Estimated Time to Read: 4 Minutes
In his book “Influence: The Psychology of Persuasion”, famed psychologist Robert Cialdini cites 6 Principles of Persuasion. I highly recommend this book for everyone, especially those that work in roles generating revenue and servicing clients for their firm.
One of the Principles that he cites is “Social Proof”, which maintains that people are especially likely to perform certain actions if they can relate to the people who performed the same actions before them. Basically, we look to others, especially those in our peer group, to see what they have done, and then follow their lead.
I must admit… I am one of those.
I get anxiety anytime I am asked to pick the restaurant for a dinner party or the hotel when booking a vacation. So, like millions of other people, I rely on reviews from Google, Yelp and other sources to help me make the “right” decision. If the hotel review is positive and it indicates the reviewer is a male in their mid-30’s with a baby who still thinks he is athletic... they might as well put the “book” button right, there.
Even if you are one whom embraces the pressure of making decisions, I guarantee that you use some “social proofing” in your decision-making process.
The concept of Social Proof is no secret to Financial Advisors. It is the reason why we have case studies - "here is a similar looking client with a similar problem that you have and here is how we solved it." It is also the reason why we display industry awards, recognition or accolades in the office, email signatures and other places. Marketing experts will advise you to build strategies around your "ideal client profile." The concept of Social Proof is why and can be a powerful tool for attracting and retaining clients.
Until recently, the “look up reviews online” part of the client-advisor selection process never existed. That is because testimonials were against the rules. A client referral likely “googled” you before taking the first meeting, seeking some validation that you are credible, but mostly relied on what their friend or colleague told them about their experience with you. But, with the SEC’s updated investment adviser marketing rule that took effect in 2021, this is evolving and those that are not adopting to this new reality will be left behind.
Since 2021, Financial Advisory firms and Compliance Officers have spent the last few years figuring out this new rule, testing the bandwidth of the SEC by trying new advertisements and using client testimonials. At the same time, Marketing teams have been learning the effectiveness of the new strategies that have opened up as a result. One of those strategies are Online Reviews.
In part due to this cautious approach, adoption has been fairly low, with less than 10% of SEC-registered firms in 2024 reporting that they use Google reviews (according to Andrew Johnson via Michael Kitces’ blog).
In our view, this presents a massive opportunity for differentiation and that forward-thinking advisors should be adopting right now. The “Next-Gen” is far more likely to rely on testimonials to make financial decisions than any generation before them. Google Reviews is one easy way to take advantage, so let’s dig in.
(1) They act as Social Proof
Let’s paint the picture…. a prospective client is reading their local Business Journal and finds a compelling advertisement for your RIA firm. You knew that was going to work! What does the interested prosect do next? Google you.
Another prospective client tells a friend they need help solving an issue, to which that friend suggests they should reach out to you. What do they do next? Google you.
I can go on and on…. prospective clients have been and will continue to seek validation online before meeting you. Consider how impactful it is to have that prospect see objective reviews from other people. In addition to having a content-rich website that speaks to them, having the social proof of reviews is an incredibly powerful nudge. Even better, they don’t need to click through anything to see them. Once they Google you (assuming your google business profile is up-to-date), they’ll immediately see comments from your fans.
(2) They boost your SEO, especially Local SEO
A byproduct of having Google Reviews is that they help with SEO (Search-Engine Optimization). Consider Google’s role… to provide all of us with the best possible search results they can. If you are searching for a restaurant, doctor, lawyer or a financial advisor, Google wants to show you results that are verified, legitimate and that other people have had a good experience working with. What is the most reliable method that Google has to know if people are having good experiences...? Reviews!
Because of this, if an individual searches “Financial Advisor + [your local market]”, Google is programmed to push results to the top that have reviews, especially positive reviews. This is especially important when competing for "priority" within search results against competitors that have much larger marketing budgets and invest heavily in keywords (like the search phrase I shared above).