You're listening to “Financial Advisor Marketing”—the best show on the planet for financial advisors who want to get more clients, without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal.
James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.
James: Financial advisors, I have a fantastic guest for this week's podcast episode. We're going to talk about marketing and a marketing report. It's a fantastic 108-page PDF. It's, of course, no one other than Michael Kitces. Michael has been a huge influence on my career. I consider him the number one financial planning thought leader, influencer, whatever cheesy term you want to call it, in this space, period. It’s remarkable to me that despite being in the industry and financial advisor space for 10-plus years, Michael and I have never really done a podcast or anything together. [01:06.4]
Michael: No? I don’t know if we haven’t.
James: It's crazy, but this is going to be it and I'm so honored to have him here. We're going to talk about the 2024 Kitces Marketing Report, which you can find by googling that, the Kitces 2024 marketing report or study. It should be the first result. You'll know you're in the right place when you see the title. It's how financial advisors actually market their services. It's 108 pages, again, just so you know you're in the right place. It is chock-full of valuable information and I cannot recommend it enough. That's why I'm so glad to have the man himself here to talk about it. So, Michael, thank you. Talk a little bit about yourself. Introduce yourself for the few who don't know you.
Michael: Awesome. I appreciate that. Thank you, James. Michael Kitces, Chief Financial Planning Nerd at Kitces.com is the formal title. We are a team of nerds. We've just decided to own it. We not only provide professional development content for financial advisors—how to get better at financial advice, where you get a lot of CE for pretty much anything you can possibly need CE for—and how to be more successful, where we run a lot of practice management programs, and research around advisory marketing and productivity and technology and the like. [02:14.5]
I also work up other hats. I'm head of planning strategy for Buckingham Wealth Partners, which is our advisory firm. I'm a co-founder of XY Planning Network and AdvicePay, fpPathfinder and New Planner Recruiting. So, I wear a lot of different hats, kind of come with a lot of different lenses for the advisory world. But in our discussion today, this study is one of four that we do on a rotating basis over a two-year cycle, so every six months, we put out a new study, one on advisor productivity, one on technology, one on wellbeing, and then this one on marketing, which just came out in the first half of 2024. For folks who are looking as well, Kitces.com/marketing will also get you there direct, but googling for it works pretty well as well. We try to be good with our Google SEO game. [03:00.7]
James: And we'll talk about that a little bit, too, because SEO and content marketing appeared several times in the study. What do you think are some of the most important findings? Just things that advisors need to take away. We'll get that off the table first. That way, there's value front-loaded in the podcast.
Michael: There are a couple of things to me that are interesting of what we see from this study and have the repetition of it that we've done over the years. The first is, I would say, by and large, most advisors grossly underestimate their marketing costs in the first place.
If you look at the typical advisor’s P&L, the average advisor spends about 1–2% of revenue on marketing. It's not a terribly high number, and I think a lot of that just comes from how we've all been trained as advisors, or most of us who have been in it for any period of time, which is the way you get clients is you go out there and you find people, and you get to know them and they decide to do business with you. Networking and centers of influence, and seminars and education, all the things that we've learned over the years to get out there and be present in our communities and build relationships and bring on clients, and that's fine and well and good. We'll talk a little bit more probably later about particular tactics and how they show up. [04:15.8]
What it means for most advisory firms is that a huge portion of their marketing expense is basically their advisor compensation, which we had to put in the bucket of my advisor comp, what I have to pay my team to serve my clients well, when, in reality, for a lot of firms, 20% of their advisor comp is actually business development time, which means, if I was going to kind of true up your profit and loss statement, it should go in the marketing category. If I move it down there, what you find pretty quickly is that a lot of advisory firms really spend more like 10% of their revenue on marketing and sales, and they're not very efficient at it. [04:54.7]
A lot of firms will, when you do that reconfiguration and you say what I spend on marketing is the stuff on the marketing line item of my P&L, and maybe 20% of my advisor compensation, because 20% of my time is going towards business development, and you divide that by how many clients you actually got in the past 12 months. You come up with these numbers of $3,000 per client, $5,000 per client. Some are $7,000 to $10,000 per client. That's the total cost of the business to get one client, and that's a lot of money.
Now, the good news is, when we work with clients have 90-something percent retention rates over several decades, the math works pretty well, but I think this is also why a lot of advisory firms find that when you've been doing it for some period of time, you start implementing minimums of things like $250,000 or $3,000 fee minimums we find are very, very common, and not coincidentally, we find that the average cost for an advisor to get a client is right around $3,000 when you put in both the hard dollar spend and the value of their time. [06:08.8]
So, we've all kind of converged in the space where we make our minimums about what it costs to get a client in the first year and a) it gets a high number, and b) it anti-scales. One of the most striking things we found is that as advisory firms grow, their cost to get clients actually goes up.
James: Yeah, I've seen it, too. Yeah, anecdotally. Yeah, that’s interesting to me.
