Client prospecting tool using LinkedIn sparks debate

Automation may appeal to LinkedIn 'Lions,' but many advisers prefer the personal touch

Jan 20, 2014 @ 12:01 am

By Joyce Hanson

Technology, LinkedIn, prospecting,
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Jeff Tompkins and Jimmy Lyons, co-founders of technology startup advisorConnect, claim to be the first entrepreneurs to have figured out how to automate client prospecting on LinkedIn.

Still in beta, advisorConnect scours a financial adviser's first-degree contacts on LinkedIn, then finds those contacts' second-degree contacts and ranks them according to location, total number of LinkedIn contacts, job changes in the past 90 days — even potential investible assets.

“The sweet spot is the second-degree connection,” Mr. Lyons said. “The average LinkedIn user has 300 first-degree connections, which results in 90,000 second-degree connections.”

More: Has the financial press overhyped social media?

Maybe so. But not everyone agrees that more is necessarily better when it comes to the number of second-degree connections.

While LinkedIn is one of the best, if not the best, social-media tool for client prospecting, automation of client prospecting on the site may not be a good way for advisers to go, some experts said.

Financial services is a person-based business. You can't fully automate.Crystal Thies, an independent consultant who trains advisers on how to use LinkedIn for sales and business development

Crystal Thies, an independent consultant who trains advisers on how to use LinkedIn for sales and business development, said she has more than 2,300 first-degree connections on LinkedIn and can see the value in connecting with her second-degree contacts.

However, even if the assumption that advisorConnect's algorithm makes about second-degree contacts' investible assets is correct, it is no match for a human being combing through his or her LinkedIn contacts and seriously thinking about how to make a personal connection with second-degree contacts, Ms. Thies said.

“Financial services is a person-based business. You can't fully automate,” she said.

Matt Halloran, a certified coach for advisers who sits on advisorConnect's advisory board, counters that the advantage of automation is its ability to broaden advisers' reach exponentially and quickly.

Identifying potential contacts is a numbers game, and some LinkedIn users have thousands of contacts, Mr. Halloran said. These users, commonly referred to as LinkedIn open networkers, or “Lions,” create the potential for thousands upon thousands of potential connections.

“If you can use an automated tool using LinkedIn, that unlocks a huge opportunity,” Mr. Halloran said.

Ms. Thies, who co-authored “The Social Media Handbook for Financial Advisors: How to Use LinkedIn, Facebook and Twitter to Build and Grow Your Business (Bloomberg Financial, 2012)” with Mr. Halloran, is not so sure.

“If you're not being discriminate in who you connect to, you may deal with someone who's not real,” she said, noting that hackers have been known to collect data in Lions' networks and use it to create false identities.

LinkedIn Corp. officials did not respond to requests for comment. However, LinkedIn's Help Center says in a definition of the term Lion that the company does not endorse the term.

“As a reminder, only connect to people you know and trust and only join groups you want your name associated with,” the Help Center states.

While the jury is still out on automating connections on LinkedIn, some advisers say they prefer to join groups on the social-media site to make connections with potential clients.

“I do all my prospecting within LinkedIn groups,” said James Cox, managing partner of the Harris Financial Group and an LPL Financial affiliate.

For example, Mr. Cox participates in LinkedIn employee and retiree groups with members who are already clients of Harris Financial. Within those groups, he'll comment on topics such as retirement planning and changes in interest rates. He avoids the hard sell of direct prospecting.

“I'm talking to people about things they really want to know about it,” Mr. Cox said.

Kristin Andree, president and business strategist of Andree Media and Consulting, agrees that LinkedIn groups can be a good source for prospects. Further, she advises using established connections to reach out to someone new on the social-media site.

“I tell advisers to use LinkedIn to find the prospect, and learn as much as you can about them and how they fit your target market, and find out who in your market can introduce you,” Ms. Andree said. “After that, go old school. Pick up the phone and call them.”

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