High-Growth Advisors Go All-In on Marketing: Broadridge

Customer acquisition rates vary widely among financial advisors, but "smart marketing" pays off, and those advisors who consider themselves to be "innovators" in leveraging technology are "reaping bottom-line benefits," according to the findings of a survey conducted for fintech firm Broadridge Financial Solutions.

The study, conducted in May by Boston Research Technologies, defined "growth-focused advisors" as those aged 25 to 49 who spent more than $5,000 on marketing annually and self-identified as "aggressively focused on adding new clients." Twenty-one percent of the 406 U.S. advisors surveyed were part of this group.

Growth-focused advisors averaged nearly twice the assets under management of their peers, at $297 million vs. just $154 million, according to the report. Forty-three percent of growth-focused advisors, meanwhile, were able to successfully acquire 20 or more clients over the past year, compared with only 16% for other advisors, Broadridge said.

"We're seeing a planned strategic investment in digital marketing among aggressive, growth-oriented advisors and firms," Kevin Darlington, vice president of Advisor Solutions at Broadridge, said Wednesday in a statement. "Advisors are already investing in and seeing success in organic social media marketing," he said, adding: "As it becomes increasingly difficult to break through the organic clutter, the natural next step is increased investment in paid digital advertising channels that can offer powerful targeting to new audiences and stoke the lead generation pipeline."

The most growth-minded advisors are "separating themselves from the pack in terms of new client acquisition rates," which he said were "even more than we suspected."

The most innovative, growth-focused advisors that were surveyed are "using digital channels to their advantage, growing a healthy inbound prospect pipeline and closing leads," he said, adding, however, that "too many advisors still need to secure the building blocks of their digital prospecting journey before savvier advisors swoop in first."

Initiatives including the optimization of websites to generate traffic from the right prospects and making it easy for those prospects to opt into future advisor communication "have never been more important to business success," he said.

Growth-focused advisors were more likely to achieve a higher level of AUM, spend more on marketing per acquisition, gauge marketing effectiveness in terms of revenue and be confident in their ability to meet their business goals, according to Broadridge.

Annual marketing spend among respondents largely corresponded with client AUM, with 55% of those with under $200 million under management spending under $2,500 and 70% of those with over $200 million in AUM spending more than $10,000, the company said.

Across all respondents, the average percentage of revenue spent on annual marketing was just 3.3%, and marketing spend was found to be more focused on new client acquisition (60% of respondents) than cross-selling of existing clients and family members (40% of them), according to the firm.

Most advisors surveyed spend marketing dollars within the same top four channels: website (76%), in-person events (57%), social media (45%) and customer relationship management systems (44%), Broadridge said.

But going forward, advisors indicated they intended to increase their investments in digital marketing, it noted. Of those surveyed, 19% said they planned to increase investment in social media, followed by webinars (14%) and digital media advertising (13%). Twelve percent of advisors also planned to hire new in-house marketing staff, a trend that Broadridge said was especially prevalent among advisors with more than $200 million in AUM (20% of them).

The Tech Innovators

Only 11% of advisors considered themselves to be "innovators" when it comes to leveraging technology in their practice, and only 18% rated themselves as very confident in meeting their practice growth goals over the next 12 months, the firm said.

But the self-identified innovators are already seeing strong benefits, according to the survey's findings. Fifty-seven percent of innovators indicated their websites have generated leads, compared with just 37% among all respondents, Broadridge said.

However, "visibility into the prospect pipeline varied," the company said, noting just 9% of innovators were unsure if they had secured leads via their websites, while 41% of "technology laggards" weren't sure, it said. Innovators seemed to be converting marketing leads into clients more efficiently — doing so within 3.4 months on average, compared to 4.3 months for laggards.

Of those advisors that market with social media, 59% of innovators had gained a lead that became a client, much better than the 19% of laggards who had achieved the same thing, Broadridge said. Among all advisors who had generated social leads, Facebook and LinkedIn were the platforms most likely to yield success.

The average cost per new client acquisition, meanwhile, was $929, according to the survey. That's an amount "likely to be economically viable for advisors, considering the average annual and lifetime value of a full-service wealth management client," Broadridge said.

Separately, Broadridge said it acquired Shadow Financial Systems, a provider of multi-asset class post-trade solutions for the capital markets industry. The purchase, which closed Tuesday, "builds upon Broadridge's current industry leading post-trade processing capabilities by adding a market-ready solution for exchanges, inter-dealer brokers and proprietary trading firms," Broadridge said. Shadow also adds capabilities across exchange-traded derivatives (ETDs) and cryptocurrency, it said. The purchase price wasn't disclosed.

— Check out Should Advisors Copy Ken Fisher's Marketing Strategy? on ThinkAdvisor.