How Much Should You Spend On Marketing?March 4, 2020

by Samantha RussellAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarilyrepresent those of Advisor Perspectives.

Watch a video of Samantha discussing this topic.

A strong marketing strategy is essential to the success of any business, especially advisorybusinesses. However, many independent RIAs who recently broke away from a broker-dealeraffiliation or a wirehouse may be feeling cost pressures when it comes to marketing expenses.

The good news? Marketing doesn’t have to break the bank. Sure, any business owner wants tobe budget conscious with their business expenses. But you can run a successful marketingcampaign on a shoestring budget.

I’m going to answer two questions:

1. How much do advisors typically spend to market their businesses?2. How much should you be spending?

Michael Kitces recently came out with a great client acquisition costs study where he discovered that, among 1,000respondents, the average advisor is spending about 1-2% of their revenue on marketing.

To put this into perspective, if a firm’s revenue is $500,000, they are spending only about $5,000-$10,000 on marketinginitiatives. If a company is making $2 million in revenue, then they are spending about $20,000-$40,000.

Now that we have a baseline of how much advisors typically spend, let’s break down each area of spending.

Budget line item #1: Creating and maintaining a strong website – $1,500

The internet is changing the way people find you and your business. Literally thousands more people per year are meetingyou for the first time “virtually” by Googling you, visiting your website, and checking out your social media presences thanwill ever step foot in your office. In fact, 57% of internet users say they won’t recommend a business with a poorlydesigned website on mobile.

When you're deciding whether or not there’s room for a new advisor website in your budget it’s a non-negotiable. Whenchoosing a hosting provider here is a handy comparison of some of the industry’s top advisor website providers toconsider. When vetting and researching keep some of these key questions in mind when talking to the sales rep:

Cost – ask if they offer discounts for being part of industry associations like NAPFA, FPA, XYPN, etc. Additionally,they may offer price breaks for annual plans vs. monthly plans.

Who owns the content if I decide to switch providers?

What analytics integrations do you offer?

Any other integrations with leading industry providers for CRMs, etc.?

How easy is it to upkeep and add new content to my website after it’s launched? (Hint: using a content managementsystem (CMS) will make updates and blogging incredibly easy for you and your team to execute without a designer ordeveloper.)

What are some examples of your previous work?

Will my site be mobile friendly?

Will my website be archived per SEC (17a-4) standards and how will I access those archives?

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Budget line item #2: CRM – $35-$325/month

This budget line item is somewhat questionable. Your website and your live events are marketing expenses, but your CRMis just a business operation expensive. However, it is still a recurring line item that you’ll want to budget for. Depending onthe functionality you're looking for and the number of seats you’ll need pricing can range anywhere from $35 to $325 permonth. Learn more about some of the top CRM providers for financial advisors, their pricing, pros and cons.

Budget line item #3: Hosting and attending live events/networking – $2,500

Whether you are hosting events or attending them, events and conferences are great ways to network and connect withlike-minded professionals. Not only are you meeting new people, it will also deepen your understanding of the financialindustry, so this is a win-win situation! There are hundreds of events especially for financial advisors that you can attendeach year, and each one offers something new and unique that can really benefit you and your team members.

How much should advisors be spending on marketing?

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Growth-focused firms should typically be spending about 4-10% of their revenue on marketing. The average advisor isspending about 1-2% of their revenue on marketing. You may be wondering what I mean by growth-focused. When a firmis focused on growth, it is going beyond just the website for marketing purposes. It is spending its budget on a variety ofdifferent initiatives, but mostly on two things: personalization and automation. Why? Because those are the two things thatare going to propel your growth. So let’s break down the budget for those two marketing areas:

Marketing personalization

Now that you have a website, creating consistent content is going to be key to becoming a thought leader and generatingnew leads through organic SEO. A great way to get started creating custom content is by blogging.

I know, I know — right now you’re probably saying to yourself, “Who has time to blog? I certainly don’t!” If you haven’talready be sure to check out my last article where I shared a secret five-step content strategy to create 10 pieces of contentfrom one. And if you still don’t have the time to create one piece of content every month or every other week here is agreat comparison of content providers for financial advisors.

Creating custom content for your niche audience is all about honing in on the solutions that your firm provides tospecifically address the problems or pain points that your clients have. For example, if you’re working with a lot ofexecutives, write a series of posts about executive compensation packages and capital gains taxes, etc. This is anexample of producing content that's uniquely specific to your audience.

Marketing automation technology

Marketing automation technology is all about spending money on things that will help you automate your processes sothings don't slip through the cracks. You need a lot of content and touchpoints for this to work. My experience working withhundreds of independent RIAs has shown this is a line item that usually falls to the wayside. But this is the line item that isgoing to save you the most time by enabling you to automate all of your marketing efforts.

I’ve seen advisors cobble together multiple platforms to “automate” their social media, email marketing, content creation,etc. But having a software, like Lead Pilot, that you can rely on to not only archive all of your marketing per SEC (17a-4)standards but also schedule out all your marketing efforts in a streamlined and strategic manner is going to be incrediblykey for advisors in 2020 and beyond.

Sample budget

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When you sit down to map out your marketing budget, think about where your firm needs the most help and where you canleverage other tools and content to drive more leads and conversions to your site. It’s all about getting the most out ofwhere you put your marketing dollars. Below is an example of a sample marketing budget if you're making $250,000 inrevenue and you want to spend 5% on marketing initiatives.

Samantha Russell is the chief marketing and business development officer at Twenty Over Ten (a digital marketing andwebsite development company for financial advisors). Samantha helps financial advisors create digital marketing strategiesthat produce explosive growth through website development, content marketing, SEO, social media and video.

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