It can be tough to determine which form of marketing will be the best fit for you and your advisory practice – particularly given the myriad means of promoting your wealth management business. You want more people to know your legacy, your strength in financial planning, and your expertise around managing money. But you’re not sure how to get in front of more people, increase your AUM, and ultimately grow your revenue.
Investing in your marketing strategy [read more about marketing for advisors] must be a well-informed decision; there is no “one size fits all” approach to wealth management marketing. And while adopting the most “popular” marketing strategies may seem a best option, new research indicates that this may not be apt to yield the type of results your wealth management business is seeking.
Recently, Kitces Research Survey on Advisor Marketing revealed that many of the more ubiquitous marketing strategies – social media and other general digital networking, creating relationships with Centers of Influence (COI) - may not be ideal for every advisor, and to factor in the Client Acquisition Costs (CAC) around your marketing efforts.
CACs encompass the total hard dollars or the “time cost” (e.g., the number of hours the advisor spends to get a client, multiplied by the cost of their time based on their own compensation. Kitces holds that assessing CACs is a best practice for determining how well a marketing strategy is working to meet your individual needs.
Kitces further stresses that figuring out the best marketing strategy for your wealth management firm largely depends upon which qualifiers you consider “best.” Your strategy will depend on how much you value and take under advisement the available popular strategies, CAC, and median marketing efficiency. Pursuing each one of these strategies produces vastly different results, so assessing your own values may aid in making these crucial decisions.
A highly experienced Chief Marketing Officer who has seen various marketing campaigns, advertising budgets and social media projects through completion can help make these decisions easier for you.
As an Outsourced Chief Marketing Officer to a large network of independent wealth management firms across the nation, we at Select Advisors believe that one of the most important decisions Financial Advisors need to make around their marketing is to first determine which of the following two routes is most suited for them:
Marketing strategies for financial advisors can essentially be broken down into two primary categories. Deciding which route to take can take a lot of the confusion off your plate.
The two categories are:
Organic
vs.
Paid
In this article, we’re going to shed light on the difference between organic and paid marketing for advisors, and help you determine for yourself, based on your goals, budget and timeline, which one is best for you.
Organic Marketing is successful brand promotion achieved without the use of advertisements. From blog posts to humanized social media content, organic marketing heavily relies on developing a story around what you stand for to encourage robust brand awareness and ultimately pull your target market in to contact you for their needs. In essence, with organic marketing, you are building and cultivating your own highly targeted audience from the ground up. As an analogy, with organic marketing, YOU are the one throwing the party and inviting others to join. You get to curate the exact experience your invitees will have, from the guest list, all the way down to the music selected for the event. It’s 100% your choice, customized like a glove to how you want to organize this event.
Organic marketing is a grassroots effort for letting the world know who you are. This is YOUR party and you’re inviting others in to see it!
Organic Marketing is the equivalent to you doing all the legwork to organizing your very own unique event, tailoring the guest list, experience, food and music all the way down to exactly what showcases who you are.
On the other end of the spectrum, Paid Marketing, can also take on a variety of forms, like Google ads and sponsored social media posts, and has the potential to bolster your wealth management business in front of a larger built-in audience.
With paid marketing, you are basically attending someone else’s party; whether it is Google’s, Facebook’s or a local publications’ cocktail event, you are simply an invitee, hoping that your attendance to the event will allow you to share as many cards as possible with anyone else there. The benefit to paid marketing is that it takes away all the legwork for throwing this party. You simply put on your fancy shoes and attend. The downside? You have absolutely no ownership of the guest list; it fully belongs to the host. They just allow you to interface with their loyal attendees. And there’s a hefty price tag for attending (and attending again to speak with the same people).
So which route should you embark on? Should you put in the legwork for throwing your own event (organic marketing), or should you simply buy a ticket and attend a party already in production (paid marketing), with the goal of “rubbing elbows” with people who may qualify as prospects for you?
The answer to that depends on your response to my question for you: What do you want marketing to do for you? Because “Growth” for one firm may have a different definition than “Growth” for another firm.
One firm may be desperate to get its feet off the ground and may be in the red month after month. According to Kitces, the ability to attract a critical mass of prospective clients can be a struggle resulting in an attrition rate as high as 70% in the first three years. In such a situation, investing in some paid marketing may not be a bad idea. You can call this “butts in the seat” if you’re holding seminars or no one has ever heard of you. In such situations, “Paid” marketing may be your fastest way of getting a life-line going for you.
However, just because you’re paying Google or Facebook to market you and “Pay per Click” doesn’t mean you should get your “Billion Dollar” AUM goggles on. When it comes to paid advertising, you should be prepared to kiss a lot of frogs; think of it like online dating. You’re going to be encountering lots and lots of the wrong type of people, even if you set your filters right. Furthermore, just because you’ve got some budget for advertising doesn’t mean it’s a guaranteed sale, even if you do get in front of the right people.
Once people visit your site or fall for your “downloadable booklet”, do you look the part to gain more of their attention? Or do you constantly have to invest dollars in ads to focus on the law of big numbers?
Furthermore, if you’re going down the route of paid marketing, be prepared for competing with some of the largest financial firms out there bidding for the same “Keywords” you are. Good luck trying to bid for keywords like “Wealth Manager near me” or “who are the top financial advisors in my area.” We wrote about this that Fisher Investments spends at least $300,000 MONTHLY just on digital ads. Are you prepared to compete with Fisher?
If you’re not, or if your response to the question of “What do you want marketing to do for you” is that you’re looking for a more sustainable, long-term approach, and systematic way of building out the foundation to drive your own prospects towards your brand may, and to build brand equity into your firm name, then organic marketing is the better strategy for you.
With organic marketing, YOU decide in a very discerning way who makes it to your door, and what you want your firm to stand for in the long run. Keep in mind that with organic marketing, you are looking at a venture capital-like J-Curve effect; more time spent and invested in building the foundation of your business. At Select Advisors, we call this the 3 B’s of organic marketing: Beautification, Brand Awareness and Broadcasting of a Message.
What is the timeframe for organic marketing to work? It really depends on where you’re starting from. You have to build your foundation until you get to a tipping point and your message is so consistent and attractive such that the outside world can’t wait to attend, if you use the party analogy. You can’t FORCE people to want to work with you, so you have to keep improving the recipe for a good party until you have a waitlist for who wants to attend.
Similarly, until your message, engagement and follower base is so robust, you’re going to keep providing value and content to your audience. Then, we get to a point when all the leg work you have spent begins to pan out. In the interim though, you are actually BUILDING something; you are building a brand, a business, a story. None of this time is going to waste.
When you do organic marketing RIGHT, and constantly cultivate, beauty, and broadcast your brand, you get to a point when it becomes smooth sailing; People know you, you become a household name, you’re always on top of people’s mind, and you spend ZERO dollars on advertising. You simply share your thoughts and your ripe and deep network follows.
At Select Advisors Institute, we want you to know the facts before committing to your next marketing strategy. Organic marketing offers many benefits of which any business–large or small, on a tight budget or rife with cash–can take advantage. If you have the means to pursue the paid marketing route, however, that certainly has its benefits, too. Businesses that are able to do so often find that organic and paid marketing can nicely complement one another when correctly done. Either way, considering the CAC may offer a new view into how to pick marketing strategies that will best align with your firm’s time, money, and personal values.
As aforementioned, as your business grows, your marketing will likely need to change. Kitces recommends investing in more scalable and efficient marketing strategies to grow your advisory business. No matter the best strategy–or combination of strategies–Select Advisors Institute will work to find the perfectly tailored marketing initiative for your wealth management business.