RIAs looking to grow their businesses might want to consider opening their wallets — just a bit.
That's according to the 2014 Fidelity RIA Benchmarking Study from Fidelity Clearing and Custody, the division of Fidelity Investments that provides clearing and custody to registered investment advisors, retirement record keepers, broker-dealer firms, banks and insurance companies.
The study found that firms spending one percent more on marketing and business development can translate to a 20 percent increase in revenue growth. Giving marketing priority, and then devoting both time and money to it to make it work, could lead to returns that substantially outpace the investment
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Compared with "other RIAs," those that the study characterized as "marketing leaders" are 42 percent more likely to prioritize growth, dedicating more resources and spending 33 percent more (2.4 percent of their revenue, compared with just 1.8 percent) on business development and marketing.
Marketing leaders are also seeing 40 percent more client growth, 23 percent more asset growth and 20 percent more revenue growth than those "others." Why? Putting time and money into marketing and business development boosts marketing leaders' "ability to plan effectively, ingrain their firm story and apply a disciplined referral process," according to the study.
Devoting all that time and attention to getting the word out about one's firm means firms are putting more effort into the process — everything from marketing plans and deadlines to goals and progress — and allow results to drive compensation for business development staff.
In addition, marketing leaders also don't rely on a single method of marketing. Both leaders and "others" cite communications, collateral and events as their top three marketing activities, but 58 percent of leaders are using all of them, rather than relying on just one or two. They're also all over social media and likely have been there for two years or more, showing that they jumped on the bandwagon early in search of innovative ways to reach new clients.
They're clear on why their firms stand out from the rest, too, having refined their message to their market(s), and have also put time and attention into developing a referral pipeline that they nurture. They also reciprocate, returning the favor of referrals and paying enough attention to their referral sources to send them appropriate leads.
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