THE NEW LOOK OF RIA MARKETING BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING

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1 THE NEW LOOK OF RIA MARKETING BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 1

2 INTRODUCTION Registered Investment Advisors (RIAs) are the fastest growing segment in the advisor industry, as well as the only segment that has increased its market share since the 2008 crash. However, this growth is largely the result of an influx of advisors from other segments, and RIAs now face the challenge of standing out amongst their fellow advisors as well as do-it-yourself investors who are using roboadvisor services. Standing out has become more of a chess match, and many firms are leveraging technology to help improve their marketing practices and client visibility. To find out more, Back Porch Vista conducted a study of RIA clients insight on technology and how it can help firms differentiate themselves. BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 2

3 CHALLENGES RIAS FACE 43% of RIAs primarily target Generation Xers, while only 33% of RIAs are continuing to target Baby Boomers. RIAs have faced a lot of new challenges in the past decade. One of the largest challenges is how to keep up with the rapid pace of technological advances within the industry. Smartphones and smartphone apps have changed client expectations about the amount of time it takes to find information, while the emergence of social media has also shaped client communication methods. Moreover, rise of the robo advisor has shaken RIAs traditional operations. With each of these arrivals, RIAs have had to adapt new strategies to provide their clients and their investors with the best service and insight possible. To add to all of the variables technology has added to the industry, RIAs have had to adapt to a changing customer base. Many RIAs have enjoyed working with the Baby Boomer generation (51-69) over the past couple of decades, but this generation is beginning to pass the torch to the next generation and no longer brings home the same income. Their financial needs are also changing as they start the next phase of their life. Many RIAs have already recognized this changing of the guard and are now targeting Generation Xers (35-50). In fact, according to a study by Jefferson National, 43% of RIAs primarily target Gen- Xers, while only 33% of RIAs are continuing to target Baby Boomers. 1 With this generational changeover comes a shifting prioritization of advisor services. The Baby Boomers primary concern now is gaining retirement advice, while Generation Xers want to know how to pay for their kids education. On the other hand, Millennials want more information on subjects like student loans and purchasing real estate. Each of these varied needs provides a unique challenge for RIAs to best serve their clients. 2 Prioritization of Advisor Services Student Loans and Real Estate Paying for Kids Education Retirement Advice MILLENNIALS GENERATION X BABY BOOMERS 1. Jefferson National: Eight Out Of Ten RIAs Serebrin, F. Top 10 Priorities for RIAs for 2016 BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 3

4 WHAT ROLE DOES MARKETING PLAY IN RIA GROWTH? Seven out of ten RIA firms do not have a marketing plan in place. The average RIA firm spends around 1.8% of their revenue on marketing and growth efforts. However, leading RIAs spend 2.4% of their revenues on marketing and growth. David Canter, Executive Vice President and Head of Practice Management and Consulting at Fidelity Institutional Wealth Service explains, You have to dedicate time and money. You either have to spend the money with outsourced providers or hire folks. 3 A 2014 Fidelity Benchmarking Study also found that nearly one third of firms planned on ramping up their marketing budget over the next five years. While increasing an RIAs marketing budget can help with growth, there should be a purpose behind the increased budget allocation. RIA firms should have a plan or specific goals they hope to obtain before they move forward on raising the budget. The Fidelity Study revealed that seven out of ten firms do not have a plan in place to determine what they want their marketing efforts to accomplish. Developing a marketing plan is an important step to ensure that everyone understands the firm s future vision. So where are RIAs focusing this spending increase? According to a survey by BenefitsPro, the top focus of spending for RIAs is on growth, with 38% of firms listing this as their top initiative. The second largest initiative was investing in technologies that could benefit the firm. One out of four RIAs viewed this as their top priority, as many believe that technology is a vital part of their plans to best serve their clients while keeping ahead of the competition Britton, D. Most RIAs Spend 2% of Revenue on Marketing. 4. Only 5 % of Registered Investment Advisors... One out of four RIAs are investing in new technologies to implement into their firms. BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 4

