go to the Find tool and search for a CFP professional near them.  There is a form that allows them to contact the planner through the website.

But Dan Drummond, spokesperson for the CFP Board, notes that a direct contact through the website would be the only way the advisor would know where the referral came from—and he notes that most consumers simply take down the names of advisors whose profile interests them and investigate them on the web before making contact directly.

“We’re getting 550,000 to 600,000 searches on the site each year,” says Drummond.  “That results in roughly 250,000 people using the “find” tool,” he says, since most people are doing two or three searches at a time. 

Last year, with that volume, only 12,000 prospects actually clicked the “contact” button, filled out the form and authorized the contact information to be sent to the CFP professional.  In other words, very few of the searches led to a prospect contact that could be easily traced back to the original search for a CFP advisor.

This may be why the advisors in my survey reported getting few clients via the CFP Board’s planner search tool.  “Every two years or so, I’ll get a potential client from there,” says Kelley.  Mark Butterworth, of Butterworth Financial Group in Tulsa, OK, is more positive: he says he might get 2-3 people reaching out to him in a given year through the CFP Board website.  Fawaz estimates that only two prospects have contacted him via the CFP Board—and neither has visited his office.

Laurie Laner, of Financial Designs in Minneapolis, MN, estimates that she has received three requests through through the CFP Board over the past five years.  “It seems to me that the CFP Board has a huge, untapped opportunity,” she says, “if they truly believe that the CFP is the designation of choice.”

I did get one positive mention of CFP Board-driven referrals, and it was an interesting contrast from the naysayers.  Gregory Rogers, of Cannon Beach Financial advisors in Brookline, MA, says that over the past five years his firm has received 17 referrals by that vector, and eight became clients: six wanted a full financial plan and then ended the relationship, and two went on to become ongoing financial planning clients.

Meanwhile, Ed Slott’s Elite Advisor Group ( has a marketing element to it: Slott not only helps you become fluent in the nuances of IRA planning, distributions and Roth conversions, but he helps you position yourself as an expert in this increasingly important (and complicated) area. 

And, apparently, he also provides referrals drawn from his exposure in the national press.  (Ed, I saw you on CNBC, and I was wondering if you knew a financial planner here in Cincinnati…)

“There are around 500 members of Ed Slott’s Elite IRA Advisor Group around the country,” says Steve Bane, of Bane O’Leary Wealth Management in Bloomington, MN.  “The cost of $6,500 a year is well worth the educational value and access to his professional staff for consultation.”  In other words, the referrals are icing on a cake that includes a monthly newsletter, semiannual training events, monthly update calls and media access—and the icing has value too. 

“This year we’ve been referred twice; both households have become clients and moved $1.7 million to us for advisement and one of those clients has referred us,” Bane says.  “We don’t belong to Slott for the referrals,” he adds, “but they are easier to convert from a prospect to a client.”

Robin Delaney, of the Concierge Financial Organization in Tampa, FL, has been a member of the Elite IRA Advisor Group for the past several years, and reports that she receives 5-7 “great” referrals every year. 

This is probably the second-best referral program of all the ones referenced in this report, and one of only two that you should pay attention to if you’re serious about raising the number of non-client, non-COI referrals.

The other is in the next category.

Association Referrals

This related to the Financial Planning Association (FPA) and its Planner Search program, and the National Association of Personal Financial Advisors (NAPFA), which manages the Find-an-Advisor program.  If there are other association referral programs out there, none of the respondents to my survey saw fit to mention them.

The FPA and NAPFA programs both allow members to post a profile as a member benefit, and on the outside they look very similar.  But on a big picture basis, many of the survey respondents, in one way or another, said that the FPA referral program’s effectiveness falls somewhat short of remarkable. 

Meaning?  One advisor reported receiving zero referrals after having been a member since the FPA has came into existence.  Neal Van Zutphen, of Intrinsic Wealth Counsel in Tempe, AZ, says that in the 34 years he has been a member of the FPA and predecessor organizations, he has received just a handful of possible prospects, and none have ever become a client. 

“I’ve been a member of the FPA and its predecessor organization for over 30 years,” says Geoffrey Boyer, of the Boyer Financial Group in Fogelsville, PA.  “If I have received one referral every five years, that would be a lot.”

“I have been an IAFP and FPA member since 1984,” says David Henderson, who practices in Staunton, VA.  “Over three decades,” he adds, “I could count the number of referrals on one hand and have fingers left over.  I get referrals from CPAs and attorneys,” he says; “never from my professional association.”

