Marketing and the RIA Firm’s Inorganic Growth Strategy 

Marketing and the RIA Firm’s Inorganic Growth Strategy

If you are a fan of the RIA Benchmarking Study series from Charles Schwab like we are, you’ll be familiar with these categories of growth for RIA firms, organic and inorganic. The role of marketing and how it can support a firm’s inorganic (acquisition or adding advisors with a book) strategies is the area we’d like to highlight. We find most firms think of applying marketing to their organic goals and don’t often consider fully how marketing can support the inorganic side. 

First, let’s define the spaces, and discuss how marketing typically fits in each one.  

Sales for Organic 

Advisors adding new clients and growing their AUM (organic growth) is often an activity-based approach that is more akin to sales. Anyone who has cold-called for clients knows the drill: x number of cold calls per day should yield y number of leads per week and z number of sales per month.  

Client referrals avoid (or at least augment) the cold-calling methodology, and as an advisor’s business matures, the ratio between referrals and cold-calling skews towards referrals. 

Marketing is not going to be the sole driver of leads in this scenario. Marketing is necessary and it can support the firm’s organic efforts, but it is not likely to generate sufficient activity in and of itself for an advisor, or the firm, to hit their performance goals. And given the personal connection and level of trust necessary between a client and the advisor/firm, you can see how marketing alone cannot replicate that. 

This is not to say that marketing should be ignored. The top-performing firms use marketing tactics like newsletters, articles/blogs, and social media to educate clients and prospects. And they also think through their segmentation to develop ideal client personas and subsequently the firm’s unique value proposition. While not stated in the Schwab report, we would expect that the segmentation is more sophisticated than “HNW/UHNW,” not least of which because that’s what almost every advisor says. For our clients, it is always more sophisticated than that. 

There are many firms that have made it to 2024 solely on referrals and they have no or at best a rudimentary online or digital presence. As the principals look towards succession, they will need to develop an online presence simply to attract younger advisors and clients who have grown up in the digital world. Long-term awareness marketing campaigns and brand building can handle this, but those types of campaigns are not designed to generate leads per se

It is best to consider the expense for awareness campaigns the same way you consider rent – just a cost of being in business. 

Business Development for Inorganic 

It is an entirely different story when it comes to inorganic growth. M&A or recruiting advisors to join the firm requires the firm’s reputation, culture, and presence to be out in the marketplace in advance of any serious discussions with potential joiners. This is more like business development, and “marketing” excels in this scenario. This also represents a shift in thinking, particularly when recruiting advisors – in fact, just the term “recruiting advisors” conjures up visions of headhunters, resumes, and HR departments. Applying marketing techniques in this area is very effective. 

The types of marketing campaigns to support advisor recruitment typically focus on firm culture, training, mentoring, work/life balance, and testimonials from current advisors go a long way here. 

We have a client doing advisor recruitment that also weaves in campaigns directed at the ideal advisor personas, characteristics that are embodied in certain types of candidates. Examples include being a D1 college athlete (ties nicely to their “coaching”), or experience as an attorney. 

The other thing they understand is that these are perpetual campaigns. Their recruitment is perpetual, and the marketing supporting it needs to be as well. 

Another excellent use of marketing tactics is in advance of an acquisition or a push into new geography where the firm may not be well known. The goals of this type of marketing effort might include influencing the community at large to have positive feelings about the firm or to put the firm on the local advisors’ radar in that area. This can range from a very simple awareness strategy to something that is much more sophisticated. If you think about the functions of reputation or crisis management, this is similar, just more proactive and without the crisis.  

These campaigns generally have more discrete timeframes and are often separate from their existing marketing efforts. 

 The Schwab survey reports nearly half of firms have pursued inorganic growth over the past five years. And those that did saw a 300 bps higher compound annual growth rate over the same period. Not surprisingly, half are looking to do so in the future. 

Marketing Technology 

The survey also indicates which technology systems had the greatest impact on ROI. Portfolio management and financial planning systems were in the top three, as you might expect. The other technology in the trio (in second place) is a CRM or Client Relationship Management system. In our world as marketers, we prefer combination CRM & Marketing Automation systems. 

The marketing automation portion provides the platform for creating and tracking marketing campaigns, managing client (or advisor) personas, and publishing content. It also adds in the ability to build sophisticated automations that can educate, gauge, and help qualify a prospect. When the CRM portion is utilized, tracking the entire journey from prospect to client is possible, with ROI attribution to the marketing campaign that brought them in. In the RIA world, we often use the marketing automation function only for campaigns on the organic side. On the inorganic side, which doesn’t require portfolio management, financial planning, or customer vaults, we utilize the combination system. 

When Should You Call Us? 

JQLaCorte creates and executes marketing programs for RIA firms, asset managers, and other financial advisory and financial services firms. If you are an RIA firm with a rudimentary online presence, or a firm pursuing inorganic growth strategies, we can help.  

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