Algorithms already pair up couples on websites looking to get hitched. Why not high-net-worth clients seeking out independent advisors?
Startup lead gen platform Zoe Financial is built on that premise, and on Tuesday it announced $2 million in seed funding from several angel investors, including lead investor Chris Jones, former co-head of global active equities at BlackRock, and Robert Deutsch, the former head of global ETFs at J.P. Morgan Asset Management.
Similar to eHarmony, the platform, which launched in February, matches clients and advisors based on their responses to a series of questions. It is free for clients to use, and Zoe earns an undisclosed percentage of the fee the advisor charges the client.
Zoe’s CEO and founder, Andres Garcia-Amaya (a former executive director at J.P. Morgan Investment Management) says the median investable assets of the clientele on the platform is roughly $750,000, “but we have surprisingly attracted some clients with $5 to $10 million.”
Like any elite matchmaker, Zoe wants to set some standards in client referrals, Garcia-Amaya says, so there’s a screening process for advisors looking to join. The acceptance rate of advisors for the network, he adds, is currently close to 5%.
“Most lead gen platforms are focused on getting quantity of advisors versus quality since their revenue model is dictated on having as many advisors paying them for leads,” he says. "In the Zoe network, we focus on quality.”
The platform keeps a focus on pure RIAs, Garcia-Amaya says; hybrid RIAs are not included. Then, only RIAs with a CFP, CFA or CPAs. From that group, the network chooses only those with clean records and low client-to-advisor ratios.
“We then spend hours interviewing them to understand their investment and financial planning process, their fee structures, their onboarding, their culture," he says, noting that even their technology stack is evaluated. "After the in-depth due diligence we ask ourselves, ‘Would I trust this person with my parent's retirement money?’ If there is any hesitation on that answer, they are still a no.”
Garcia-Amaya adds that since they are not a custodian, their referral network doesn’t require advisors to hold a certain amount of assets in any particular custody account. “We also don't have our own advisors, like some custodians do, so we don't compete against the RIAs in our platform for prospective clients.”
Once in, the advisor can be matched with a prospect. Zoe facilitates the scheduling. When the prospect becomes a client, Zoe follows up six months out to get feedback from both the client and the advisor to further improve the service and the matching.
Deutsch, who is still the chairman of the J.P. Morgan ETF board, says Zoe addresses a need among wealthy investors looking to connect with the right advisor.
"Most people do not know how to find a suitable advisor and don't know the right questions to ask," he says. "And, many of the best advisors do not have a process for building their network of new clients. Zoe solves for both of these issues."
Existing lead generation services are lacking, Deutsch adds. "Most today are simply tossing potential client names to advisors without any process for qualifying their leads," he said. "Zoe Financial provides well-qualified leads and matches the clients needs to the advisors' expertise."
Garcia-Amaya says the idea for Zoe was formed during his time at J.P. Morgan.
“After meeting thousands of advisors around the country, what became very clear to me is that a vast majority of successful financial advisors had a great sales process, but no financial planning or investment process and there was no way their prospective clients could tell the difference between true advisors and salespeople,” he says.
The bar for entry into the financial planning industry is low, he says.
“As a result, some advisors can dress the part, be part of the right country club and be trained to say the right things to grow a big practice without actually having a strong financial planning or investment knowledge. Consumers are becoming aware of this nowadays and thus prefer to have a filter of due diligence.”
Bill Winterberg, industry consultant and founder of advisor technology blog FPPad.com, notes there have been other startup efforts to get advisors in front of clients, such as NerdWallet’s now-defunct ‘Ask An Advisor.’ Also, Winterberg adds, some advisors may not want to participate in a network that limits their access to all clients.
But there is value in decreasing friction for customers with a due diligence tool that can quantifiably match them to advisors, he says.
“I really like the ability to narrow down my choices of advisors, which can be really overwhelming, to people who are likely to effectively communicate with me,” he says.
