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Should Advisors Copy Ken Fisher's Marketing Strategy?

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In a recent interview with ThinkAdvisor, investment manager Ken Fisher dished on why Fisher Investments has such a “robust” advertising and marketing budget. The firm targets ad spending equal to about 6% of yearly revenue — for an advisor bringing in $1 million, that would mean roughly $60,000. 

Popular blogger and planner Michael Kitces took to Twitter to share his views on advisor marketing — the average firm spends less than 2% of revenue on sales, he says — spurring a dialogue on advisor marketing. 

The Twitter thread focused on two related issues: Why Fisher spends so much, and whether there is value to be gained by following his lead.

To the first question, Kitces quipped: “I can think of $114B reasons…”, referring to Fisher Investments’ current level of assets. 

RIA consultant Brad Wales then probed: “Curious, what’s your take on what’s driving the low <2% average? Lack of desire to actually spend the money? Lack of familiarity/comfort with how to prudently spend it? Both? Or perhaps something else?”

Kitces answered: “Inability to figure out how to deploy it effectively. If your ROI on marketing was near-0%, you wouldn’t spend much, either. :) Believe most of that 2% is client appreciation events and things that are still only even quasi-marketing.”

Andres Garcia, CFA, of Zoe Financial chimed in: “The industry has been outbound sales driven. Senior folks at large RIAs grew up in that world and thus don’t really buy into marketing driving their biz. I found 6% of Rev to be surprisingly low for Fisher.”

Kitces replied: “Yeah I suspect it was actually higher for Fisher in the past. Marketing is one of the few areas in advisory firms that has real economies of scale. 6% of Fisher revenue is still an AMAZINGLY large marketing spend for an RIA. :)” replied Kitces.

Customer Acquistion Cost (CAC) 

Tren Griffin, a former private equity investor who now works at Microsoft, said, “It should be possible to calculate the cost of acquiring each $1M increase in net AUM. Has anyone calculated that?”

We’re actually working on some advisor research right now to estimate CACs. It’s VERY under-researched in our space,” Kitces answered. 

Advisor Bill Nickles noted: “Given the retention rates in our industry it makes even less sense firms don’t spend more. I’m guilty as well but getting better.”

Indeed when you do the math on the lifetime value of a client, it’s mind-boggling we don’t spend WAY more on marketing for most advisory firms,” said Kitces.

The discussion also turned to related topics like economies of scale and industry competition. In addition, marketer Sarah Grillo asked about ThinkAdvisor’s coverage of Fisher, “Did anyone else notice in that article he also was quoted as saying this: “… the ads that work the best both among men and among women don’t have any women in them”.  Wait, did he REALLY say that?

Fisher did indeed say that in the interview: “Our culture says you’re supposed to [include] women [for diversity]. But in fact, the ads that work the best both among men and among women don’t have any women in them. It’s been true that it’s very hard to come up with an ad that includes women that pulls as well among either men or women as ads that are just of men.”

As to the reasoning behind this bias, Fisher said he’s perplexed: We don’t know. One of the [things] that’s true about a lot of this stuff is that it’s hard to know ‘why.’ [Research-population studies show] that ‘why’ is the most important thing. But it’s also just about the hardest thing to get to the truth of.”

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