It has been a challenging year for financial advisors, with many struggling to adapt to new compliance and rules, increased market volatility, and ongoing hiring and talent retention challenges.
New York: Capitalizing on digital marketing in the USA is the key to growth for RIAs and IBDs; survey has revealed recently.
The fourth-annual financial advisor marketing survey by global Fintech leader, Broadridge Financial Solutions, Inc., reveals that 63% of advisors are actively seeking new clients but only 43% are experiencing adds in inbound prospect requests.
Increasing compliance and regulatory pressures, a competitive landscape for wealth management service professionals and market volatility continue to challenge Independent Broker-Dealers (IBDs) and Registered Investment Advisors (RIAs) and requires them to find innovative new solutions to generate business.
Despite evidence that staying on offense with a cutting edge 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," said Kevin Darlington, General Manager, Head of Broadridge Advisor Solutions.
"That said, digital platform usage is a bright spot and continues to show upward-trending success, as advisors double down on digital strategies and maximize the use of websites, LinkedIn and Facebook to generate leads, " he added.
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, only 10% of advisors report being very satisfied with their marketing return on investment (ROI), down from 15% in 2021. RIAs tend to allocate more to marketing, spending $27,000 annually compared to $9,7000 by IBDs.
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. Seventy-six percent of advisors with a defined marketing strategy feel confident (somewhat or very) in meeting practice growth goals compared to those who do not (61%).
In addition, financial advisors with a defined marketing strategy have onboarded more than two times the number of new clients in the past 12 months: an average of 41 new clients versus 17 for those without a defined marketing strategy. Eighty-two percent 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%).
Advisor success in converting social media leads to clients is trending up, reaching 41% in 2022, an uptick from 34% in 2019. Fifty-seven percent of advisors with a defined marketing strategy converted a social media lead to a new client, compared to 36% of those without a strategy.
Forty-one percent of advisors with a defined marketing strategy had a social media lead convert to a client, while the majority of advisors (61%) report that they feel their websites could be more effective in generating leads. However, 31% percent of advisors plan to spend more on their websites in the year ahead – 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 (27% currently servicing non-local clients, up from 24% in 2021), and younger advisors are planning to take advantage of recent SEC marketing regulatory updates, leaning into the idea of featuring testimonials in their marketing. 43% of advisors under the age of 45 compared to 30% generally.
Image: Broadridge