In Broadridge’s benchmark research survey, Marketing Practices of Growth-Focused Financial Advisors, 406 financial advisors revealed what top performers and average advisors were doing in their bid to win the battle for new business. As it explored the practices, marketing spend and success metrics of participating RIA firms and independent broker-dealers, the report also showed what it takes for aspiring professionals to join the ranks of their top-performing peers.
More aggressive and more confident in their ability to meet their growth goals, growth-focused advisors—which made up 21% of participants—were better at calculating their marketing ROI and connecting their marketing dollars to their success in finding new clients. Of these high achievers, 88% said they deployed the biggest share of their marketing resources to client acquisition versus only 67% of the majority.
The most startling example of just how different advisors are performing in terms of marketing effectiveness and client acquisition: Self-defined “innovators” said they are acquiring on average 17+ new clients annually, while “laggards” are acquiring four or fewer.
What Holds Most Advisors Back?
Advisors commonly cited three big stumbling blocks:
1. Lack of time
2. Lack of dependable marketing talent
3. Absence of a digital marketing strategy
They said they were further hampered by ineffective marketing ROI measurements, confusion around which technologies to use and an inability to draft a coherent marketing plan.
In contrast, 42% of growth-focused advisors had a well-defined marketing strategy versus 24% of all others. Fifty-five percent were also more likely to track their marketing effectiveness in terms of revenue versus only 42% of their peers. Plus, 72% were more confident about meeting their client acquisition goals versus only 61% of the majority.
Which Marketing Channels Worked Best?
While struggling to find their footing among their firm’s evolving offerings and digital tools, the 79% who were not growth-focused still demonstrated a high level of marketing commitment when it came to boosting both win rates and ROI. All participants said they planned to increase their marketing spend across 11 marketing channels with an emphasis on these top five:
1. Websites Critical for maintaining a financial advisor’s 24/7 digital presence, websites require the biggest marketing commitment. New web-site investment though for growth-focused advisors and everyone else represented only a low-to-modest increase of 2% and 9%, respectively.
2. In-person events While three of four top channels are grounded in digital applications, the popularity of in-person events shows that live, face-to-face events are still highly effective in the prospect conversion game. Accordingly, top performers said they intended to increase spending by 7% versus 12% for everyone else.
3. Social media Advisors are increasing their marketing spend to this channel at a higher level than any other channel—20% for top performers versus 18% for the majority. Among those who actively market via social media, 59% of self-identified innovators converted a social media lead to a client in the last year versus only 19% of the majority.
4. CRMs These mainstays are mandatory for firms and, for the most part, are already well integrated with client acquisition strategies and campaigns. Accordingly, growth-focused advisors said they planned to increase spending only 5% versus 7% for their peers.
5. Digital advertising Advisors upped their planned investment for both organic and paid digital advertising significantly; 15% for growth-focused advisors versus 13% for everyone else. Technology proved to be more of an enabler than a disruptor here as advisors liked the cost-efficiency and freedom of delegating digital ad campaign management to support staff or outside resources.
Smart investments in marketing are having a big impact for growth-oriented advisors, further separating them from others. But increased spend without thoughtful planning and measurement just introduce increased waste of time and money. Advisors typically begin relationships with new clients by understanding the client’s goals and then devising the best plan to reach those goals. Advisor’s marketing plans should be goal-driven and metrics-driven as well. Imagine an advisor showing up to a client review without data and details of progress and investment performance. Taking their own medicine, advisors a plan and work with measurements. For example, a growth-oriented advisor might be highly focused on attracting and converting new clients. She should be measuring the various parts of the sales and marketing funnel accordingly: How many new leads did she identify? Where did they come from? Her digital channels—websites, social media, emails—will paint a very informative picture.
Benchmarking Win Rates
With Broadridge’s access to the ideas and practices of thousands of advisors across the financial services industry, Marketing Practices of Growth-Focused Financial Advisors will hopefully become the first of an annual survey series. This will allow Broadridge a chance to test the truth behind popular industry statements like “Whoever can afford the highest cost per acquisition will win.”
In this study, Broadridge was able to report that the average client acquisition cost came in at $929, after participants totaled up their marketing costs and divided by their total number of new clients acquired. At that level, advisors might gain a better handle on what an attractive ROI could look like when their marketing spend is measured against the revenue generated from a long-term relationship.
The bottom line: While there may be a wide gap in acquisition and spend rates across the advisor community, there is still room at the top for professionals committed to learning from their growth-focused peers. The average advisor already understands how a well-allocated portfolio works. By allocating their spending across their favorite channels, they can ensure marketing tactics stay aligned with their client acquisition goals.
Learning from the practices of growth-oriented advisors can help average performers crack the marketing code for themselves—and not bust their budget.
As vice president, product development of Broadridge Advisor Solutions, Kevin Darlington led the development and launch of Broadridge Smart Insights, a cognitive learning tool that lets advisors employ data intelligence to target, engage, convert and retain prospective clients.