Bob Bolen, of Envision Wealth Planning in Brentwood, TN reported: “I’m on the FPA referral program, and I’ve never had a referral from them that turned into a client.” Jack McCord, who practices in La Jolla, CA, estimates that he has gotten one single referral from the FPA website over the past ten years of membership.  Fawaz has had exactly the same experience.  “No client or prospect has ever said they found me via the FPA, ever,” he says.

Matt Stephens set up his profile on the FPA website somewhat over two years ago, and has received zero referrals so far.  “It’s free with my membership,” he says.  “I suppose it’s worth what I’m paying for it.”

Others said that when they did get referrals, from a mention of the FPA in the press, the individual was not likely to be a qualified prospect.  “They were typically too small of a client size for us,” says Matthew Kelley.  “Think: lower income, tons of debt.”

Reading this feedback, we should probably remember the equation: Satisfaction equals Expectations minus Results.  If peoples’ expectations were high regarding the FPA’s referral program, then even a good result that fell short of them would result in dissatisfaction. 

As it happens, this reminder is especially helpful as we turn to the NAPFA referral program.

I received more messages relating to the NAPFA referral program than all the other referral sources combined.  I learned that the NAPFA referral program is, by any measure, the most productive source of referrals for financial planners (yes, even more than the custodial programs), which means, now that we’re at the bottom of this report, that this may be the only referral program most Inside Information readers should consider.  For some, that means joining NAPFA might ultimately be more profitable than the small amount of commission revenue they’re hanging onto.

But here’s the thing: NAPFA’s Find an Advisor program was also the most-often criticized referral program in my survey.  In other words, it was doing more for its participants than anything else, and was somehow getting low marks for it.

Find an Advisor

NAPFA’s Find an Advisor program is free to members, and leverages NAPFA’s extraordinary relationship with the press.  Whenever a consumer writer pens an article about financial planning or financial advice, NAPFA and its planners are inevitably mentioned, usually referenced as the good guys in a dangerous financial world.  You can’t buy that kind of credibility.   

I remember somebody years ago found a statistic that said that people were 20 or 30 times as likely to click on a link and look for a service provider after seeing a reference to NAPFA (and its good guys) than about any other reference to any other provider or category of provider.  I remember reading that statistic and thinking that it was probably an underestimate.

You participate in Find an Advisor by filling out an online profile—a brief description of your firm, and the names of the advisors and associates at your office.  You upload your firm’s logo and your picture, which go at the upper right and left of your profile, respectively.  You choose from a set of boxes to define your expertise (working with unmarried couples, hourly fee structure, medical professionals, business owners, etc.), a maximum of six, and they show up next to your picture at the top.  The site provides your office address and phone number, and offers prospects two prominent buttons to click: “visit website” (taking them to your website) and “email firm” (putting them directly in touch with you). 

Whenever people click that second button, that’s when you know that this is a NAPFA referral.  (The more sophisticated advisors can set up a way to track where the visits to their website are coming from, so they might have statistics related to that first button.)

As mentioned above, people who commented on the NAPFA referral program invariably said that it was better than anything else out there. “The best referrals I have gotten all came from NAPFA,” says Van Zutphen in what was a typical comment.  “NAPFA is hands-down the best referral system we’ve seen,” adds Ken Robinson, of Practical Financial Planning in Cleveland, OH.  “I tell newer advisors that ACP [The Alliance of Comprehensive Planners] taught me to plan, and then NAPFA got me the clients.”

But for every one of those, there would be four comments like Dick St. John’s: “Our best source over the years has been NAPFA,” he says, “but not for this year so far.”  “I used to get a lot of referrals from NAPFA,” says Rick Kahler, of Kahler Financial Group in Rapid City, SD.  “But then they went to their new website and those dropped to zero.” 

Perhaps the ultimate put-down, for a NAPFA member to make, came from Fawaz.  “The referral program is one of the reasons I joined NAPFA back in 2008,” he says.  “Today it’s no better than the FPA’s.”

Controversy and Complexity

For the past 8-12 months, there has been controversy within NAPFA related to what some users perceived to be a sudden, precipitous drop in referral volume that seemed to coincide with a recent website redesign. What had been working really, really well for years was suddenly hardly working at all.

“Two years ago, I was getting highly-qualified leads who were interested in long-term relationships,” says Barbera.  “This year, I’ve received few calls, and the ones that are coming in are either from young savers who aren’t interested in a long-term relationship or about-to-retire folk who aren’t interested in a traditional advisor-client relationship.”

“The NAPFA numbers dropped like a lead balloon after they made some website “improvements” a year or so ago,” added an advisor who preferred to remain anonymous.  Mike Garry, of Yardley Wealth Management in Newtown, PA, readily admits that he got his business running on NAPFA referrals in 2006 and 2007.  But then, he says, the referrals suddenly slowed down a bit, and then they trailed off almost completely a little over a year ago.  He’s grateful and not happy at the same time.