5 To dive deeper into the effects of incorporating technology into marketing efforts, we looked at a study conducted by Jefferson National. The study compared the difference between High-Earning Advisors (earning more than $500K per year) and all other advisors. Results show that 90% of High- Earning Advisors are adding new technology in their firms over the next twelve months, as opposed to 75% of all other advisors. In addition, 82% of High- Earning Advisors have a strategy to enrich technology integration within their firm, versus only 61% of all other advisors. Finally, 80% of HEAs are changing marketing strategies to attract the next generation of clients, as opposed to only 60% of all other advisors. This study clearly shows that while all advisors see technology as an integral part of their firm s success, there is a clear contrast between High Earning Advisors and their average peers. 5 Image Source: Business Wire 5. Jefferson National: Eight Out Of Ten RIAs... BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 5

6 HOW DO RIAS VIEW THEIR MARKETING? Many firms have some level of marketing process in place. However, the 2014 Fidelity RIA Benchmarking Study suggests that only 5% of respondents are advanced in marketing areas. To gain more insight on how RIAs view their marketing efforts, BPV reached out to its RIA clients. When asking firms to assess their marketing effectiveness on a scale of one (least effective) to five (most effective), only 6% of firms answered five % 2. 16% 3. 42% 4. 26% 5. 6% A sizable 68% of firms answered the same question at a three or below, indicating that over 2/3 of RIAs believed their marketing was average at best. We believe this indicates that many RIAs believe they have the potential to enhance their marketing capabilities. How Effectively Are Firms Using Technology? BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 6

7 WHAT MARKETING TECHNOLOGIES ARE BEING USED? RIAs are using numerous forms of technology to help drive their marketing efforts. According to our survey, the three most common platforms are company websites, blogs, and LinkedIn pages. Over 70% of RIAs currently use these forms of technology to connect with their customers. According to our survey, 77% of respondents are actively using a company website. This is important because as technology continues to shape consumer preferences, the company website is usually the first place a potential client will go to gain information about a firm. For clients who conduct advisor research based on search engine results, online success is for the company website to show up on the first page of any search engine, as most prospects won t go beyond page one to find the information they are seeking. It s therefore important that advisors not only have a website, but also stay mindful of their Search Engine Optimization (SEO), or the process of maximizing visits to your website by ensuring the return rate by the search engine is higher for your site than for the competition s. Perfecting SEO can be pivotal to getting your firm listed on the first page of search engines, increasing the odds that a prospect may navigate to your website. 6 We re also seeing a large number of advisors (77%) attempting to increase their thought leadership capabilities through blogging. Topics can range from addressing current economic conditions and predicting upcoming trends, to non-financial topics such as writing about a local sporting team s last game. According to Gail Graham, CMO of United Capital Financial Advisers, some of her highest open rates on her material are on topics such as raising grandchildren and how to meditate. Companies who blog should produce new content on a regular basis to keep their clients engaged. 7 Finally, 71% of RIA respondents are leveraging LinkedIn as part of their marketing functions. This site is where prospects are likely to go to find out more information about a specific RIA or their firm. It is also a place where RIAs can reach a lot of prospects by posting their blogs, interesting articles, or being active in popular LinkedIn groups within the community Graham, G. Three Steps To Modernize Your Marketing. BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 7