Michael: I mean, ideally it's supposed to go down, right? They'll put it into some words, “We're scaling. We're bigger. We have more marketing resources to pull in the firm.” It should go down, but it actually goes up, which is why a lot of us also raise minimums as our firms grow. It's like somehow I grew this business getting anybody who had a pulse and could fog a mirror, and now that I've been 10 years successful, I'm supposed to have all these economies of scale. I feel like I'm losing money if I don't take anyone that has at least 200,000 of assets, 500,000 of assets. Sometimes we move even higher than that. [07:03.8]
It's because so many of us build these strategies around our time, right? “I go and do business development,” and that means the bigger the practice, the more valuable your time is, because the more revenue you manage, and the more expensive your time is, the more expensive it is to go, get clients.
So, as firms grow and move up market over time as they tend to do, most traditional advisor marketing approaches, end up with an anti-scaling effect, where the marketing gets more expensive as the firm gets bigger, because the time gets more expensive, and then they have to raise minimums because otherwise it's not worthwhile to take small clients when your time is very expensive—except you raise your minimums, then it becomes like a like a spiraling self-fulfilling prophecy where I raise my minimums and now I have to spend more time to get really big clients that are harder to get, which makes them really expensive to get, so I really need to raise my minimums to afford the hot, more expensive clients that I only need because my marketing time got more expensive in the first place. It just kind of spirals upwards in challenging ways that ultimately we see advisory firms tend to flatten their growth as they grow as well. [08:16.0]
So, in an ideal world, we grow and scale up, and our marketing costs become cheaper and we're gaining economies of scale, and in practice, one of the most striking things we find in our study is that, basically, the exact opposite happens and our time becomes a giant bottleneck that squeezes down the growth of the firm.
James: Do you think it is good advice to tell newer advisors to focus on the most efficient strategies from day one? Because I guess the problem that they run into, when I'm just talking to them, is I don't feel comfortable saying, “Look, go all in on SEO and content marketing and podcasting and all this stuff on day one or year one, simply because you're not going to see a return from that for a long time.” How do we make that better? [08:59.2]
Michael: Yeah, look, I think of this in kind of two parallel tracks. There's stuff that works faster that's either time-intensive or can be expensive in the long run, and there are things that work in the long run that tend to be cheaper but require a long run to get there. Some examples in that context. Look, good old-fashioned cold calling still works. Cold calling, door knocking, if you're -
James: Yeah, that was number two I think.
Michael: - that espouse that. We still see solid numbers from it. Now, you spend a lot of hours, and the success rate is horrifically low, but you know what? If you're going to spend 40 hours a week and do 1,000 calls, and you get a fraction of a percent hit rate, you might actually be getting a couple of prospects a week and a couple of clients a month, and that's better than most advisors. That's actually a lot better than most advisors, if you're getting several clients a month. [10:00.8]
So, brutally difficult, incredibly time-intensive, not terribly pleasant, but, hey, when you're in your first year or two or three and you have a lot of time and not a lot of clients, and not to be harsh, but the cost of your time is not terribly high when you don't have very many clients and revenue yet, at least from a business perspective, it really is cost-effective to do super time-intensive things, cold calling, cold knocking, just aggressive general networking, right? We join our chamber of commerce and business networking meetings and the like.
In the modern world, there's even a couple of others that we see now that are starting to show up in that vein. The various online lead generation platforms out there. Ramsey’s SmartVestor programs, SmartAsset, SmartAdvisor programs, Zoe Financial and the like, right? If I've got some dollars to spend and not just time to spend, those also can pick up growth quite quickly and expedite activity. [10:59.2]
The challenge is these, these, these are expensive in the long run. Either I pay outright for lead generation, particularly for a lot of the programs that cost revenue sharing dollars to it. Variable Cost doesn't hurt much up front, but it is expensive over the long run when you pay revenue shares. Time might be cheap upfront, but it gets expensive when you keep doing time-intensive strategies year after year.
I'll contrast that with strategies that tend to have very compounding effects in economies of scale. Almost anything that is niche-oriented, where you build a brand around a particular offering in a particular capability, in a particular clientele that you work with and get known for, there's all sorts of ways then that we can amplify that. We can get really good at SEO around the segment that we're trying to serve. We can get really good at building newsletters or social media presences or educational offerings that become lead generation funnels and pipelines that we build ourselves. [11:56.6]
Now, the caveat for those is it takes a long time for that flywheel to get going and to pick up some momentum. You can get something from a lot of those strategies in six or 12 months, but the reality is that, I mean, I've seen having founded multiple businesses over the years, it's usually three years before you really see momentum. You might see some activity in year one, and you see a little more activity in year two, and then all of a sudden, in year three, you get more growth than one and two combined. In year four, you get more growth than one, two and three combined, and you're going, Where was all this in the first two years when I really needed it? It was not going very fast.
