Advizent, the once-promising RIA marketing and branding consortium, was shut down last week by founders Steve Lockshin and Charles Goldman, Financial Planning magazine reports. They cited a lack of support from potential members and an unwillingness to take on outside capital as the reasons behind the decision to terminate the venture.

Sources quoted in this article and several others, including in RIABiz and Investment News, cite a number other reasons for the failure, including:

  • Unwillingness of RIAs to cooperate with each other
  • The high level of fees sought by the Consortium
  • Inability to provide a compelling ROI
  • Competition from other marketing and branding efforts
  • Lack of foresight in regarding to branding by RIAs

Advizent sought to create a marketplace that would match consumers with RIA firms, who would be rigorously pre-screened for ethics, compliance, succession planning, strategic planning and other characteristics. Consumers, attracted to the site via national marketing and advertising campaigns, would have been presented with Information about member firms and would have been matched with firms meeting their specific criteria.

I agree with some of the assessment in the articles exploring the reasons for the firm’s demise: for advisors to pony up the type of money that Advizent was seeking in return for a potential fuzzy pay off of consumers being directed to their firms via a website just wasn’t compelling enough. Then, there’s the fact that many advisory firms are far from sold on decent, let along large, budgets for marketing.

Add to the fact that RIAs are independent by nature and may have been wary of what they saw as a cookie cutter solution that didn’t stress individual differentiators enough, and the venture just didn’t have enough support in the industry to get off the ground.

I also believe that the venture ultimately didn’t succeed because this isn’t the best way for RIA firms to differentiate their brands, and RIAs sensed this. As I’ve written previously, in this day and age of fragmentation of the traditional media, advisory firms can best differentiate themselves via thought leadership targeted to a specific ideal client type. Savvy advisors are putting their marketing dollars into these kinds of content marketing campaigns and realize that they can best attract clients that will already meet their criteria — cutting the length and expense of the client acquisition cycle — by stressing their differentiators.

A pitch to the masses (even masses of high net worth investors) via a branded website isn’t what these firms need, and it wasn’t likely to generate enough business for member firms to justify the fees even if it did scale up and garner a decent following among consumers. Selling financial advice is becoming less and less like selling a car or a widget and  Advizent’s nascent offering may have seemed too much like mass selling with too little potential for differentiation for member firms.

The evolution of the financial advisory industry is still in a very early phase. It’s too much like the Wild West for this type of consortium to succeed. The day may come when advisors — and consumers — will be more receptive to this type of branding model, but it’s a ways off.

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