As it stands right now, Vestorly, the start-up brainchild of two former Wall Streeters, is poised to just that.
To understand why, you have to understand that Wall Street desperately needs cash right now — money that will stick around banks and be invested. One sector that fills that need is
And how valuable are investment advisers to Wall Street? They're the only "top earners" at Morgan Stanley who won't have 100% of their bonuses deferred this year, if that gives you any indication.
See, once clients choose someone to manage their money, they tend to keep it there, and at wire houses (banks with connected branches that share information with one another) that means investment advisers can sell clients a wide range of bank products.
But obviously there's an alternative to this system. To this Goliath there is a David — the independent Registered Investment Advisor (RIA). They're small firms headed up by individuals that love investing and have broken off on their own to make a living out of it.
RIAs have a distinct problem, though. They have no brand, which makes marketing and finding clients a massive undertaking.
Enter Vestorly. It's an online platform that allows RIAs to communicate directly with their clients through social media. More than that, it leverages their clients' online connections to generate leads of potential clients. When a client shares their RIAs content with friends and family, and those friends and family get to know that RIA, Vestorly tracks those connections.
That means instead of RIAs reaching out with a cold call, potential clients are coming to RIAs through a kind of referral. They've already been familiarized with an RIA's ideas and insights through friends or family, so they feel comfortable getting on board.
Best of all, Vestorly 100 percent compliant. Think of it as a private club. If an RIA's clients want to share information with a friend (as the platform suggests) those friends have to accept that information.
"Vestorly removes the testimonial risk by cutting out any likes, discussions, and commenting. It's fueled by the pre-exiting online activity of interacting with, and sharing, content," said Vestorly co-founder Justin Wisz. "Vestorly's recommendation algorithms do the thinking for the adviser on relevant content to publish, and Vestorly does the thinking for the client or prospect of the adviser by recommending relevant people in their social graph with whom they should share content. The result is a valuable connection built on social proof that adds value for everyone involved, without risking a testimonial or endorsement."
In short, you're not going to get a note from the SEC over a Facebook post.
Wisz figured this out during a few hard years as an independent consultant for RIAs. After a stint at California-based investment bank Fisher Investments and back in New York City at SNL Financial, he started his own marketing and lead generation firm for RIAs.
"When I was consulting I'd run into clients who’d called the crisis. They would tell me, 'I'm a wealth manager in Salt Lake City and I’ve been beating the market for 15 years.’ I started to align with them ideologically," said Wisz.
It was a few years into that business that he met Ralph Pahlmeyer, a trader at JP Morgan. Together they whittled the costs of an RIA's fliers, advertisements, cold calls etc. down to $5,000 per signed client. Still, less than 1 percent of leads (and RIAs have a ton of them) turned into business.
What made them realize they could do better was one simple fact: The vast majority of signed, sealed, and delivered RIA clients come from customer referrals.
The pair started raising money from friends, family, and eventually investors last year, and Vestorly will come out of beta in a matter of days. Already the product is being tested by 40 RIA firms around the country, and dozens more are waiting to join.
Using social media and referrals, Pahlmeyer and Wisz have lowered the cost of finding a new client down to $200-300.
One RIA already on board is Paul Schatz, President of Heritage Capital in Connecticut. He writes a regular client newsletter and contributes to news outlets like Fox Business and CNBC, but he's noticed that over the last year the content he's put out on Vestorly has become a significant tool in his arsenal.
“The first year is usually hard in marketing because there’s a familiarity you have to get with people reading...now it’s prime important information," Schatz said. "Before people were deleting the e-mails. Now I’m seeing responses that are turning into money.”
And it isn't just about finding new clients, it's about keeping the old ones. During the worst years of the financial crisis Schatz noticed that clients were coming to him because their advisers at bigger firms had disappeared when the market was most terrifying.
"I'm out there to take every client I can from the wire houses because they don’t provide quality service. I talk to my clients at least monthly, I challenge the wire houses to do that," said Schatz. "You’re always going to have down years but if you’re communicating with your clients through a product like Vestorly, they’re going to stay with you longer than they would if you sold them a product and disappeared.”
Now is the time for RIAs to strike. Since the financial crisis Wall Street's brand has taken a serious beating and clients are jumping ship for the independent channel. Over the last 5 years, RIAs have been able to take as much as 1 percent of market share away from wire house behemoths annually.
Not too bad for people that have basically no marketing. Now imagine how things will be when they do — Wall Street probably is.
Check out a video about how Vestorly works below:
How Vestorly Works from Vestorly on Vimeo.