So, you can almost think it as there's marketing that we do to get activity now and there's marketing that we do to plant seeds for the future, and the seeds that we water and grow ourselves tend to be a much more cost-effective way to get trees in the long run, not to overuse the analogy. But either some people start with very slow watering seeds and then don't survive long enough to see them sprout, or, really, what I see happen most often in our business is we're so desperate to get clients when we launch—because I need the revenue, because I told my spouse I'm going to try this for a while, because I'm in an advisory development program that says I have to have this much money by this many days or years or I'm not going to qualify my contract right then—immense pressures when we're getting started to make things happen fast. [13:20.3]
The reality is fast approaches tend to be more sales-based than marketing-based, and we build a sales-based business-development style and culture that becomes a burden around our neck later because it doesn't scale as we grow and our time gets more expensive—so the thing that works for us at the beginning becomes the anchor around our neck later if we can't at least figure out how to reinvent it.
Relative to your initial question, I mean, the ideal I would tell someone who has at least some latitude and flexibility about how they're approaching their marketing in the first years is, I would plant as many long-term marketing seeds as I can, because you will thank me in the long run, and I would do as many of the short-term strategies as I need to do so that I'm here in the long run. [14:08.2]
So, the more you've got financial runway to give yourself time, the more the I would lean [towards] marketing, and the more you need some revenue coming in the door ASAP, the more I would lean towards anything that makes revenue come in the door ASAP, because you get no credit in the long run if you're not here to keep playing the game in the long run.
James: I feel like you're speaking my love language, and I hope people listen to you, because I frequently say stuff like work on outbound during the day, inbound at night, keep going, keep going. I get frustrated with a lot of the marketers in the financial advisor space, because I feel like many of them are selling a pipe dream, like, “All you have to do is just write these blog posts and everything will be fine,” or “All you have to do is just make cold calls.” But you’re right, it gets more expensive later when you are still making cold calls and you still have that chain around your neck and you can't escape. So, I know it's hard, I know it's difficult, but that's really it, and the research says that.
I would like to go through, just so financial advisors know the success rates by tactic. I'm just going to go super quick. [15:04.7]
Michael: Yeah, yeah, yeah.
James: Client referrals is number one. Then cold calling, door knocking, as you have mentioned. Centers of influence, which I love, traditional solicitors. That’s hiring people to set appointments?
Michael: It can be hiring people to set appointments more commonly. It's doing rev shares.
James: Okay, yeah.
Michael: People that are, if you give me the client, I'll give you a cut of the revenue.
James: Sure.
Michael: Often, we do that with our CPAs. In our research, centers of influence is, I build the relationship with the CPA or the attorney and I send them some business. They send me some business. Maybe I do with mortgage brokers and others that we do in the space. If we're one of the types that’s like, No, no, I've got a strategic relationship with a particular CPA firm and we give them x percent of revenue for every client that they send over our direction, we put that into the solicitor's realm, so actually register as solicitor with all the disclosure and additional we have to do where money changes hands. [16:01.0]
James: Sure. Then you have online advisory listings, which we talked about, media appearances. Direct postal mail. I thought this was interesting.
Michael: Still working.
James: We're late on this, but in December, I did a whole thing with direct mail and I wrote letters for financial advisors, and they've just been dominating. But I will say direct mail was number two or three highest revenue-- number four highest revenue per client, but apparently there were only five to nine responses, so take that with a grain of salt. Yeah, direct mail, I'm glad to see that, selfishly speaking.
Michael: It still works. I mean, again, it's got some cost to it, right? I mean, just envelopes, mailers and drops and all the rest. But, yeah, I mean, look, 2024 saw one of the largest RIA acquisitions in the history of RIAs from a firm that grew 100% organic with no M&A for a multi-multibillion dollar valuation, Fisher, Fisher Investments. I mean, if you're an advisor who lives in a decent zip code, you get Fisher’s direct mail - [17:12.8]
James: I get them.
Michael: - solicitations coming in. I mean, to me, it was one of the things that was taught to me very early on in the marketing world as I was going through my journey, which is, if you see one—I'll date myself because I'm 40-something, so I came of age in the in the ’90s and 2000s where direct mail was still more of a thing because we weren't as online yet—if you keep getting a mailer and you think it looks ridiculous, look again.
James: Yeah.
Michael: Because the only reason you keep getting it is it's working. Apparently not targeting you because you think it's ridiculous, but if you see a mailer keeps showing up, nobody spends money on that stuff just for fun. If it keeps showing up, it's working. Fisher, to me, is just a fascinating example of here's a guy that spent 30-odd years building almost entirely through direct mail and made a firm with whatever they are, several 100 billion dollars under management, and I think their valuation was north of ten billion of enterprise value, built through direct mail and they're still doing it. They do some online and other stuff as well now. [18:21.8]
James: Yeah, they do a ton online.
Michael: But they're still going on direct mail, because it works. It works, because there is a segment of people out there that still are not that into online. They don't trust as much online, and particularly when so many of us advisors build locally and with local clientele, direct mail to local zip codes, get yourself in front of people who may not be paying attention to much else.
James: I think the reason I love direct mail personally is, right now, stamps are 73 cents, and that 73-cent stamp allows you to print three pages front and back with your messaging, credibility and rapport. You can sell the heck out of the appointment. [18:59.7]
Michael: Yeah.
James: And you just can't get-- I mean, LinkedIn has a character limit. Facebook ads, there's a limit, but very few people reach that. They're not going to read six pages in a Facebook ad. It's hard to put that on the landing page without wrecking conversions. But direct mail has just been, personally, one of my secrets for a long time.
