Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Building Your Business

Advisor Marketing: Don’t Think Small

Your article was successfully shared with the contacts you provided.

We have studied the multimillion dollar advisor (MMDA) as closely as a scientist observes the Javan rhinoceros, which has fewer than 60 left in the entire world. For the last 15 years we have watched multimillion dollar advisors in their native habitats, reviewed their financials, watched them in meetings with their clients, critiqued their marketing and put together business plans for them.

Where the MMDA excels is in marketing. Each one had a proven system for getting a steady stream of derrières in chairs (a phrase of mine). In fact, no one can get to the magic million dollar mark without a marketing plan that is dependable, repeatable and predictable.

Here is how MMDAs do it.

Marketing Investment

The MMDA consistently invests in marketing.

In most cases they have invested a lot of money. Multimillion dollar advisors spend big bucks on their lifeline, marketing. One firm we worked with allocated about $1 million per year to do the marketing for 12 advisors. Yes it is a lot, but it worked for them. They also got between 1,200 and 2,400 calls per year from prospects asking to set up an appointment to discuss their finances.

Did I mention each of the 12 advisors was a million dollar producer? Some were even at the $3 million dollar level. Clearly this was money well spent.

Contrast this with a call I got a few years ago from an advisor in Vail—she was complaining that she wasn’t getting any return on her marketing dollars. How much was she spending? A whopping $300. Not per month—but per year! This bought her an ad in the yellow pages of the local phone book. She said (duh!) that she had not gotten any responses from it!

I had two comments for her: If you are not getting any results why do you continue to do it? And you will need to spend a lot more than this to get the results you need.

My point: No matter what your level, even if you are just starting out, or making $100,000 a year, you will need a hefty marketing budget if you want to build your business. In the beginning this will be a big percentage of your monthly expenses. Once you get to where most of your new clients come from referrals, you will be able to back off this investment as a percentage of total expenses.

Here’s how we do it:

My marketing budget was a top item in my business plan for building up a practice in Rhode Island from scratch. (Also highly important was making sure I had a client service manager). In fact, during the first six months of launching my practice, I allocated almost as much money to marketing as I did to paying myself.

Today I only need to allot about 3% to 5% of our total expenses to marketing. When I started out, it was closer to 15%. I have seen advisors who will need to put 30% into the marketing budget to get the results they need.

A Plan That Works

MMDAs have a marketing plan that works for them.

First rule of marketing: All marketing is trial and error. What works really well for you may not work for me. All of the successful advisors had experimented with a number of different marketing techniques and found one that fit them well and fit their niche. The smart ones then stuck with what worked.

There are only a handful of strategies that we have seen top advisors use well to create the goal of a steady stream of derrières in chairs: radio shows, community college retirement courses, educational events and referral plans probably top the list. The radio shows and educational events work great for the extroverted advisor, who loves to get on stage. If you are more of an analytical introverted type, you will need to find something that can showcase your strengths, like a solid referral program.

What we did when we started the business in Rhode Island:

Educational events work great for us because our target client has a doctoral degree and likes the high level of content we provide at these events. They also appreciate my education and experience. My high level of extroversion makes these fun and easy for me.

Some of the things that I learned as I experimented with marketing in my own practice:

Your audience can become immune to the same old story. You have to change it up periodically to draw in new people. We had great success when we tied in a topic with the current news: The fiscal cliff was a big hit in January with our target audience because it was all over the news. We had twice as many attendees as usual.

If you choose a really famous gourmet restaurant for your education event, you run the risk of only attracting people who really like the food in that restaurant. I only picked up a few low-end cases on that experiment. Luckily I paid for the event, but it was nip and tuck.

The event can be a big success, and still not make good business sense. We did a Wine, Women and Wealth event last year and had a great turnout and lots of fun with some great women. Unfortunately I had not considered the impact of not having husbands attend. We did pick up some clients, but not as many as usual because the husbands stayed home and didn’t get as excited about getting their finances in order.

Many of the husbands denigrated their wives (who all have doctorates by the way) and told they wives that the husbands knew more about this topic than yours truly. The net result—we only picked up a few clients. It was easier for them to go along with their husband’s old advisor, even if they knew they were not getting as good advice and service as they would with us.

Tracking Matters

Unfortunately, few MMDAs actually track all the information that we think is needed to make sure their marketing dollars are doing what they need to do.

When we are engaged to analyze another financial advisory firm, we always ask detailed questions about their marketing. We treat this like a business and think advisors should know how well their marketing investment is performing.

What we do:

Because we track the numbers, we are constantly experimenting and tweaking our process to make adjustments to improve our results. We see marketing as an investment that should have a good return. Most advisors don’t think of this expense as an investment in the future of their business.

We know that in order to meet our numbers, we need to have one educational event per month, with four households attending. Roughly 50% of those attending will become our clients.

Some of the things we track are: numbers of attendees, varied by topic and location; what percent indicated they wanted to come in for a complimentary meeting; what percent actually came in for the meeting; what percent of attendees actually become clients; cost per prospect household; cost per new client household; whether certain days of the week, or times of day, are better than others.

This information lets us know if we need to change our educational events to get a better turnout. Even MMDAs rarely track these numbers the way they should.

My advice to new advisors and experienced ones: If you start tracking your marketing you are likely to discover you can do more with the same marketing dollars. Treat this like a business and make sure your investment is giving you a good return.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.