U.S. consumers spent more time on their mobile devices than watching TV last year for the first time, according to research firm eMarketer. With consumers glued to their phones, competition for their attention is fierce and financial firms are feeling the pinch.
Connecting with a potential client was far easier in an analog world. Print mailers and phone calls often did the trick. Today, “17 to 30 marketing touches” are required, said David Edwards, President and Wealth Advisor of New York-based Heron Wealth.
In response to this new reality, financial services firms have stepped up their spending, plowing $15.5 billion into digital marketing this year, according to eMarketer, a 76% increase from just three years ago.
About half of those dollars went to display ads, while 43% was directed at search and the remaining six percent was used on other platforms, including social.
According to a Broadridge Financial Solutions marketing report, financial advisory firms are upping their investment in online marketing, with 19% planning to increase investment in social media, and 13% investing in more digital media advertising.
Before an RIA decides where to focus its digital marketing spending, it needs to determine if it will enlist outside help, go it alone, or pursue a combination.
If enlisting outside help from a consultant or digital marketing agency, an RIA can expect to spend as little as $250 per month to more than $7,500 per month. For a few hundred dollars a month, a firm could use a turnkey service such as Snappy Kraken, FMG Suite or Lead Pilot.
For $1,500 or more, a firm could recruit a marketing agency or digital marketing specialist for custom services, including advertising, marketing, social media management, and PR.
Total marketing budgets should range from eight to 15% of revenue, per industry executives and surveys. However, not all of that goes to digital advertising. It also covers website content, traditional paid advertising, events, and other outreach efforts.
To maximize returns, firms should deploy a mix of digital advertising and stay current with users’ preferences.
With any advertising, establishing an image and perception are top priorities. When it comes to hiring a financial advisor, consumers want an expert, said Marie Swift, President and CEO of Impact Communications, which advises financial services firms on digital strategy. (Swift counts Heron Wealth as a client.)
To portray that image, she advises firms to steer clear of traditional digital ads like banner ads or sponsored search, and instead use targeted advertising to spotlight their expertise on display in a blog, white papers, and social media. “Go for things that feel like information and education,” she said.
Swift suggests that firms buy ads to boost their posts on Facebook and LinkedIn, directing consumers to valuable content.
In some markets, Facebook is still a powerful tool to reach prospective clients. In addition to buying Facebook ads, financial advisors can also create Facebook groups for clients and potential customers and participate in other relevant Facebook Groups.
In the hyper-competitive New York City market; Edwards estimates there are 40 other wealth managers within two blocks of his Midtown office. So, his team uses specific channels for different topics and messaging. For example, it posts informational videos valuable to investors on YouTube, and highlights the firm's culture on Instagram.
As with any service provider, testimonials and reviews can help wealth managers land new clients. However, SEC rules prohibit financial advisors from seeking out endorsements or publishing them, although these policies are being reviewed. However, it is allowable for a satisfied client to post a review on an independent, third-party website such as Google Reviews.
Some firms, like Swift’s, are full service with marketing, advertising, and PR support, while smaller outfits offer a la carte services, like SEO and social media management. She advises financial advisors to invest between three and 10% of their gross revenue on marketing, including digital.
Whether going it alone or not, advisors should have a working knowledge of digital marketing, said Swift. Professional organizations offer free and low-cost resources, including the NAPFA’s new “Marketing Playbook” webinar series, that can provide useful primers.
RIAs with strong track records in digital marketing say advisors need to plan marketing campaigns and study where their customers spend time online, regardless of how much they are spending.
"The last thing you want is that your customer is hanging out on LinkedIn and you’ve put all your money in Facebook or Twitter. If you don’t know the customer persona and where they’re going to hang out, it is hard to know where to focus," said Patrick Donohoe, President and CEO of Paradigm Life.