One of the things that surprised me, the second to last success rate by tactic is client appreciation events at 44%, but then the last one is newsletter and it was 11%, and it was like a stake through my heart because I've seen so much success with email and financial advisors are probably rolling over now and crashing their cars and falling off treadmills, wherever they're listening to this, because newsletter has the lowest success rate. Why do you think that is? Why is there such a dichotomy between what I see and what's in the report?
Michael: Here’s the distinction. It's a segmentation of how we did the research. What we find, in fact, it’s what I know having lived in a newsletter marketing world for a long, long time, so this is what much of what I've done for building our platform, newsletters rarely stand alone. They tend to be a supplement, kind of a negative word, but they tend to tie to some other strategy or tactic that we're pursuing in the first place. [20:22.7]
For instance, I do newsletters, but I do newsletters in a particular niche which feeds into a webinar. Okay, so when the person comes through and they sign up, do I attribute that to the webinar or do I attribute that to the newsletter? Because I probably didn't get them to the webinar, and I only got to the webinar because I got them the newsletter. They only got the appointments because there was a call to action off the end of the webinar.
So, often, newsletters feed to webinars. They feed to seminars. They feed to other networking events. A lot of us do that. They extend a niche. They're a call to action attached to a blog. The newsletter wouldn't have worked if the blog didn't work as the blog, because the blog got the people in and the newsletter was the call to action along the way. So, we see newsletters show up in a lot of supporting tactics, and basically, almost any tactic that’s “attached to” tends to work better with the newsletter. [21:15.4]
James: Good.
Michael: That’s pretty much across the line. What you're seeing here is when you just publish a newsletter for the sake of, which I’m not trying to knock any particular providers, but it is basically the “I bought a canned newsletter. They give me a monthly thing. I just drop in my list of clients or prospects. It goes out automatically, and I'm just kind of waiting for my phone to ring,” and the answer is, 89% of advisors’ phones never ring when they do.
James: I got you, okay.
Michael: So, a standalone newsletter “for the sake of” doesn't work well, right? As I view it, it’s even as someone that very much lives the strategy. Newsletter is a trust-building exercise where I get to stay in front of you regularly and build rapport, demonstrate my competency, demonstrate my expertise, and build some level of trust. [22:06.7]
It's not good for getting things started because you need somebody to get people to your newsletter, right, if I think of it as a marketing funnel. You need a top-of-funnel activity to get people to your newsletter. While some people can get newsletters that go directly to some kind of prospect sales meeting, a lot of newsletter funnels have some bottom-of-funnel process first, often an educational event, because a lot of us, if you're content based with a newsletter, you tend to have a content thing towards the bottom of your funnel that you try to engage people with, right? It's a seminar. It’s a webinar. It's an educational event. It's a networking event. We do something to further cement that relationship. [22:50.4]
So, the newsletter works quite well in the middle of that funnel, but rarely does business get attributed directly to the newsletter, and if you do the newsletter in the absence of the rest, the failure rate is sky high. Because I send periodic canned newsletters to a list just doesn't do much on its own, because we kind of need all the steps of that funnel if we're actually going to build someone to a relationship that says, “Yeah, he sends me an email once a month, so I gave my life savings.” It takes more.
James: Right, totally.
Michael: It's a great thing in that marketing funnel, but it takes more than just that if you want someone to entrust their life savings to you.
James: That makes me feel a lot better, because since 2015, the number one most important thing, and I put this in a lot of podcast episodes, I say the holy grail of financial advisor marketing is multiple marketing strategies, and that's exactly what you just described. I am so thankful that you did, because, again, I hope financial advisors listen to you. They don't listen to me because they don't like me for some reason. Who knows? But the most successful-- first of all, email marketing from what I have seen is the most successful appointment-setting strategy, but it is back to the funnel that you described. It's a webinar, blogs, LinkedIn, podcast, again, multiple marketing strategies. [24:05.0]
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James: What I have seen great success with advisors is going to sound so simple, but it's crazy effective. A lot of times, financial advisors don't get results with emails because there's no reason for them to get results, as crazy as that sounds, or as simple as that sounds. People have reasons for not doing things. In sales, these are objections.
You could list all of the objections that you can think of for why people wouldn't do a thing that you want them to do, in this case, set an appointment. Maybe they don't trust you. They don't think you have enough credibility. They don't have enough time. Whatever. I have seen insane success with each email telling a little story, being a little entertaining, nothing with personal finance or investment advice or anything like that, to keep compliance happy, and you overcome that objection. [25:51.4]
I'll give you an example of one of the most successful emails is a financial advisor talking about how he, the financial advisor, was afraid to set an appointment and had skepticism of setting an appointment with a personal trainer, nutritionist, whoever it might be, and then the financial advisor demonstrating how he got over that fear and then applying that to the prospect. That has been such a winner and that has been my approach. I don't know if you've ever seen anything like that, but that has worked well.
