Fidelity’s 2014 RIA Benchmarking Study found that RIA firms that have a formal marketing and business development plan; write and share internally and externally a shared corporate story; and have a clearly defined referral process outperform their advisory firm peers in client growth, AUM and revenue.
Fidelity Clearing and Custody calls these firms ‘Marketing Leaders,’ since they report that they spend 33% more (2.4% of revenue versus 1.8%) than the other advisory firms in the survey on business development and marketing. That investment, however, yields 40% more client growth, 23% more asset growth and 20% more revenue growth.
In an interview, Mathias Hitchock of Fidelity pointed out that of the 400-plus advisors (the majority of whom custody at Fidelity) in the survey, only 30% said they had marketing plans, about the same as in the 2011 study. However, the Marketing Leaders report that they’re “doing well; seeing results” which suggest that “there is so much opportunity” for other advisors to follow their lead, Hitchcock said.
Why don’t more advisors take advantage of the opportunity? “Many advisors’ core competency is working with clients and managing money. They don’t have a background in marketing, and they don’t have the resources” to invest.
Then what has motivated the leaders to invest in marketing? Hitchcock says a variety of factors are in play, including lessons learned from the financial crisis, after which many firms “recommitted to investing in marketing and business development” since they learned that what the market giveth in growth, the market taketh away.
So the market leaders succeed not only because they have a higher-quality formal plan, but also because “the plans had goals and assigned leaders; with deadlines.” Those goals, Hitchcock said, “can be at a high level — asset growth, monthly net new assets — or around specific initiatives,” such as developing their centers-of-influence (COI) strategy — but the key is to assign that goal to a specific person.