Registered investment advisor firms spend, on average, 2 percent of their total revenue on marketing and business development, excluding the cost of a marketing staff if they have one, according to the 2014 Fidelity RIA Benchmarking Study. And while three-fourths of the firms say marketing and business development is a top strategic initiative, about a third say their lack of available budget is holding them back.
“You got to dedicate some time and some money,” said David Canter, executive vice president and head of practice management and consulting, Fidelity Institutional Wealth Services. “You have to either spend the money with outsourced providers or hire folks.”
Nearly one-third (32 percent) of firms plan to to increase their marketing dollars on a consistent pattern over the next five years, while 39 percent plan to keep their spending in line with business growth.
In its survey of 411 RIAs, Fidelity segmented out a subset of respondents deemed “High-Performing Firms,” those in the top quartile in terms of compound annual growth over a three-year period, as well as profitability and productivity (revenue per employee).
The firm found that high-performers are 1.7 times more likely to have a unique story that is consistently communicated by their staff to influential professionals and their clients.
“We do lots of events with advisors, and we ask ‘Tell me what makes you different?’” Canter said. “‘We’re fiduciary; we’re fee-only wealth management, holistic wealth planning; we provide superior clients service.’ When you hear a lot of these words, they really tend to blend together, so how do you stand out in a crowded marketplace?”
High-performing firms are also twice as likely to have a target client profile, and they make sure that potential sources of referrals know what it is.
These firms are also four times more likely to have a process for getting those referrals, including communications with attorneys, accountants and other business leaders.
They are also twice as likely to keep data on referrals up-to-date; in other words, they use their customer relationship management (CRM) systems to track their pipeline.
“Who’s giving me a referral?” Canter said. “How often do they give me a referral? How do I measure the flow from these centers of influence?”
All of these lead high-performing firms to close new referrals in two or fewer meetings.
To get started in marketing and business development, Canter recommends firms consider the “Rule of 15,” where a firm looks at their top 15 clients.
“Think about those and use those as a starting ground to get 15 more clients like them,” Canter said. “So what do you do to serve them that makes them replicable?”
Another tool is Fidelity’s Referral Edge offering, a database that helps advisors dynamically mine for prospects that have interlocking relationships with clients or COIs. The database searches publicly available information, such as press releases, SEC filings, and Department of Labor filings.
