How Much Should You Spend On Marketing?
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Watch a video of Samantha discussing this topic.
A strong marketing strategy is essential to the success of any business, especially advisory businesses. However, many independent RIAs who recently broke away from a broker-dealer affiliation or a wirehouse may be feeling cost pressures when it comes to marketing expenses.
The good news? Marketing doesn’t have to break the bank. Sure, any business owner wants to be budget conscious with their business expenses. But you can run a successful marketing campaign on a shoestring budget.
I’m going to answer two questions:
- How much do advisors typically spend to market their businesses?
- How much should you be spending?
Michael Kitces recently came out with a great client acquisition costs study where he discovered that, among 1,000 respondents, the average advisor is spending about 1-2% of their revenue on marketing.
To put this into perspective, if a firm’s revenue is $500,000, they are spending only about $5,000-$10,000 on marketing initiatives. If a company is making $2 million in revenue, then they are spending about $20,000-$40,000.
Now that we have a baseline of how much advisors typically spend, let’s break down each area of spending.