In a recent interview with our founder Kalli Fedusenko, Michael Kitces shared his expertise on how financial advisors can approach marketing strategically to fuel growth. Kitces provides insights that resonate across the industry. Here’s a breakdown of his advice, with practical takeaways for financial advisors who want to optimize their marketing efforts.
Kitces emphasizes the need for advisors to see marketing as a critical component of their business. He encourages advisors to integrate marketing into their operational model rather than leaving it as an afterthought. Kitces observes that advisors often struggle with "feast or famine" cycles due to inconsistent marketing. Regular marketing efforts can stabilize growth and prevent the need for reactive marketing when business slows.
Financial advisors typically spend around 2% of revenue on marketing—a figure that pales compared to other industries where marketing spend ranges between 8-15%. Kitces points out that advisory firms often invest time, rather than dollars, in marketing. He suggests advisors view their time spent on client acquisition as a marketing expense. In practice, Kitces found that advisors pursuing growth spent between 6-10% of revenue on marketing, aligning more closely with successful firms in other sectors.
One of Kitces' key recommendations is for advisors to pick marketing channels that fit their personal skills and interests. Advisors who enjoy writing might focus on blogging, while those who thrive in front of an audience could explore webinars or live events. Kitces notes that firms do well when they choose tactics that feel natural and engaging to them. This approach can turn marketing into a source of energy rather than a drain.
Client acquisition costs can be high, averaging around $3,000 for each new client in Kitces' research. Advisors must factor this into their strategy and consider how to optimize these costs, especially if targeting clients with smaller asset bases. Kitces points out that this challenge is why many advisory firms maintain minimum asset requirements. Without carefully managing acquisition costs, advisors may struggle to achieve profitability in their early years.
High retention rates are common in advisory practices, often ranging from 95-97%. Kitces advises against over-investing in retention, as most firms already have strong client loyalty. Instead, he suggests maintaining excellent service without overextending resources. For firms aiming to serve the next generation, Kitces recommends a thoughtful approach, noting that the costs of marketing to younger clients may outweigh the benefits.
Kitces observes that larger firms ($5 billion+ in AUM) are moving towards centralized marketing strategies, often investing in lead generation platforms or large-scale content marketing. These firms can scale client acquisition more efficiently, allowing them to sustain rapid growth.
By following these insights from Kitces, financial advisors can position their practices for sustainable growth while overcoming the challenges of client acquisition and retention. But implementing these strategies can feel overwhelming—especially if marketing isn’t your strong suit. That’s where Kalli Collective comes in. As specialists in financial advisor marketing, we create personalized, data-driven strategies that help you stand out and connect with your ideal clients.
Ready to elevate your marketing and make it a seamless part of your business? Contact us today or join the conversation on LinkedIn with @KalliCollective and #GetSavvy! We’re here to help you build relationships that fuel growth.
Watch the replay of A.U.M.™ - Kitces on His 2024 Marketing Research Report
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