Amid a backdrop of higher costs and intense competition, many RIAs are seeking new tactics and strategies to remain competitive and drive growth. To achieve these goals, many are considering methods such as mergers and acquisitions, bringing on new advisors, and revamping their sales team and process. But according to industry experts from McKinsey & Company, many of the leading competitive dynamics shaping the RIA industry today may call for a renewed focus on one area in particular: marketing strategy.

McKinsey has identified four main trends driving competition in the RIA channel today: 

• Diversifying services to increase client lifetime revenue
• Competing for the highly profitable HNW segment
• Offering solutions through employers to acquire new clients
• Introducing new compensation models to attract advisor talent

A more thoughtful and deliberate marketing strategy can improve an RIA’s chances of success in these areas. Recently, Capital Group Private Client Services and Capital Group’s RIA Advisory Board met with consultants from McKinsey to discuss focus areas for RIA marketing strategy. We captured the insights from that conversation to help advisors understand how to refine their marketing approach, ensure it is aligned with their organization’s top goals and consider specific tactics that can benefit them in the months ahead.

Align your marketing strategy with your overall business objectives

According to McKinsey, when you exclude market appreciation, some 70% of RIA growth is driven by attracting new advisors — either from other RIAs or channels like wirehouses and bank advisors. The other 30% is driven by organic client acquisition. With the help of effective marketing, the most successful RIAs are growing on both fronts.

Marketing determines how advisors are perceived by their target audience, other advisors and the industry. According to McKinsey, RIAs with the highest growth through advisor expansion as well as organic client acquisition are also those who excel at articulating the firm’s value proposition and points of differentiation.

“Marketing is more than just advertising. This seems like an obvious point, but it’s one that advisors often seem to forget,” says Samantha Gammell, head of marketing at Capital Group Private Client Services. “The most important thing about developing an effective marketing strategy is to recognize that marketing exists to serve the firm’s core business goals. Done correctly, marketing occupies a seat at the leadership table, where the focus is entirely on building the overall business.”

Once you’ve established core goals, there are some fundamental principles to help you think strategically and intentionally about the role marketing can play in building your business. One of these is defining your unique message and how you differentiate from other providers. It is oft-given advice, notes Gammell, and yet surprising how many RIAs do not think this through before they embark on a marketing campaign.

Another key principle is consistency. Once you develop your message, it should be steady and recognizable in every channel where you have presence — including your website, social media and marketing pieces. It should also extend to the way your teams communicate your firm’s value proposition in direct conversations with clients and prospects. This level of brand consistency is the basis of brand identity. You can adapt your message for different audiences and reach out to them in different ways, but the firm should project a unified identity wherever and however it communicates.

The who, what, where and how of a marketing plan

At a more tactical level, Gammell notes that it’s useful to develop a marketing plan on the framework of who, what, where and how.

• Who is my target audience? What are their interests and needs, and how can I position myself uniquely to help them?
• What message do I need to communicate? What do I need to share with my target audience to get them on the pathway to becoming a client?
• Where and how should I deliver that message? This is not a single-touch issue, but rather a coordinated process. Where do I find the people that I want to deliver this message to? Will I network at my children’s school or at the nonprofit board I sit on? Will I host an event or connect on social media? These ideas are not mutually exclusive. You should consider carefully how these tools will work together and how marketing, the advisors and the sales team will collaborate to move a prospect through the funnel.

Since most RIAs seek organic growth rather than buying leads or clients, according to McKinsey, lead generation strategy is critical. Some firms focus on using digital marketing to achieve better marketing ROI than they would through custodian referrals or purchased leads. To optimize lead conversion, top firms use consistent roles and responsibilities across the funnel — for example, lead generation, lead qualification and handover, closing, and client servicing and retention. This tactic allows team members to build specialized expertise and should be more efficient in the long run.

Existing clients are an important piece of the puzzle

According to McKinsey, wealth advisors should look for more ways to institutionalize their approach for seeking referrals and be more willing to ask clients for referrals. If you are serious about growing your business, it is no time to be shy. Research from Capital Group’s Pathways to Growth: 2023 Advisor Benchmark Study shows that referrals remain the greatest source of new business — representing 87% of new client acquisition.

Client surveys should also be part of your marketing toolkit, Gammell says. Some advisors may be reluctant to survey their clients because they don’t want to be a burden on them. However, surveys have become so ubiquitous now that most people are used to them. You can make a virtue of it, essentially telling your clients with full transparency that your goal is to offer them the highest level of customer service and you need their help to do so.

Quick surveys with tactical intent are the most effective. For example, you could email a brief survey to get feedback after an event or stage a couple of questions in your client portal about a specific online feature. These are pulse checks that help you make business decisions in the moment.

Periodically you could run a more sweeping survey to test client satisfaction, which is highly subjective. “We do one every two years,” says Gammell. “It’s a longer form survey, and it’s designed to measure trends in sentiment over time. There are around 20 questions, and it takes about 10 minutes to finish. We ask the client about their different experiences with the firm, with their advisor and with the services they interact with.”

A side benefit of surveys is that they help to connect the firm and the advisor in the client’s mind. RIA marketing strategists constantly need to figure out the right balance between marketing the firm and marketing the advisor. The right balance will vary from firm to firm depending on their key business goals. “We know from observing investor behavior that the client ultimately will make decisions based on the advisor,” notes Gammell. “But the firm behind them matters, especially when things go wrong. So you need to get the balance right, and the most effective firms know how to do that.”

Measuring success

Marketing should be a measurable activity. Ultimately, the right key performance indicators (KPIs) are business metrics based on the objectives you established before starting any sort of marketing effort. For example, key business metrics might include gain in net new households, new AUM, retention rates or satisfaction rates. Client lifetime value is another important metric, one that is harder to measure but worth the effort. This KPI nets out the total cost of acquiring and retaining a client against their total lifetime revenue stream — that is, their true economic value to the firm.

These types of metrics take time to play out. In the meantime, you can review shorter term KPIs to gauge the effectiveness of your marketing plan. These will typically be activity based and near term — essentially leading indicators that vary by channel.

For example, if you host an event, how many people did you invite, who came (the ratio of attendants to invitees), did they bring friends and how long did they stay? If you are using email, what are the click-through rates? If you set up an online questionnaire, how many people completed it?

These are specific channel measures that you can use to understand the health of a specific engagement. Overall, your true marketing KPIs are those important long-term business metrics.

Focus on effective marketing

Increasing competition in the wealth channel makes an effective marketing strategy a matter of urgency. No matter how creative you are, the only good marketing strategy is the one that serves your firm’s key business objectives.

As you think through your marketing strategy, don’t hesitate to reach out to Capital Group’s RIA support team, who are committed to helping RIAs achieve their goals, and can connect you to additional practice management resources.