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Fidelity Finds RIAs Seriously Lag in Marketing, Business Development

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Findings from the 2014 Fidelity RIA Benchmarking Study, released Wednesday, showed that many firms recognized the need to improve their marketing and business development capabilities.

Only 5% of RIAs in the study felt their firms were advanced in these areas, and 70% did not have a plan in place to guide them toward better business results—a number that has gone unchanged since 2011, Fidelity Institutional Wealth Services said in a statement.

The study explored what may be holding RIAs back from advancing their marketing and business development efforts, and examined best practices of “high-performing firms” to help RIAs learn from their peers.

High-performing RIAs excel in growth, productivity and profitability, according to the study.

It said that although many factors could contribute to a firm’s success, these RIAs stood out in several important areas of marketing and business development: firm story, targeting clients, referrals and aligning talent—strategies that may be contributing to their ability to close business in two or fewer meetings and drive more incremental growth than other firms.

“Three-fourths of firms see improving their marketing and business development as a top strategic initiative, but they are struggling to make progress,” David Canter, executive vice president and head of practice management and consulting at Fidelity Institutional Wealth Services, said in the statement.

“As firm leaders sit down to think through their 2015 strategic plans, they should consider looking to their peers for insights on what is working and ideas on where to focus to make the most impact.”

Key Findings

High-performing RIAs strive to tell a consistent firm story, while half firms are still struggling to establish one, the study found.

Only 56% of all firms in the study said they had a clearly defined and differentiated firm story, and only 43% said their stories were tailored to the specific needs of target clients.

High-performing firms were 1.7 times more likely to tell a consistent firm story, with all client and prospect-facing associates describing their firm and its key differentiators in the same way.

As a result, these were also more likely to agree that the majority of their clients knew the fundamentals of their firm story, which can help clients become advocates for the firm.

The study also found that while RIAs were making progress in targeting the right clients, high-performing ones were almost twice as likely to effectively communicate their target client profiles to help generate the right referrals.

Firms with a target client profile reported that 90% of new clients added in 2013 fit this description, compared with only 75% of clients on board prior to 2013.

High performers were almost twice as likely to have effectively described their target client profiles to both clients and centers of influence. Fidelity said this may help clients and centers of influence identify the most appropriate referrals, in turn leading to a higher percentage of clients fitting target client profiles over time.

The study said few firms had an “advanced” referral process; high-performing ones were four times as likely to leverage centers-of-influence referrals to the fullest.

Referrals from existing clients and centers of influence were important channels of growth for RIAs, accounting for 75% of all new clients. However, less than one-third of firms rated their referral processes as advanced or even fairly strong.

Only 14% said they had analyzed their client base to focus on the clients most likely to make referrals.

High performers are four times more likely to describe their centers-of-influence referral processes as advanced. This included activities such as always thanking sources for referrals and working to understand their centers of influences’ target client profiles so they can send reciprocal referrals.

In addition, they were likelier to review centers-of-influence data, such as referral status, at least monthly and keep data up to date.

Finally, the study found that high-performing firms had talent and resources in place, while one-third of RIA firms were pursuing business development officers.

High performers were twice as likely to be pursuing strategic initiatives to develop talent-management plans or change firm compensation plans—signs that they may be managing talent more proactively, according to Fidelity.

They were also less likely to see lack of internal sales and marketing capabilities as an issue and, possibly as a result, were less likely to be hiring business development officers.

Eighty-one percent of high-performing RIAs were not looking for business development personnel, compared with 66% for other firms.

– Related on ThinkAdvisor: 5 Steps to Replicate Your Best Clients


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