Michael: Yeah, look, the old saying in our industry since forever, right, people do business with people they know, like and trust, and even when we look at the roll up of all of our statistics, also one of the interesting things that we did with our study was we asked all these different tactics—how many clients did you get from them? How much revenue did you get from them?—so we can figure out which ones are working and which ones are expensive, and which ones get bigger clients or smaller clients, and the success rates and all that, so we go through all the different tactics and what was generating what. [26:57.0]
We also came out from the other one. We said, okay, so we talked to all these advisors. In the aggregate, it represents thousands of clients that came on board across all these different advisors. Let’s come up from the client end and say, in the aggregate, how did clients find their advisors? What were the pathways in total that got clients to advisors by the marketing strategy that they landed in or through to get to the advisor that they got to?
So, when we look that way, you get some really interesting ways to think about this and view this. Almost two thirds of clients find their way to their advisor through some kind of trusted connection to that advisor, referral from an existing client, referral from a center of influence, steered to them from a lead generation site because I trust a lead generation site enough to give it my information and say, “Please send my name to three advisors that would be appropriate.” Now, I have some personal views about some advisor sites over others. [28:07.5]
James: Me, too. I’m not a fan.
Michael: We don't open that door. But from the consumer end, I went to that site and entered my information because I trust that they are going to steer me to an advisor that would be good and appropriate for me, right? There’s a transfer of trust effect that happens whether I'm referred from a client. James, tell me who you work with. I need someone I just want to use, who you use. I go to my CPA. I say I need an advisor. Who should I go to? Or I go to one of these sites that says, like, We feature all the trusted advisors with our thorough vetting process. Enter your name here and we'll introduce you to an advisor that you can work with. [28:45.8]
So, almost two-thirds of clients found their opportunities through that. Of the rest, about two-thirds of the rest, found their advisor from some kind of in-person activity. Think seminar event, networking event, some other opportunity where I met them in person, like, Seems like a decent guy or gal. I write. I built some trust. I built some rapport. I know, like and trust them now enough that I would want to do business with them, and that's about two-thirds of the rest.
Now, if you're following with the math at home, we're already through 85–90% of all clients. The last 10% is basically everything else combined that's out there. What it says to me, and again, no news, it's really just like a repeat of the old aphorism, a) people do business with people they know, like and trust, and so when I can get a transfer of trust from someone that the client prospect trusts in the first place, whether that's a friend or one of their other advisor professionals, or even a website that they trust, that's huge. If I can meet them in person, because we’re just human beings and we tend to connect socially in person, that goes a really long way in driving it forward. [30:12.6]
I think it's also why when we look at sort of what works of what's left, or even the discussion that we had earlier around the parts of newsletter that work and the parts of newsletter that don't, to me, it utterly reinforces the whole nature of what we do in marketing as advisors, is building trust.
James: Totally.
Michael: Full stop. There’s nothing left besides that. Either they're asking someone to build trust, they want to meet us to build trust, or, at best, if we're going to go after what's left—look, there is a segment that's left, if you can be dominant in what's left and you merely get 10% of all households. There's 120 million from the U.S., so 12 million households left to do for the last 10%, pretty sweet opportunity—it still is all about, how am I pursuing trust building. Right? [31:13.7]
So, I'm getting to newsletters that drip over time, because I have to build that relationship over time. We're actually seeing an ongoing uptick in not just activity but results in ROI of podcasts, because, as we live in this medium—you produce podcasts. We run two podcasts from our platform—there is a certain fascinating intimacy around trust building with people you're trying to do business with in a podcast format. Given how a lot of us listen to these days, you're physically in their ear, right?
They’ve got that ear bud tucked right in there. You are just beaming your voice directly into their skull, and unlike even video, much love to my video friends, most of us don't watch a video for more than 30 seconds, right? Video is a medium we skim. Audio is a medium we can consume for a long time, right? We hang out with it while exercising, mowing the lawn, walking the dog, commuting all the different places that we engage in podcasts. [32:11.0]
So, with podcasts, I can build a relationship with you for hours and hours over weeks and months. Video, I'm lucky to get you for 30 seconds before you scroll to the next thing in the feed. Likewise, I feel like that's why just even as we execute our marketing, newsletters have also worked well for us. You don't tend to do it, I mean, certainly don't do hour-and-a-half reads the way you do. You can do an hour or an hour-and-a-half podcast. But if you're putting valuable content out there, people will give you permission to share it with them regularly.
If you keep sharing useful stuff regularly, you build the number of repetitions it takes to eventually say, “I trust this person. They understand me, because I've been following their newsletter for a year. It's like everything they send is like they're in my head and they know what I'm dealing with.” It's like, yes, because I have a very clear ideal target persona and I communicate to it very well. But from the person, the recipient sense, like, They know me. They understand me. I can trust them. They just keep showing up regularly, doing what it is that I need to build that trust. [33:17.3]
So, when I look overall at the marketing tactics, what I basically see is that it's either transfer of trust, it's “I met you in person for trust,” or it's “I had a way to drip trust on you over time.”
James: Okay, I think I see that, too.
