fabeetle: halfbaked idea or the bomb for matchmaking financial services

by on August 25, 2009

A new site, fabeetle.com, launched yesterday amid some fanfare in the brokerage community with a beta launch soliciting participating amongst advisers. fabeetle attempts to tackle a huge problem in the industry: matching financial advisers (FAs) with potential clients looking for the right ones.  While it’s becoming infinitely easier to buy products over the Internet, a lot of inefficiencies exist in the financial adviser market.  Buyers of such service are typically relegated to local professionals who have been recommended via word of mouth.

In the audio interview below, founder Brandon Gadoci, says that financial professionals need new clients more than ever after what we experiences over the past 12 months.  Old marketing techniques like cold calling, networking breakfasts, financial seminars, direct mail, etc. return .5%-2% depending on the skill level of the FA.  Referrals, in light of all these inefficiencies, are still the way to go to build bigger practices.  fabeetle doesn’t want to hold the FA hostage — it’s not a pure lead generation site like others in the space.   Gadoci says, “There is no way right now to reach out beyond immediate social circles to see if a particular adviser is right for me.”

So, we’re talking consumer generated content that allows clients to describe, rate, discuss financial advisers all in an attempt to create a community to share this type of information.  Gadoci claims that the platform is not a social network but rather part of a larger trend of c0nsumers going online to research an offline purchase.  You can also check out Russ Thornton’s overly positive review of fabeetle.

Beyond the reasoning behind creating a system like this (huge wealth transfer to baby boomers reaching retirement), all parties on different sides of this transaction recognize that the current way we shop for these types of services is antiquated.

That said, sites attempting to matchmake FAs and investors haven’t been overly successful.  I think this lack of success is due to a couple of reasons:

  1. unidirectional usability: it’s just plain boring to go onto a site with limited content and functionality to shop for services in general, let alone for financial services.  If there isn’t bi-directional activity enabling users to read and contribute as well, these sites generally lack any umph.
  2. pure traffic aggregation: Others have attempted to aggregate consumer traffic/attention by providing educational materials or by successful advertising.  In turn, like Lending Tree, this lead is auctioned off to advisors.  Advisors lack the tools to see how much that lead is worth and are too far away from the lead-gen process to really pay too much attention to this.
  3. unclear value proposition: Of course, everyone would like an extremely transparent market and efficient transactions but it’s unclear to me and the rest of the public how these matchmaking sites help me do this better, both as a consumer and as an FA.

It will be interesting to see how fabeetle addresses a couple niggling issues:

  1. comments/reviews: successful sites provide an equal amount of positive and negative views on products.  Too much skewing towards the rah-rah, I love my adviser, would tank the objectivity of such a system.
  2. approbations: Currently, there are major problems with publishing client approbations – So and So recommends X is a no go.  It sounds like fabeetle has a compliant solution for this, so will be interesting to see how that plays out.  Check out the problems posed by LinkedIn for financial advisers.
  3. convincing early adopters to use the system: What’s the incentive to get early adopters in and comment on FAs?  As an FA, do I want my profile up in party without any partygoers?

I haven’t seen the system, so I can’t really comment on it specifically but I’m interested in seeing if this ambitious project has real legs or not.  I do feel like creating a marketplace for services doesn’t have great prospects.  We don’t have a lot of concrete examples for other B2C services that show online marketplaces work. eBay works but that’s for mainly for products.  With bundling of financial services, not unlike telecommunication services, it’s so hard to make apples-to-apples comparisons that lead to a transaction.

I tend to think that advisers can more effectively market themselves by going it alone and spending a little time and forethought to create a good content marketing strategy. RIA Sean Hannon’s doing it but what do I know?

Check out the interview below Russ Thornton on Advisor Blogger.

