Capitalizing on Digital Marketing Key to Growth for RIAs and IBDs

Capitalizing on Digital Marketing Key to Growth for RIAs and IBDsMarket volatility, increasing compliance pressures and a competitive landscape for wealth management professionals continue to challenge independent broker-dealers (IBDs) and registered investment advisors (RIAs), requiring them to find new solutions to generate business, according to a new report.

Broadridge Financial Solutions’ fourth annual financial advisor marketing survey reveals that 63% of advisors are actively seeking new clients, but inbound prospect requests apparently are not meeting practice demands, as only 43% of respondents are experiencing increases in inbound prospect requests compared to 59% in 2021. 

As such, confidence in meeting practice growth goals has declined somewhat. When asked about practice growth goals in the next 12 months, slightly more than half (52%) of respondents said they are either “very or somewhat” confident, which is down from 63% who said so in 2021.  

“It has been a challenging year for financial advisors, with many struggling to adapt to new compliance and regulatory guidelines, increased market volatility, and ongoing hiring and talent retention challenges,” notes Kevin Darlington, head of Broadridge Advisor Solutions. “Despite evidence that staying on offense with a sharp marketing strategy yields business growth, especially in volatile markets, we’ve seen advisors shift back to defense and fail to allocate the right level of time, money and effort to their marketing strategies.”

That said, Darlington adds that digital media usage is a bright spot and continues to show upward-trending success, as advisors “double down” on digital strategies to generate leads.

Defined Marketing Strategy

As to their marketing strategies, the survey found significant differences in outcomes between those advisors who have a defined marketing strategy versus those who don’t.

Overall, while advisors’ average marketing spend continues to increase—$17,433 in 2022, up from $16,090 in 2021—the percentage of revenue allocated to marketing is down to an average of 3.1% in 2022, compared to 3.6% in 2021. Moreover, the percentage of advisors reporting that their marketing budget is less than 1% of total revenue rose significantly to 30%, compared to 21% in 2021.

Yet, only 10% of advisors report being very satisfied with their marketing return on investment (ROI), down from 15% in 2021—which could come down to whether they have a defined marketing strategy.  

Despite higher spending on marketing, only 28% of advisors have a defined marketing strategy (up slightly from 26% in 2021). However, these advisors are far more likely to achieve better business outcomes than their counterparts without a defined marketing strategy, the findings show. In this case, 76% of advisors with a defined marketing strategy feel “somewhat or very” confident in meeting practice growth goals compared to only 43% of those without a defined strategy.

In addition, advisors with a defined marketing strategy have on-boarded more than two times the number of new clients in the past 12 months at an average of 41 new clients versus 17 for those without one. 

As to the challenges, 82% of advisors report that developing a marketing plan/strategy is the top challenge when it comes to marketing activities, followed by finding the time for marketing efforts (81%) and managing compliance (79%).

Social Media Usage

Meanwhile, the largest increases in marketing investments will be on digital tactics like websites and social media versus traditional channels like television or radio.  

In fact, advisor success in converting social media leads to clients is trending up, reaching 41% in 2022—an uptick from 34% in 2019, according to the findings. What’s more, 57% of advisors with a defined marketing strategy converted a social media lead to a new client, compared to 36% of those without a strategy. Not surprisingly, LinkedIn and Facebook are advisors preferred social media platforms, far outpacing other platforms, such as Twitter and Instagram.

Still, content marketing remains a challenge for advisors. Lack of time (39%) and uncertainty about the best approach (37%) remain the top barriers among those rarely or never sharing content.

At the same time, most advisors (61%) report that they feel their websites could be more effective in generating leads. That said, just 31% of advisors plan to spend more on their websites in the year ahead—which is the highest spending allocation among all areas reported.

Other top tactics include using digital marketing to expand their prospect pools. The percentage of advisors growing their business outside their locale continues to increase, with the findings showing that 27% of advisors are currently servicing non-local clients, up from 24% in 2021.

And leaning into the idea of featuring testimonials in their marketing, younger advisors are planning to take advantage of recent SEC marketing regulatory updates—registering at 43% of advisors under the age of 45 compared to 30% generally, according to the findings.

The survey was conducted by 8 Acre Perspective on behalf of Broadridge from Sept. 29–Oct. 10, 2022, among 401 registered financial advisors, divided primarily between IBD (52%) and RIA (43%) channels.

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