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Written by: Justine Young
There are endless perks to RIAs with small teams, like flexibility and your ability to add a personal touch to your service for each and every client. But there’s no doubt that your firm faces different challenges than the goliaths of financial advice.
For example, your clients get to know each and every face in your office, and really benefit from the “family” feel your RIA offers. But how do your prospects know about that tight-knit, hyper-personalized experience? Maybe you’ve got the service down pat, but your marketing budget and expertise are limited.
The good news is that you’re not alone. In fact, a recent report from McKinsey & Company showed that there are about 700 new RIAs sprouting each year.
Today, we’re outlining the top five most common marketing challenges facing small RIAs – plus the solutions you need to solve them.
5 Marketing Challenges for Small RIAs (and Their Solutions)
1. OPERATING WITH A SMALLER BUDGET
While some experts say RIAs should allocate anywhere from 4-10% of their budgets toward marketing, Barron’s reports that investment advisors typically spend in the 2-4% range.
Marketing budgets are often stretched thin even at the largest advisory firms – and the issue can easily compound at small, independent RIAs. Much of marketing requires both a money and time commitment, but with big marketing dreams, tight budgets and small amounts of free time, many advisors are left wondering where their dollars can have the biggest impact.
The Solution: Focus on low-cost marketing tactics – and put your money in your website
If you want to up your marketing game without adding too many zeroes to your marketing budget, you can focus on lower-cost marketing methods, such as client referrals.
Did you know that people are 400% more likely to become your client if they’re referred by a friend? Yet less than 11% of advisors ask for referrals. The best way to increase your chances of getting referrals is also the most obvious: Offer excellent service.
As far as where to put that precious marketing dough, it’s a good idea to invest in your website. Your firm’s website is your digital home, and likely key in your prospects’ decision to ultimately work with your firm or another RIA entirely.
One recent report showed that “76% of consumers look at a company’s online presence before deciding to visit it in-person.”
It’s important to invest in a solid, custom site that provides a great experience for your prospects and clients. Even something as seemingly small as website load time can make a huge difference! In fact, 40% of users leave a site immediately if the page takes more than three seconds to load.
When you put your money into your firm’s website, you can feel pretty confident that it’s working hard for you.
Related: 6 Easy Ways to Optimize Your Financial Advisor Website
2. KEEPING IT ALL COMPLIANT
We all know the mantra: “Compliance is king.” But I’d like to amend it to:
“Compliance is king. And costly. And time-consuming. And sometimes tough to get right.”
That’s become especially apparent in the wake of the SEC’s new Marketing Rule, which gives more marketing freedom to firms (such as use of testimonials in advertising), while also requiring more compliance oversight to ensure these new areas stay on the right side of the law. The SEC filed 760 enforcement actions in 2022 totalling more than $6 billion in fines. For small firms especially, RIAs can’t afford to err.
The Solution: Work reviews into the process
One of the easiest ways to avoid compliance errors is to create a repeatable and consistent review process. The more eyes you have on your marketing materials, the more likely you are to catch any regulatory errors.
This review process should always include your firm’s Chief Compliance Officer (CCO), as they are likely most familiar with recent SEC guidelines, such as the Marketing Rule – as well as compliance challenges specific to your RIA. In addition, connecting with a compliance consultant like RIA in a Box can help maintain compliance at a much lower cost than adding a full-time compliance officer to your team.
3. WORKING WITH LIMITED MARKETING EXPERTISE
When you see your competitors handing out swag, hosting events, publishing ebooks and creating custom podcasts – it’s easy to visualize your dream marketing plan. But how do you actually get started?
Many small firms have a small (or nonexistent) marketing team, making it difficult to turn marketing ideas into action. And, just like the financial world, marketing comes with a whole new set of jargon. From CTAs to SERPs, there’s a lot to learn – and not a lot of free time in your schedule.
The Solution: Work with an agency
It sounds like a cop-out coming from me, a content writer at an agency, but it’s true – agencies can provide all the expertise your firm needs to get your marketing journey started, at a fraction of the cost of hiring a marketing person in-house. You don’t have to take a crash course on all the acronyms, and you can trust your agency team to bring your goals to life.
Plus, marketing agencies handle the majority of the nitty-gritty, so you don’t have as big of a time commitment. Instead of spending your entire Friday writing that blog, you can spend 10-15 minutes discussing your thoughts and ideas – then hand over the writing task to someone else.
4. FINDING A NICHE
There are nearly 15,000 RIAs in the US, with that number increasing each year. One of the biggest struggles for RIAs of all sizes is differentiation – finding a way to stand out from the crowd.
Without a differentiator, there’s no way for prospects to choose between you and the advisory firm down the street. For a long time, differentiating yourself was as simple as “fee-only” and “fiduciary.” While those are important identifiers of how you do business, they’ve become so common that you just can’t rely on them to set your firm apart anymore.
The Solution: Think about what makes you weird
Especially in small firms, you have an opportunity to really let your personal passions shine in your marketing efforts.
For example, take Thomas Kopelman, who specializes in financial advice for millennial investors. Or Danika Waddell, who provides financial planning for women in tech 💪through her firm, Xena Financial Planning.
Think about what makes you weird, or what clients you really gravitate toward – is there something there that makes your firm special?
Once you find your niche – run with it! Your “something special” is what will make you memorable to clients.
If you haven’t seen it already, check out “The 6 Types of Niches for Financial Advisors” from Kitces.com.
5. MEASURING ROI
One of the most common questions we get as a marketing agency is, “Is it worth it?” In other words, will you see a concrete ROI on your marketing efforts?
There’s no cut-and-dry answer to this question, and many firms struggle to quantify their marketing returns – especially those that don’t directly lead to new clients, like blogs or newsletters.
The Solution: Keep it simple
As you begin your journey into marketing analytics, we suggest you start off with simple methods.
For example, if you send out a regular newsletter or prospecting emails, create a custom link to measure exactly how many people book a meeting with your firm through those emails. The best part? Custom links are easy and free!
Each RIA – regardless of size and resources available – has its own set of unique marketing challenges. By pinpointing your marketing goals and roadblocks, you can find the right solutions to keep your firm on track.
Related: How To Make the Switch From Universal Analytics to GA4