Tagged as: advisors, broker, financial advisers, investment, marketing

  • http://twitter.com/stephsammons Stephanie Sammons

    I tend to agree with your evaluation here. Most of all, my question is what is going to motivate any consumer to spend time rating their financial advisor online when it is already difficult to motivate them to 1)Complete any survey about service or experience 2)Proactively give referrals. Perhaps the idea of having consumers rate brands or products would be a better route to take, but I've seen some of those sites struggle significantly as well and I know that these sites have been costly to build. I don't believe that higher net worth investors will have the time nor the interest frankly to participate in this type of process…and those happen to be the clients we want as advisors. The most significant drawback is that advisors can't interact or engage and until those laws change (if they ever do), it will be difficult for this concept to gain any traction. In addition, client relationships are private and I don't know that many advisory clients will want to go public with their opinions.

    The better route for advisors to engage in to the extent that they can (legally) is to build their personal brand around their unique value proposition, leverage social media, and foster a community of “believers” in order to drive word of mouth. The Coffeehouse Investor is a great example of this (http://www.coffeehouseinvestor.com) and Cathy Curtis has done a great job of this at http://www.curtisfinancialplanning.com.

  • newrulesofinvesting

    Thanks for your great comments, Stephanie. You are totally right — it's extremely hard to try and extract this type of info from clients, above and beyond the structural issues of engaging in this form of public discourse.

    I agree with your solution and you highlight two great examples of how to effectively build brand online and leverage social media to do so.

  • http://twitter.com/rwohlner Roger Wohlner, CFP

    I agree with with many of Stephanie's comments, especically the concerns that the higher net worth clients may not participate in the Fabeetle community. On the other hand I really like what Brandon is doing and I plan to participate in the hopes that I am wrong.

    Another concern is with the concept of comsumer rankings of advisors. Client A may love a particular advisor. That positive ranking does not mean that the advisor is right for client B. Both advisors and clients are individuals, each client is not automatically a good fit with even the best of advisors. Likewise with an advisor who receives a negative ranking.

  • http://twitter.com/fabeetle fabeetle

    Great points guys. I think the main question I see from the comments below is whether or not the HNW will participate in such a site. It makes sense that we are all asking this question, so here are our thoughts:

    We tend to believe through our research that the HNW target market is made up of the same contributors and observers as other, less affluent audiences. That said, we would disagree with Stephanie's statement of:

    “…I don't believe that higher net worth investors will have the time nor the interest frankly to participate in this type of process…and those happen to be the clients we want as advisors.”

    We believe that the HNW are actually more likely to “participate in this type of process” than other target markets. (One thing that we should point out here is that both Stephanie’s comment and our response are very broad statements, the reality is that there are groups within any target market that will and won’t participate, we are just wondering which way the HNW have a propensity to act given an appropriate solution).

    In October of 2008 a study was released from Google and Unity Marketing, giving some insight into the way that the HNW, or “millionaires”, are making purchasing decisions. The article is written with luxury retailers as the audience and to an extent financial advisors could be included in this category. FAs either work with people who don't want to, or can't manage their own money. Whether you agree with this specific linkage or not is not the point. It is the overall purchasing behavior of the consumer that we are interested in. According to Google's Retail Director, John McAteer, millionaires seem to involve the internet in their purchasing decisions more than one might think:

    “We were surprised by just how much information they wanted online. Just over 90% of millionaires say they always or often read other customers' reviews online, for example, compared with 68% of affluent shoppers. “

    In our opinion these types of trends indicate that the HNW do have an interest and therefore are actually more likely to participate in reading and writing online reviews.

    With respect to the question of the HNW having enough time, John McAteer says that it is this very lack of time that is pushing the HNW to the internet for buying decisions. In the very first Question and Answer we find the following:

    “Q: What are the biggest misunderstandings that marketers and retailers have about millionaires?”

    “A: There's this deep-seated conviction that the wealthy are very idle people–a sort of “ladies who lunch” crowd. They often don't understand just how time-poor their rich customers are–90% of millionaires in our survey work, and often at very demanding jobs.”

    We believe that it is this misconception that will allow fabeetle to become successful. The misconception that somehow the HNW are so busy they don't have enough time to logon, read or write a rating or review but they do have enough time to ask for, meet with, evaluate and keep up with multiple referrals, meetings, pitches, value propositions, etc. This research and more suggests that as solutions present themselves to the HNW which allow for them to consolidate a process efficiently and effectively, they become strong adopters. Are calculation is that as we introduce such a solution they will become adopters, and this will benefit both FAs and clients alike.