8 WHAT S PREVENTING TECHNOLOGY ADOPTION? There s a learning curve. We are a small firm, so it is hard for us to spend time digging into a CRM and how to use it. While the vast majority of advisors are using at least one form of marketing technology, only 48% of respondents are engaged in over 4 out of the 13 technologies listed in the above wordcloud. So what is preventing RIAs from increasing their use of technology? We found that one out of three advisors felt they lacked the time and the resources to successfully integrate technology into their firm. An additional 20% of advisors felt they lacked the insight to fully understand and use technology to its full capability. An advisor from our study made this apparent when asked about the challenges of incorporating technology within their firm: There s a learning curve. We are a small firm, so it is hard for us to spend time digging into a CRM and how to use it efficiently. Other RIA concerns included compliance issues, as well as a perceived lack of fit advisors believed technology had within their primary client demographic. WHAT CAN WE IMPROVE? In addition to understanding overall usage patterns, we also wanted to gain insight on where firms wanted to improve their marketing and technology efforts. The two most common responses were Customer Relationship Management (CRM) and social media. Our BPV survey indicated that around one out of three advisors wanted to improve their Customer Relationship Management, and one out of four advisors wanted to improve their social media presence. It is no surprise the importance of successfully utilizing these tools considering that both CRM and social media tools frequently involve direct communication with clients and prospects. The emergence of technology and social media has completely changed the way clients communicate with companies, and one advisor from our study was especially aware of these changes when asked how the firm could improve: Definitely communication with clients and marketing efforts. We know we are behind the 8 ball on this. We do a little marketing but not like we should be. People now have the ability to gain information in the blink of an eye, and they have come to expect that they can get answers to all of their questions in a rapid manner Anthony, J. What the Rise of Robos Should Teach You... BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 8

9 CONCLUSION There is no shortage of challenges that today s RIA faces. It is hard to keep up with new trends in technology thanks to rapid improvements in technology. However, these challenges can present opportunities for firms that are willing to utilize the latest platforms to cut through the clutter of the industry. With competition ramping up in the industry on a daily basis, technology and marketing can be vital in aiding RIAs growing their business. We know there simply isn t enough time for advisors to meet with clients, develop their business, manage clients investments, build a website, keep up with LinkedIn, and water the plants. That s why we help you focus on the most important part of your business: your clients. With decades of experience in investing and marketing communications, our relationship team is always available to assist your needs. Find out more at BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 9

10 SOURCES Sanduski, S. (2015, May 27). 5 ideas from RIA marketing mavens. Retrieved from BLOG09/ /5-ideas-from-ria-marketing-mavens Britton, D. (2014, December 17). Most RIAs Spend 2% of Revenue on Marketing. Retrieved from most-rias-spend-2-revenue-marketing Anthony, J. (2014, October 2). What the Rise of Robos Should Teach You About Marketing Your RIA Firm. Retrieved from financialservicesmarketing.com/rias/what-the-rise-of-robos-shouldteach-you-about-marketing-your-ria-firm/ Only 5 % of Registered Investment Advisors Feel Advanced at Marketing, Business Development, According to Fidelity The 2014 Fidelity RIA Benchmarking Study (Graphic: Business Wire). (2014, December 17). Retrieved from home/ /en/5-%-registered-investment-advisors-feel- Advanced Jefferson National: Eight Out Of Ten RIAs And Fee-Based Advisors Expect Their Firm s Profitability To Increase in Next 12 Months. (2015, June 17). Retrieved from Nationals_First_Annual_Advisor_Authority_Study.html Serebrin, F. (2015, December 8). Top 10 Priorities for RIAs for Retrieved from Graham, G. (2015, October 6). Three Steps To Modernize Your Marketing. Retrieved from BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 10

11 CONTACT US: Local Toll Free KNOXVILLE: 9202 S. Northshore Dr. Suite 300 Knoxville, TN SHREWSBURY: 595 Shrewsbury Ave. Shrewsbury, NJ ORLANDO: 801 N. Orange Ave. Suite 730 Orlando, FL This document is illustrative and educational and is not a specific offer of products or services. DENVER: th Street, Suite 306 Denver, CO backporchvista.com The opinions expressed are as of the date written and may change as subsequent conditions vary. This paper is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader. Copyright 2016 by BPV Capital Management. All rights reserved. BPV CAPITAL MANAGEMENT THE NEW LOOK OF RIA MARKETING 11