Michael: And that's pretty much everything that's left. The only small thing we find after that is “I've just got an immediate problem. I need an advisor today,” and I go on Google, and if you're good at the Google SEO game for your particular segment, whether that's like a niche or local SEO in your market, there's a small tale of people who are just like, Stuff's going on my financial life and I literally need an advisor now. In fact, I probably should have called you one to three months ago, but I'm late now. I've signed paperwork for a divorce or a settlement, or an options exercise or something by Friday. How quickly can I meet with you? Then I just tend to quickly Google and find something, find someone fast. [34:13.3]
This is such a trust business that you have to have a marketing medium that either transfers trust, connects trust directly, or builds trust over time.
James: I think you hit the nail on the head. I think that that's probably the most profound insight that I've heard in a long time about marketing. I don't want to get cynical, but I do want to talk about the SEO stuff. In my experience, financial advisors tend to be about three to five years behind other marketing strategies and pretty much a lot of business development. I call them airport books.
Michael: I feel like three to five years is generous for our industry, but, sure, keep going. [34:55.8]
James: Something like that. I was surprised to see SEO rank so highly. Personally speaking, I use search engines and I know that I'm not representative of every market. I understand that. I personally used search engines, maybe 1/100th in what I did a year and a half ago, and a lot of my peers, friends, colleagues, entrepreneur buddies, whatever, their experience is relatively similar.
I am very cautious right now and I don't rule it out, but again, just cautious of SEO as a marketing strategy, because it reminds me of what Charlie Munger and Warren Buffett would call cigar-butt investing. They pick up that cigar, they get a couple puffs. I think SEO is that right now or SEO as we know it. I think it's going to change. Hopefully, it does. But do you think that SEO is still going to be going strong in three to five years for advisors?
Michael: I really do, but I feel like I need to put two asterisks on this, because there's really two rather different strategies that show up with an SEO that look quite different from one another. [36:05.8]
Strategy number one is, I've got some kind of niche or specialization. I'm the guru at stock option exercises for Intel employees, and so when you have to do your stock options and you have to do your RSUs, and you start googling around, the best time to exercise Intel RSUs, Intel options, 83(b) election RSU Intel, you're going to find a particular advisor who does that.
Now, maybe you're doing that because you actually need to exercise immediately because it's coming due, in which case that advisor is going to get you right away. If not, that advisor has a whole bunch of blog posts about topics like this, with a newsletter call to action that says, “Want to know more about our updates about what to plan around Intel?” [37:00.8]
Now what happens is the SEO is the top-of-funnel for their newsletter, hyper-targeted to the same place, and then the hyper-targeted newsletter probably builds up to a seminar or webinar, and then we get them as the client. But something's got to feed the top of that funnel, and when you've got a really well-defined niche or specialization that you can dominate, SEO is like God's gift to mankind when you have a specialized focus, because you don't even have to go out there and market it.
You just make awesome content about it, and the search engines just send your ideal prospects to you and no one else. You don't have a high-volume site where you get a million visitors. It's like, I get 270 visitors every week and 50% of them converts to prospects and 30% of those convert to clients, and I've got more clients than I can possibly deal with in a hyper-focused niche area that I can never afford to market to, because Google sent all to me to free. [37:59.2]
So, there’s one version that's there, and I think that frankly is quite sustainable an opportunity. It'll get incrementally more competitive as another advisor shows up that's specializing in Intel, but someone's like, All right, so there's two or three of us doing Intel right now. I'm going to do Google. I'm going to do Facebook. I'm going to pick something else.
I know advisors that are incredibly successful building their entire practices having hyper-focused niche content that's literally for one company's employees, because that company is a big enough national-scale firm that you can easily get your 50 to 100 great clients for life, just being specialized in that domain. There’s one version there for SEO. I think that works. I think that works fairly sustainably. Yes, niches will get incrementally a little more competitive over time, but the reality is, the overwhelming majority of advisors, the only way we define our ideal client persona is enough money to afford to work with me. [38:56.4]
So, there’s so much opportunity happening in specializations right now and SEO is just a free pipeline of prospects who have the exact persona and are searching for literally the answers that you publish on regularly. So, there's one version there. I think it works, focus in its domain. But, again, it's mostly top-of-funnel. You can't just do SEO. I need SEO with content from a blog. The blog has to feed to a newsletter. The newsletter maybe feeds to a meeting, if not it probably feeds to a seminar or webinar and that leads to a meeting. It works, but it has to be part of a whole funnel. No one just googles that and gives you their life savings on the spot usually.
The second version of SEO that we see is local SEO.
James: Yeah, I don't think that's going away.
Michael: I don't think it's going. It’s been an interesting mixture. There were folks who made the case for a few years that local SEO was going to go away because we're in a digital world now post-pandemic. I can meet with an advisor over Zoom anywhere in the world. Why do I even need one local? [40:06.5]
Yes, but this is a human-relationship business. While we can build trust online, been there, done that, there is a certain ease and expediency to just literally building locally in my community. If you actually look at Google Trends, the number one financial-advisor-related search since forever is “financial advisor near me,” because Google knows where we are, so you can literally just type “near me” and it solves for the rest.