    In our opinion the behavior trends and needs of the HNW audience are already heading in a direction that would make our solution appropriate. The question is whether or not fabeetle will be the one to bring to market that solution.

    Of course we could be wrong, but that is what taking risks is about right?

    You can read the articles referenced here:
    http://www.mediapost.com/publications/?fa=Artic…

    http://www.networldingblog.com/2009/01/18/milli…

  • newrulesofinvesting

    Roger, agreed with your points on the HNW crowd. I guess we'll wait and see.
    To your second point, one could make the case that with any rating, it's totally subjective to the user's experience. Just because someone loved a particular book and posting a positive rating on Amazon doesn't mean it's the right book for me. Hopefully, there will be enough positive and negative commentary so that a user can decide for himself whether they may be a match or not.
    I'd add to this point that what is hard about judging performance of a service, in general, is that if it's not commoditized and delivery and execution differ greatly between clients (this one gets a financial plan, this one gets asset allocation, another gets active stock picking), it is hard to get apples-to-apples comparisons because our experiences differed so greatly.

  • http://twitter.com/brandongadoci Brandon Gadoci

    Great points guys. I think the main question I see from the comments below is whether or not the HNW will participate in such a site. It makes sense that we are all asking this question, so here are our thoughts:

    We tend to believe through our research that the HNW target market is made up of the same contributors and observers as other, less affluent audiences. That said, we would disagree with Stephanie's statement of:

    “…I don't believe that higher net worth investors will have the time nor the interest frankly to participate in this type of process…and those happen to be the clients we want as advisors.”

    We believe that the HNW are actually more likely to “participate in this type of process” than other target markets. (One thing that we should point out here is that both Stephanie’s comment and our response are very broad statements, the reality is that there are groups within any target market that will and won’t participate, we are just wondering which way the HNW have a propensity to act given an appropriate solution).

    In October of 2008 a study was released from Google and Unity Marketing, giving some insight into the way that the HNW, or “millionaires”, are making purchasing decisions. The article is written with luxury retailers as the audience and to an extent financial advisors could be included in this category. FAs either work with people who don't want to, or can't manage their own money. Whether you agree with this specific linkage or not is not the point. It is the overall purchasing behavior of the consumer that we are interested in. According to Google's Retail Director, John McAteer, millionaires seem to involve the internet in their purchasing decisions more than one might think:

    “We were surprised by just how much information they wanted online. Just over 90% of millionaires say they always or often read other customers' reviews online, for example, compared with 68% of affluent shoppers. “

    In our opinion these types of trends indicate that the HNW do have an interest and therefore are actually more likely to participate in reading and writing online reviews.

    With respect to the question of the HNW having enough time, John McAteer says that it is this very lack of time that is pushing the HNW to the internet for buying decisions. In the very first Question and Answer we find the following:

    “Q: What are the biggest misunderstandings that marketers and retailers have about millionaires?”

    “A: There's this deep-seated conviction that the wealthy are very idle people–a sort of “ladies who lunch” crowd. They often don't understand just how time-poor their rich customers are–90% of millionaires in our survey work, and often at very demanding jobs.”

    We believe that it is this misconception that will allow fabeetle to become successful. The misconception that somehow the HNW are so busy they don't have enough time to logon, read or write a rating or review but they do have enough time to ask for, meet with, evaluate and keep up with multiple referrals, meetings, pitches, value propositions, etc. This research and more suggests that as solutions present themselves to the HNW which allow for them to consolidate a process efficiently and effectively, they become strong adopters. Our calculation is that as we introduce such a solution they will become adopters, and this will benefit both FAs and clients alike.

    In our opinion the behavior trends and needs of the HNW audience are already heading in a direction that would make our solution appropriate. The question is whether or not fabeetle will be the one to bring to market that solution.

    Of course we could be wrong, but that is what taking risks is about right?

