The key to growing any business often lies in how the company's products and services are marketed. A sound marketing plan is the growth engine behind a business and will shape how the world perceives that business and the uniqueness of its offerings.
Similarly, establishing the right price point for goods and services dovetails with savvy marketing and is often necessary to the very survival of a business. The "Goldilocks" theory of pricing dictates that finding (and periodically resetting) just the right price point is a must for any thriving business. Setting too low a price erodes profits, while setting prices at too lofty a level could scare away clients.
The latest AdvisorBenchmarking survey of registered investment advisors, which included 912 RIA respondents and was conducted online in May 2007, yielded some surprising results about advisors' marketing efforts. For the first time, we asked how advisors price their services and what changes, if any, are planned.
How RIAs Spend Their Time
Establishing a professional identity can be part of an advisor's overall marketing strategy. The survey found that 40% of respondents refer to themselves as "investment advisors" while 30% have assumed the title of "wealth manager." Those that dubbed themselves wealth managers indicated that, on average, high-net-worth investors comprised 60% of their client base. Wealthy investors are decidedly most advisors' primary focus, with minimum account sizes in our sampling of RIAs now averaging $421,000, up from $225,000 in 2002.
Although not an officially accepted title, more than one-third of advisors (34%) also noted that they are positioning themselves as retirement "coaches," which they see as a practical way to prepare for the much-anticipated Baby Boomer retirement rush.
While advisors recognize marketing as a key component of their businesses, actual time spent marketing dropped by one-third from the previous year, while hours spent on tasks related to business administration increased by 47%, and time engaged in research grew 150%. Advisors reported that an equal 10% of their days are now spent on the tasks of marketing, business strategy, and research (30% total), while business administration and client services combined eat up 37% of their time. Time spent on portfolio management also declined, dropping from 27% last year to 20% in the latest survey (see chart below).
What Is Marketing, Anyway?
