Every financial advisor has talked with clients about budgeting. It's not about restrictions, you tell them. It's about priorities.
Your budget is a tool to declare what's important to you and allocate your resources in a way that aligns with those prioritized values.
The funny thing is that when it comes to marketing for growth, financial advisory firms, large and small, don't always heed this advice. In fact, in an impromptu (and totally unscientific) LinkedIn poll I conducted last week, a whopping 57% didn't have their marketing budget yet approved for the new year.
If you want to grow your firm in 2024 — whether organically or through M&A — then you have to allocate your marketing budget to your growth goals. Even in many enterprise-level firms, marketing is often considered an expense rather than a growth driver. So it's no surprise that most firm marketing budgets resemble a wish list for the year instead of a strategic, prioritized plan.
If you're still working through your marketing budget for 2024, here are five essential considerations to ensure that your spending is intentionally aligned with your business growth objectives.
1. Start with a clean slate.
Unless you were 100% thrilled with your outcomes from 2023, that year's budget isn't the right template for the new year. While it may feel like you're reinventing the wheel, starting your 2024 marketing budget from scratch ensures that you're asking the right questions and not just filling in the blanks.
A clean slate can keep you from carrying over activities that may not be progressing you toward your growth objectives, and just get funded year after year because … well, that's what you've always done.
But when you're trying to achieve goals you've never reached before, you'll have to engage in strategies you've never tried before. And prioritizing new things usually means deprioritizing things that are not working (spoiler alert: That's a good thing).
2. Know your total.
The question I get most often from small advisory shops, major RIAs and wealth platforms is this: How much should we spend on marketing? While there's no one answer, there are a few tried-and-true ways to approach the question.
I recommend establishing a marketing budget based on a target percentage of overall operating budget or as a percentage of projected revenue for the year.
According to Deloitte's 2023 CMO Study, companies allocating based on operating budget spent an average of 13.6% on marketing — accounting for 8.7% of revenue. In financial services, marketing accounted for about 8% of revenue.
For technology companies, marketing accounted for a whopping 21%. For most advisory firms, allocating between 9% and 15% of operating budget to fund marketing is appropriate. If you create and sell a technology product, think about allocating 13% to 18% to marketing.
3. Prioritize outcomes, not activities.
Most budget templates are dictated by finance and have pre-set categories — staffing, advertising, events, technology, sponsorships, etc. With a format like this, it's very difficult to understand at a glance what outcomes your budget is trying to generate.
The solution? Categorize your budget by desired outcome.
