One of the largest hurdles for many financial advisors is not in developing the technical skills to be able to give good advice to clients, but in learning how to engage effective marketing strategies that are essential to growing and sustaining a successful advisory firm. Unfortunately, this struggle to attract a critical mass of prospective clients to actually pay for an advisor’s services has resulted in a very high attrition rate in the advisory industry (as high as 70% in the first three years). Accordingly, there has been a great deal of attention on identifying the ‘best’ marketing strategies for financial advisors to help them grow their businesses.
However, there have been surprisingly few studies exploring effective marketing practices in the financial advisor industry over the past years. Which is why we launched the first Kitces Research Survey on Advisor Marketing in 2019, to identify the marketing strategies financial advisors are really using that work (or not), what tools, technology, and systems advisors use, best practices in the most popular advisor marketing techniques, and what advisory firms really spend on marketing (including hard-dollar marketing costs, tools and technology, and staff support). Our study revealed that, while some of the most popular marketing strategies actually being used by advisors were those that required a large investment of time (such as establishing relationships with COIs, social media, and other forms of networking), many of these popular time-based marketing strategies turned out to be among the least effective at using the firm’s resources (i.e., time and money) to generate new clients. Conversely, strategies with comparatively modest investments of time and dollars (like SEO strategies and paid web listings) were far less common among the advisors surveyed in the study, yet ended out having the lowest Client Acquisition Costs!
Accordingly, pursuing more resource-intensive marketing channels – that potentially involve both time and money – can be a worthwhile effort in helping advisors attract more clients (for instance, cultivating relationships with COIs with affluent client bases, which potentially requires many hours of an advisor’s time, could yield more high-net-worth prospects than less resource-intensive marketing strategies) by generating enough new revenue that makes the time invested worth the effort, even if they may seem less ‘efficient’ in terms of the acquisition cost per client than those requiring fewer resources. These considerations become increasingly important as an advisory firm grows in terms of clients and revenue, because the larger a firm grows, the more difficult it is to scale time-intensive marketing channels (like COIs and networking) with that growth, since the advisor’s time gets both more valuable and more scarce. Ultimately, investing into more efficient – and scalable – marketing strategies can be a key component of sustainably growing an advisory firm as it becomes easier to spend the resources on dollar-based strategies than on time-based strategies.
To dive deeper into the costs and efficiency of various marketing strategies, we are excited to announce the 2022 Kitces Research Study on Advisor Marketing, which will examine how advisors’ marketing strategies have evolved over the course of the COVID-19 pandemic and explore further what the fastest-growing advisory firms are doing to market themselves at scale. All advisors are invited to participate and help the advisor community better understand “What Actually Works In Advisor Marketing”– and hopefully gain some insight into how they can improve their own marketing efforts as well!