“NAPFA seems the best at generating referrals,” says Kelley, “but lately they’ve had an increase in traffic but a decrease in outcome.  It’s odd.”  Bolen says that he built his practice on NAPFA referrals.  “Then they changed their process and the referrals just dried up,” he says.  “I haven’t had a referral from NAPFA in years.”

What’s going on?  The deeper you delve into the mechanics—and adjustments to the mechanics—of online referral systems, the more you appreciate how delicate and complicated they are.  Dave O’Brien, of Evolution Advisers in Midlothian, VA and a current NAPFA board member, says that the most recent board meetings have allocated resources to explore and address the drop-off through a top-down analysis of the newly-redesigned website.  He speculates that some of the problems stem from a shift in how prospect messages were identified, which are being changed back to the way they worked before. 

“In the old system, NAPFA members would get an email from the Find an Advisor website,” he says.  “In the new system, for a year and a half, it didn’t show that the consumer was contacting you through NAPFA.  The website would launch the advisor’s email, and you would get an email directly.” 

Meaning: some NAPFA members may have been getting the same number of prospect click-throughs, but they weren’t nearly as traceable to NAPFA.  “That,” says O’Brien, “is being fixed.”

There are other fixes as well.  The biggest objective of the redesign, according to NAPFA CEO Geoff Brown, was to make the NAPFA website mobile-friendly.  “Up until that point,” he says, “if a consumer really wanted to use Find an Advisor, they had to be sitting at a desktop computer.  Now they can search from their phone, or from their tablet, and have a quality viewing experience.”

But at the same time, the mobile-friendly site was steering prospects toward what Millennials do on their phone: building a contact list of advisors in their area whose expertise (remember those six boxes you click) matched what they were looking for. 

“We saw that it was pushing people toward making lists rather than making contacts,” says Brown.  “So we’re switching that around, so it’s now highlighting “email the advisor” and “click through to the firm website.”

Another change might be adding to the confusion.  “Before the current structure was put in place, consumers had to input their contact information before seeing any search results,” says Brown.  “We noticed a decline in the number of consumers going through the full process, so the decision was made to drop that requirement.”

Finally, the web redesign made a change in the search algorithm which could have an impact on the referral flow for some advisors.  Advisors who type in their own firm name and their own zip code have complained that other firms, outside of their zip code, are listed ahead of them in the search results. 

How could this be?

Brown explains that the old and new search algorithms were/are based on Google Maps.  Previously, Google Maps would take whatever zip code the prospect enters in the Find an Advisor screen, and it would place a dot on the precise latitude and longitude that is right in the very center of that zip code.  Then it would identify the firm whose office happens to be located closest to that dot, and put that firm at the top of the rankings.  The second firm in the rankings would be the office next-closest to that all-important dot—and so forth.

A committee of advisors supervised a change in the newly redesigned website.  Now the Find an Advisor algorithm will put down that same dot, but instead of ranking firms by how close they are to this spot on the map, it will search for all the advisors whose offices are located within a 5-mile radius of that dot.  If it comes up with 20 names or more, the search stops and the prospect is presented with those 20 or more advisory firm names, in randomized order.  Randomized means that a search right now would produce one list, while a search two minutes later would produce another, with different firms at the top and in all slots going down the list.

If the system doesn’t find 20 firms inside that 5-mile radius, it will broaden the circle by five miles, and another five, until that number is met.  Then it provides the firms that are within the 5-mile radius first, randomized, and then the firms that are less near, again randomized.

Why shouldn’t the algorithm simply prioritize according to how close each firm is to Google’s center dot?  Brown says that, with the old system, he’s had advisors call him up to ask the exact latitude and longitude where Google’s dot is located in their zip code, so they can rent office space as close as possible to it.  “The committee thought that this new search process was the fairest that we could offer,” says Brown.  But he acknowledges that firms whose offices happened to be located closest to the heart of their zip code might have experienced a drop-off in referral flow under the new system.

Since the summer round of board meetings, Brown has brought in several experts in algorithmic programming, who are exploring whether there are any commonalities among the advisors who are complaining that their referrals have dropped off, vs. the others.

ARE there others?  In fairness, I should say that not every comment re: NAPFA’s Find an Advisor program included a complaint, and it seems possible that some advisors didn’t experience last year’s sudden drop in referral flow. 

