According to news coming out of Schwab’s Impact conference, RIA’s are most interested in expanding their client base as a means for fueling revenue growth.  Makes sense given the lackluster forecast for asset appreciation in the near-term.  So how are they planning to pursue this objective?  Acquisitions, mergers, alliances and the addition of professional staff appear to be the primary strategies that are high on the agenda.  Interestingly there was no reference to investing in marketing as a means for building the prospect pipeline, differentiating the firm for competitive advantage and expediting the client acquisition process.  This raises an obvious question on the slight to marketing; “Is this because RIAs aren’t conversant enough with marketing as a means for building their practices or that they have invested in marketing previously and not met with success?”  

There are several elements required to build a successful financial advisory practice; choosing the right institutional, custodial and product provider relationships, trading platform, operational and technology systems and building a first rate professional and administrative support team. Unfortunately, most FAs overlook one obvious strategy…marketing.  Further, institutions and custodians don’t always provide independent RIAs with the requisite practice development training, consulting and or tools required for an advisor to effectively market their firm in today’s competitive environment.

One of the principal goals of marketing is to profitably drive revenue while distinguishing the firm for competitive advantage. One of the best ways to drive revenue is to acquire new clients. In reviewing the findings of the 2010 FA Insight Study of Advisory Firms' “Growth by Design” analysis, a couple of clear patterns emerged:

1. The need for marketing: 48% of new clients came from existing client referrals, meaning that over half of an advisor firm’s new clients resulted from some other aspect of their practice marketing efforts.

2. Marketing matters: Firms that embraced a “growth by design” approach significantly outperformed their counterparts with annual growth rates that were 10% to 30% higher and operating profit margins that were 12% to 16% greater.

Generating qualified leads, nurturing those prospects through the consideration process and converting them to clients requires an integrated marketing approach. To be certain, the advisor plays a critical role in this process through their phone conversations, written correspondence and face-to-face meetings with each prospect. As the “Growth by Design” study shows, a firm’s chances for success in acquiring new clients can be greatly enhanced with the development of a marketing plan. Having a marketing plan that defines the firm’s target audience, key value propositions and articulates the firm’s service offering in a clear and compelling manner allows for the effective allocation of a firm’s time and money.

The other benefit of marketing as a client acquisition strategy is that the investment made in this area is a variable cost that can be adjusted over time to reflect the success of the firm’s client acquisition efforts.  Acquiring another RIA or adding professional staff represents sunk costs that come with no guarantee of success and can carry significant risks in the near-term as cultures are merged or advisors are transitioned. 

At Evolutionize we know how critical marketing is to the success of an advisor firm. That is why we focus exclusively on providing practice marketing support to financial advisors. Our mission;

“We help financial advisors grow their firms by attracting new clients using proven integrated e-marketing practices for less than the cost of an administrative assistant. “

Have a plan? Interested in a second opinion? Or are you looking for an efficient means of formalizing your marketing planning process? Contact  CliffC@evolutionizemypractice.com for a complimentary consultation.