To me, at its core, that's basically a version of a niche specialization. My niche is “people whose home or office is geographically convenient to the address of my office,” and that works and I think that still works. I think that still works for a long time. Even in a digital age, we're a bunch of humans that really like local, in-person. In fact, some of us have even been so onlined-out that we are kind of resurging back to local as a way to engage locally. [40:57.6]
The interesting X factor to me, James, around local SEO, that actually means we're seeing an uptick or rise in advisors that are finding success with SEO hooked to local, is thanks to our change in the marketing rule a few years ago, now we can ask our clients to leave Google reviews.
Now, some compliance asterisk: ask uniformly. Don't cherry-pick. Everything has to stay there. Be careful about how you respond to them that you don't create entanglements. Please consult your compliance attorney before you do the specifics of how to execute Google SEO and Google reviews properly—but local SEO, plus Google reviews, when Google is the number one search engine, “financial advisor near me” is the number one search, and Google shows a results preference for those who have high ratings. Oh, and by the way, the number one way that consumers are trying to make decisions is like decisions based on trust, and one of the best ways to engender trust is to show peer reviews of results so that we can see other people have done this, even if we don't know a person ourselves to refer us. [42:07.0]
So, that nexus of activities—“financial advisor near me” is the number one search. Google still sends immense amounts of traffic. Google has a preference for those with good reviews. Consumers are trying to figure out who to trust when they can't figure out who to trust, and so they often do rely on reviews, and thanks to a change in the marketing free world a few years ago, at least in the RIA channel, you're allowed to ask clients to leave those reviews and prompt them to leave reviews, as long as you do it in a compliant manner—means we've seen a couple of advisors whose Google Local SEO results just like hockey-sticked upwards in the past 12 to 24 months because of the all those factors coming together.
We see both of those working, but both have very specific refinements about how they're done. Niche doesn't work alone. It's your top of funnel to a funnel that needs regular content to drive new SEO activity. It needs keyword-optimization to drive the results. [43:05.1]
It needs a newsletter so you can drip on them, because they don't just Google their way back to your website. If you get them there once, congratulations, but you need some call to action to keep them in your ecosystem, and then you still need a way to convert them through your newsletter funnel before you get them to action.
Or you're playing the local SEO game, which you can do, but there's both aspects about how you do that on your website so that you show up for the right city names and zip codes for your geographic region. You have to claim your Google My Business Profile. You need to get Google reviews. You need to ask your clients to leave them in a compliant way. Again, there's a lot of steps there to make that work as well.
But we see both of those working quite well, but both are hyper-targeted in their context, right? I’m either a geo-targeted search near me or I'm a very targeted search for a particular, really nichey problem that I have, right? I work at this company and I've got these benefits, and the company is asking me to make all these decisions and they're life-changing, million-dollar decisions, and I'm searching online for very expert content to help me figure this out and not screw up this really big decision. Writing an article of seven reasons why Roth conversions are awesome will get you literally nothing in SEO. [44:15.7]
James: Yep, just throw it away.
Michael: So, look, most of the ways that advisors do content historically doesn't work. We don't see it working in the standalone newsletters. We don't see it working in the standalone blogs, because it doesn't bring anybody in anymore, and it's not even the most nurturing of the people that are there, because you're just like you're sending them something that CNBC also sends them and CNBC has way more distribution reach than you do and ever will.
James: I think that's a very interesting point, so I guess that's how I feel. I feel that the general articles, like the Roth IRAs and 10 reasons why you need HSA, yeah, that's gone. That's dying a terrible death, and rightfully so, because I'm kind of sick of it. But I think you're right, the very specific, specialized-- because even in an artificial-intelligence tool, if I go to ChatGPT or Claude, or whatever, and say, “I need a financial advisor who helps with” whatever, they're pulling the information from the search engine anyway. But I guess I should have phrased that better. I do think that they don’t work. [45:16.5]
Michael: Correct, like, “Tell me the pros and cons of a Roth conversion.” We're going to ask AI about that at some point.
James: Right, yeah.
Michael: Yeah. “Tell me how to properly execute an in-plan backdoor, mega backdoor Roth at my employer with this name that uses this 401(k) provider and how to do the paperwork because I can't figure it out.” If you're at a major employer, you could probably find an advisor who has literally written that article, because there are some really hyper-targeted nichey advisors who are getting that. AI doesn't have enough-- That’s so focused of a search. AI is too generalized to know how to give that level of specificity. [45:57.7]
In general, I mean, look, we've all done or many of us at least have played around a little with ChatGPT and the like, and we've all kind of learned it's pretty good at most things, but if you get too deep into some specialized area, it hallucinates. It doesn't know. It makes mistakes, right? Again, when you translate that to a client world, the number one thing I'm searching for is someone I can trust with life-changing decisions, we're a really long way from AI doing that.