For instance:  “The NAPFA online referral generator is great,” says Kmetty.  But her expectations seem also to have been well-controlled.  Over the past couple of years, she reports getting 10 referrals, with two becoming clients and another five still in the pipeline.

Owen Mulhern, of Financial Coach in West Chester, PA, expected nothing when he joined NAPFA, but two months in he’s already received two unsolicited contacts via the NAPFA website.  He’s overjoyed.

Somewhere in the middle is Jill Hollander, of Financial Connections in Corte Madera, CA, who reports getting 50 referrals last year through the NAPFA website.  But most of them were for standalone financial plans—what she describes as “one and done.” 

“However, we are noticing that many of them are coming back for updates as we build out the financial planning product to include implementation assistance or updates.  The NAPFA referrals,” she adds, “seem ‘sticky,’ even if it is not consistent AUM revenue.”

And some believe that if NAPFA can fix the problems, the new website design is superior to the old one.  “I think the user interface is much better, and is a positive step forward,” says Brandon Grundy, of Ridgeview Financial Planning in Santa Rosa, CA. 

Of course, I received some suggestions on how to make the Find An Advisor system work even better—and I’ll pass them on here in case anybody at NAPFA headquarters might be listening.

One suggestion I received was to allow NAPFA members to see how many people clicked on their profile every month, so you can see how much activity there is among people who decided not to follow up with you.

Sean Curley, of The Retirement Planning Specialists, Inc. in Greenwood Village, CO, recommends that the site be more precise about its search by firm name.  Today, if you put in a couple of key words that are pretty close to a firm name, the site brings up hundreds of firms that have one of those words in its name, rather than one or two that have both.  Similarly, the search for planners by name is less-than-intuitive.  He says that when he typed in his own name, and got an exact match, the site also showed advisors with similar sounding names that would be irrelevant to the search.

Finally, Curley thinks that checking a limited number of boxes that denote each advisor’s expertise is flawed.  You can only check six boxes, which means if you have special expertise in one or two specialty areas, you might not be able to check the boxes for bread and butter retirement planning or investment management.

More fundamentally, Laner wishes that NAPFA would step up its messaging.  “I think they’ve missed so much opportunity to sing the praises and describe the attributes of the fee-only advisor, especially with the DOL and SEC debates that have been raging,” she says.  That would probably generate more traffic to the NAPFA website and drive more referrals, but even if it doesn’t, Laner thinks it would benefit the public.  “So many consumers think they’re getting quality advice when they really aren’t,” she says.


What did we learn from this exercise?  First, that the plethora of new pay-for-prospect referral sites are not, yet, contributing very much to the profession’s bottom line.  I’m going to predict that one or maybe two of them will eventually emerge from the pack and find a formula that works, but it’s impossible to predict which that will be at this stage.

Ed Slott’s program provides referrals as an incidental benefit to the information package it offers, and ironically, it appears that this add-on referral system is the second-best in the profession.

Finally, if you read the many responses closely, you can see the hint of a very significant change in the marketplace, which is going to make it much harder for advisors to evaluate the effectiveness of any referral network.  In the past, consumers would look at profiles online and then click directly through to the advisor they liked.  Today, the vetting process is more thorough.  Prospects go to a referral website at the start of their search for a financial planner.  They identify a handful (or more) of advisors who might be a fit, step away from the referral site and do more research on the web.  Increasingly, as we move on from the baby boomers to more tech-advanced generations, this is taking place on the phone.

The result is that you don’t always know where the referral is coming from.  You’re contacted through your website or via email from out of the blue, and the beginning of the search may have been the CFP Board’s “Find a Planner” tool, the Paladin Registry or NAPFA’s consumer-facing website.  By the time the search was complete, the prospect will often have forgotten where she got this particular advisor’s name.

“When I ask people how they found me, they’ll occasionally say ‘NAPFA,’ says Jamie Milne, of Milne Financial Planning in West Danville, VT.  “But the more common response is something vague, like ‘the web,’ or ‘the internet.’”  When he tracks the statistics on clicks and their sources, he sees NAPFA as the referring website twice or more a week.  But the direct contacts through the NAPFA website is running closer to one or two a year.

“I think consumer behavior today is more complex than a simple site referral,” adds Jane Beule, of Griffen Black, Inc., in Redwood City, CA.  “Quite a few inquiries come in through our website.  But when I ask those prospects how they found us, many of them say that they went to the NAPFA site and looked up firms to check out.”

Grundy thinks it may be simpler than that: people are less willing to contact advisors through a third-party system today than they were even a year or two ago.  “Some prospects simply don’t like giving their email address and contact information to a third party website,” he says.  “They’d prefer to read about me, click through to my website, and then contact me from there.”