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Want to be a Billion Dollar RIA? Follow These Tips

It stands to reason just about every RIA with $100 million of AUM aspires to be an RIA with $500 million of AUM and just about every RIA with $500 million of AUM aspires to be an RIA with $1 billion dollars under management or advisement.

What has to happen to make these goals realities?


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Marketing in the 2020s

It stands to reason marketing financial advice and services in the 2020s will be substantially different than in past decades. That’s because there has been a paradigm shift in the control of information about financial firms and their advisors.

In the not too distant past, investors had to talk to advisors to learn more about them and their firms. This created a major competitive advantage for the brand firms. In fact, in a survey that is more than 20 years old showed 62% of investors said they felt more comfortable selecting an advisor from a brand name firm because they had heard of the firm. A more recent survey showed only 16% of investors had this same bias. 

Today, investors can use the Internet to find and research advisors. They can visit websites, google search names, and check online compliance records in a matter of minutes. What they see on the Internet will determine who they contact for interviews. Who they contact impacts who they select. 


The Virtual Marketing Revolution

If “digital marketing” is using SEO and SEM to build visibility on the Internet, website traffic and leads, then “virtual marketing” is the ability to interact with leads, prospects, and clients without any face-to-face contact.

Just about every advisor in America is comfortable with virtual servicing. That is, an advisor’s best client relocated to another city and retained the relationship with the advisor. This created a virtual “servicing” relationship. 

The bigger challenge is to replace traditional face-to-face marketing with virtual marketing and no face-to-face contact. Based on feedback from several advisors, effective virtual marketing is a new ballgame. Advisors are delivering the same information in a different format.

The biggest issue seems to be virtual marketing dilutes the impact of the advisors’ relationship and sales skills. Virtual marketing is more about sharing information and making prospects comfortable enough that they select financial advisors they have never met. This may be a winning alternative for investors who struggle to make objective decisions when they select financial advisors.  

Some advisors may blame the Coronavirus for this game-changing shift in the way investors select financial advisors and firms. On the other hand, no one really knows how long the virus will impact the marketing practices of financial advisors or the long-term consequences. But it does stand to reason the Internet is a delivery system for information about financial advisors and that is not going to change. In fact, it is more likely the Internet will have an even greater impact on the marketing practices of financial advisors in the future. 


Superior Services vs Superior Marketing

Are some RIAs bigger than others because they provide superior advice and services? That is certainly a possibility because bigger firms can afford to hire more professionals or pay more money to the financial professionals who invest assets in the securities markets.

However, more analysts and portfolio managers or more expensive professionals do not necessarily translate into better results for investors. In particular, when a firm uses passive management to invest client assets in ETFs. This definitely levels the playing field between firms. In fact, this causes some firms to struggle with differentiation.

Bigger firms view marketing as a safer, more consistent bet than delivering superior performance year-in and year-out. Performance has too many non-controllables compared to marketing systems that are also based on numbers, but the numbers are more controllable.


In-House vs Outsourcing

It stands to reason, smaller firms will have fewer in-house resources that have digital marketing expertise. There are two primary issues. Building a digital marketing platform requires several different types of expertise including some in-depth knowledge about the financial service industry.

Plus, digital marketing professionals are relatively expensive because demand for their services far exceeds the supply of professionals who understand financial advisor business practices and digital marketing.

Consequently, even the largest firms may outsource some of their requirements to a digital marketing agency with experience in their industry. The agency will supplement the work of in-house professionals or do the work for them because there are higher and better uses for the time of the internal staff.


The Lead Generation Question

Another distinguishing characteristic between larger and smaller firms is who is responsible for producing leads that the firms’ advisors can pursue. Smaller firms tend to make that the financial professionals’ responsibility. Consequently, if they want more marketing, they just hire more advisors.

Then it is up to the advisor to use obsolete outbound marketing tactics (cold calling) to initiate contact with investors to produce his or her own leads and prospects.

On the other hand, bigger firms can use inbound marketing tactics to produce leads for their advisors. This is based on investors using the Internet to find, research, and initiate contact with financial firms and their advisors. Advisors need websites to make this type of marketing work, so firms use inbound marketing and not professionals.


Reach the Right Investors

When advisors use outbound marketing tactics like cold calling, they can control the number of calls they make each day. They also control who they call so it is reasonable to assume they only call investors who have a high probability of meeting their firms’ minimum requirements for new clients. On the other hand, anyone can find advisors on the Internet and initiate contact, whether they are qualified or not.

This is the principle reason why most digital marketing tactics are persona-based. That is advisors use digital marketing to reach the right types of prospects. In a simple sense marketing focuses on the keywords that are input into the search engines when investors are seeking advisors, information about advisors, or financial information.

The content on the Internet and the content on financial advisor websites should have a connection. For example, if an advisor wants to reach business owners on the Internet there should be content on the advisors’ websites that relates to the financial needs and interests of business owners. 

The more specialized this form of marketing the more successful it will be. For example, a financial advisor targets not only business owners but business owners who are close to retiring and selling their businesses. Call it the right timing, but this liquidity event could result in a new client with millions of dollars available for investment.  

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