The higher the stakes and the more complexity, the worse it is. The higher the stakes, the more complexity, the more concerning and more I need trust as a consumer. The things that clients need us for the most is the thing that they naturally trust AI the least for. But, again, general education, yeah, AI is going to give some cool, useful stuff, and it'll probably be pretty decently good, because it's just going to aggregate everything that all of us ever wrote into some general educational material. [47:01.4]
So, the opportunity lies in the specifics, and to me, the cool opportunity that we have as advisors—I mean, look, if I'm building a business like Vanguard, Schwab, Merrill or Morgan, some firm that needs tens and hundreds of thousands of clients across the nation, it's very hard for them to market. They have to market with national brands, Super Bowl commercials, all that cool stuff you can trust because we've been around for however many decades or centuries. That's what they have to hang their hat on, because they need so many people. They can't go after anything with any level of specificity.
Most advisors, we can have ludicrously successful practices with no more than 50 great clients. Yes, a lot of us have 100 or 200 clients. It’s cool. Now let’s go through the list. How much revenue do you generate from your top 20% of clients? How much profit do you generate from your top 20% of clients? We quickly get back to “Okay, so I basically generate 100% of my profits from the top quarter of my book.” Cool. You, too, are actually successful with 50 great clients and 100 or 150 you couldn't say no to who are dragging down your profitability and you're supporting them as a service to your community. [48:07.0]
When you can be successful with 50 great clients, there's almost no specialization and focus. That's too specific at that point. I mean, there's seven billion people on the planet. You need 50 of them who can afford to pay your fees to have a great successful practice. It's so feasible to be targeted in a business like ours when you're operating as an individual advisor.
I mean, that's even this kind of the superpower of why I remain incredibly bullish on solo advisors and, quote-unquote, “small practices” in a world where everyone says you have to merge and grow huge to survive. I'm like, no, you don’t. You need a bajillion clients just to pay your overhead. I can have 50 great clients in the system to make a zillion dollars. I’m cool. Keep doing your big firm thing. Not to knock some folks that want to make big firms, but you really don't need it when you can be wonderfully successful with a hyper-targeted, high-quality client base. [49:09.0]
James: That's kind of how I feel as an entrepreneur, not even in the financial advisor world, just from a marketing perspective. I run a pretty lean business, but it does okay, you know? It’s primarily just me. Yes, there's some people in the background who make wonderful things happen, but, no, I'm totally with you there.
I want to be respectful of your time. I think this has been probably maybe the best podcast episode ever for Financial Advisor Marketing, definitely top five, maybe top three.
Michael: Awesome.
James: I am so grateful. If there was one key insight and I think it's the trust thing, or an actionable takeaway that you want advisors to have, what would that be?
Michael: I’ll actually go a little bit of a different direction. If there's one other thing to take away from our research, one of the fascinating things we find, overall, just when we look at our research, is every marketing channel has wildly successful advisors even down to we all knock direct mail, except the single largest organic growth marketing RIA in the history of RIAs did it almost entirely with direct marketing. Thank you again, Fisher. [50:14.0]
Every marketing strategy has some advisors who have been wildly successful, and every marketing strategy has a giant slew of them that are literally generating zero results, not bad results, but zero. To me, what it effectively comes down to is, again, in this world, tying to the trust conversation—people do business with the people I know, like and trust, which means I have to show up consistently and repeatedly over time to build that trust relationship, whether I'm doing that in person or virtual, or with content or whatever it is—what that means to me is the most important thing is pursuing a marketing tactic that aligns with you and your style that you will be able to keep doing it long enough to make it generate the results that it can generate over time. [51:04.3]
So, if you think direct mail is dumb because you're just awesome when you get in front of people, cool, go be a seminar marketer and do that. If you don't really like being on stage, you'd rather talk to people in a more intimate setting, cool launch a podcast. If talking to strangers sounds scary and you'd rather just write it out, great, go make a blog. If you're like the dazzling sunshine of every room that you step into, immerse yourself into in-person marketing, please. It will go wonderfully for you.
So, whatever the thing is, right—you can do it with audio. You can do it with video. You can do it with written. You can do it in person. You can do it virtual—what is the thing that aligns to your natural style and strength of how you show up in the first place so you can do it with consistent repetition and refine it over time?
I think one of the reasons why we see so much variability is any marketing tactic can work when you refine it enough, and every marketing tactic can fail, because if you go to do a thing that's not even well-aligned to you in the first place, you don't stick with it long enough to ever refine it, or even just to show up with enough consistency to ever have a chance to build trust. [52:13.3]
So, pick the thing that aligns with you that you can stick with, and then stick with it long enough that you can both show up with consistency and that you have a chance to refine it and iterate on it over time. It's just the first stab is never the magical one. You have to iterate on any marketing tactic over time. It gets a little easier if you're clear about who you're trying to be for and what that ideal client looks like, but pick the marketing strategy that works for you and your style of how you want to market and show up. That alone will drive you further forward than anything else. Once you're there, then we can nerd out on tactics and requirements. [52:56.8]
James: That is absolute gold. Financial advisors, don't be a bird trying to swim or a fish trying to fly.
Michael: Yeah.
James: Lean into your natural gifts, your strengths and abilities. You heard it from the man himself. Financial advisors, I thank you so much for listening to this episode, and I will catch you next week. [53:13.6]
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