    You can read the articles referenced here:
    http://www.mediapost.com/publications/?fa=Artic…

    http://www.networldingblog.com/2009/01/18/milli…

  • http://twitter.com/stephsammons Stephanie Sammons

    I guess the real issue is the legal barrier. If an advisor could populate his or her profile, write and post articles, AND direct clients to write reviews about them, AND post those comments, it would be a fantastic platform. (think http://www.AVVO.com for lawyers) However, with the current legal environment, unless I'm missing something, you can't combine the FA directed activities with the 'crowd' activities, and you can't direct clients to write testimonials about you or publish those testimonials. You would have to have a Chinese wall between these activities which again is why I believe that the advisor has to focus on what they can control…building a unique online and offline brand that sets them apart! Good research on millionaires but have you considered conducting a survey on HNW specifically around your concept to determine interest? That might give you some answers. Good luck either way.

  • http://twitter.com/fabeetle fabeetle

    Great points guys. I think the main question I see from the comments below is whether or not the HNW will participate in such a site. It makes sense that we are all asking this question, so here are our thoughts:

    I tend to believe through my research that the HNW target market is made up of the same contributors and observers as other, less affluent audiences. That said, we would disagree with Stephanie's statement of:

    “…I don't believe that higher net worth investors will have the time nor the interest frankly to participate in this type of process…and those happen to be the clients we want as advisors.”

    I believe that the HNW are actually more likely to “participate in this type of process” than other target markets. (One thing that we should point out here is that both Stephanie’s comment and my response are very broad statements, the reality is that there are groups within any target market that will and won’t participate, we are just wondering how the HNW have a propensity to act given an relevant solution).

    In October of 2008 a study was released from Google and Unity Marketing, giving some insight into the way that the HNW, or “millionaires”, are making purchasing decisions. The article is written with luxury retailers as the audience and to an extent financial advisors could be included in this category. FAs either work with people who don't want to, or can't manage their own money. Whether you agree with this specific linkage or not is not the point. It is the overall purchasing behavior of the consumer that we are interested in. According to Google's Retail Director, John McAteer, millionaires seem to involve the internet in their purchasing decisions more than one might think:

    “We were surprised by just how much information they wanted online. Just over 90% of millionaires say they always or often read other customers' reviews online, for example, compared with 68% of affluent shoppers. “

    In my opinion these types of trends indicate that the HNW do have an interest and therefore are actually more likely to participate in reading and writing online reviews.

    With respect to the question of the HNW having enough time, John McAteer says that it is this very lack of time that is pushing the HNW to the internet for buying decisions. In the very first Question and Answer we find the following:

    “Q: What are the biggest misunderstandings that marketers and retailers have about millionaires?”

    “A: There's this deep-seated conviction that the wealthy are very idle people–a sort of “ladies who lunch” crowd. They often don't understand just how time-poor their rich customers are–90% of millionaires in our survey work, and often at very demanding jobs.”

    I believe that it is this misconception that will allow fabeetle to become successful. The misconception that somehow the HNW are so busy they don't have enough time to logon, read or write a rating or review but they do have enough time to ask for, meet with, evaluate and keep up with multiple referrals, meetings, pitches, value propositions, etc. This research and more suggests that as solutions present themselves to the HNW which allow for them to consolidate a process efficiently and effectively, they become strong adopters. My calculation is that as we introduce such a solution they will become adopters, and this will benefit both FAs and clients alike.

    It seems that behavior trends and needs of the HNW audience are already heading in a direction that would make our solution appropriate. The question is whether or not fabeetle will be the one to bring to market that solution.

    Of course I could be wrong, but that is what taking risks is about right?

    You can read the articles referenced here:
    http://www.mediapost.com/publications/?fa=Artic…

    http://www.networldingblog.com/2009/01/18/milli…

  • fabeetle

    Good points here. Sorry about the moving of my comment. Noticed a spelling error and tried to fix it but seems like I screwed everything up as I was logged in under the wrong twitter account. Anywho…Stephanies response was to my post below:

    Thanks Steph, you bring up really good points with the regulation aspect and we are very familiar with it. We think we have come up with a solutions and will reveal it at a later date. As far as a survey of HNW with fabeetle specifically, we do have such a data set and feel confident about the results. We will also be releasing this at a later date.

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