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How much should you budget for your marketing? If you go on the internet, you’ll find tons of answers to this question. Reports, studies and statistics that tell you how much financial advisors spend.

But the truth is: Financial advisors don’t need a marketing budget to get more clients. That might sound radical, but you can create a marketing strategy that attracts clients on autopilot without ever making a budget.

In this episode, you’ll find out exactly how to turn your marketing into a client magnet—even if you never budget.

Want to stop worrying about your money and start getting clients? Listen now!

Show highlights include: 

  • Why most financial advisors throw away their planning skills when it comes to marketing—and how to infuse your financial skills into the marketing process. (1:58)
  • The “maybe you’re just better” reason you shouldn’t take marketing budget advice from the internet. (6:55)
  • How mastering cold calls can hurt your business (even if it attracts clients) (12:21)
  • The “Reinforcing feedback loop” that unleashes exponential growth in your business. (15:07)

If you’re looking for a way to set more appointments with qualified prospects, sign up for James’ brand new webinar about how financial advisors can get more clients with email marketing.

Go to https://TheAdvisorCoach.com/webinar to register today.

Go to https://TheAdvisorCoach.com/Coaching and pick up your free 90 minute download called “5 Keys to Success for Financial Advisors” when you join The James Pollard Inner Circle.

Discover how to get even better at marketing yourself with these resources:




Read Full Transcript

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: Hey, financial advisors, hope you're doing well. In this episode, I want to talk with you about the idea of a marketing budget and, to be frank, I used to get this question quite a bit. Financial advisors would ask me what their marketing budget should be and stay stuck in this idea of a budget. Fortunately, I don't get this question as much anymore, so I wonder if people are finally waking up to the idea that a marketing budget isn't really a good idea. Let me explain. [01:00.4]

Depending on the study or report you read, financial advisors typically spend about 1–5% of their revenue on marketing. A lot of places will recommend between 1–10%. If you just Google a financial advisor marketing budget, “What are financial advisors spending on marketing?” that kind of thing, you will see all of this stuff, and I'm not really sure where the recommendations even come from or what the basis is for any recommendation in the first place. I just don't know.

Imagine if I told you that you should save 10% of your income. It sounds good on paper, kinda sorta, but it's meaningless without context. What if you're drowning in debt and can't even afford to pay your bills? You're not going to get to 10%. What if you make $10 million per year and you live a minimalist lifestyle? If that's the case, then I will be forcing you to spend money that you don't want to spend because your savings rate is probably 80–90% or more. Again, the whole marketing budget thing, it's just like that advice, like save 10% of your income. It is meaningless without context. [02:01.0]

One of the biggest mistakes financial advisors make when trying to build their businesses is that they take their financial advisor hat off. I mean, they stop thinking like financial advisors. When they're in front of clients, they obviously think like financial advisors, financial planners, because that is what they do. They make the financial plan; they walk through the investment management; they fill any gaps in different plans for clients, and so on and so forth. They think like financial advisors. That is the bottom line. But when they're not in front of clients, when they're by themselves, they don't think like that anymore.

I want you to keep that hat on. I want you to take the same thought process you use when working with clients and I want you to apply it to yourself and your business. Would you give blanket advice and blanket recommendations without knowing people or their goals? I hope not. It's necessary to know your business and your goals before making a recommendation on what the specific percentage spent on marketing should be and I’ll give you a couple reasons why this is. [03:00.8]

First, obviously, your revenue compared to your preferred marketing strategies should be taken into consideration. Let's say your revenue is a million dollars per year and you're running a lifestyle business, and we'll assume that your primary driver of new business is something like email marketing. Okay? If you listen to the blanket recommendation of 5% of revenue, then you will find yourself trying to spend—5% of a million bucks is $50,000, so you'll try to spend $50,000 on email marketing.

Look, I'm sorry, but if you spend 50 grand per year on email marketing, then you are doing it wrong. You are getting screwed left, right, and twice on Sunday. The most a good email marketing software should cost is a couple hundred bucks per month, but if you have your heart set on a percentage, then it's going to lead you to make bad decisions and be wasteful. Just like the person making 10 million per year, I say, save 10% of your income. The person is like, Wait a minute, I'm saving a lot more. You want me to cut back? The blanket recommendation does not work. [03:58.2]

If you're spending $50,000 per year on email marketing, which is a terrible, terrible, terrible idea, because it should not cost that much, then the money would've been better off in your pocket—or let's say you're just starting out and you don't have much revenue at all. Spending 5%, that's dumb here, too. You should probably spend more and make bigger investments back into your business.

Again, it is a percentage. It is a percentage of your total revenue. If your revenue is less, then you should probably crank it up. You should probably spend more. I've talked a lot about how you either invest money or time, and when you're starting out, you invest more time than money, but, really, you should invest both. Your goal should be to invest both.

The second reason you need to know your specific situation is because your cash flow is unique to you. Different marketing strategies take varying amounts of time to work. For example, SEO can take a long time. Social media, depending on how you do it, can also take a long time. Email marketing can get appointments in a week or two. Direct mail can get appointments in less than a week. Social media is, quote-unquote, “free”, but slow. Direct mail can get expensive, but it's fast. [05:10.0]

If you don't have a huge amount of cash flow, then you will choose different marketing strategies than the person who can consistently reinvest into his or her business. I hope that makes sense. This is one of the reasons why I tell financial advisors to avoid lifestyle creep. Stop spending so much gosh darn money on the private schools and the Benz.

Look, I’ve got to break it down for you like this, okay? If you're in a Mercedes C-Class or E-Class, you're faking it, okay? I'm just telling you the truth. You’ve got to be an S-Class or a G-Wagon or bust. I'm just telling you like it is. Nobody wants to see you in the little entry-level Mercedes, okay? You’ve got your little house, your little McMansion. There's always going to be somebody richer. You're doing all this stuff so you feel good about yourself. You're trying to fill some hole in yourself, in your soul, okay, with all this stuff. It will literally never fill that hole inside of you, I guarantee it. Avoid lifestyle creep. [06:02.2]

I would rather be the person making $20,000 per month and living on $5,000 than the person making $50,000 per month and spending it all, because if I'm making 20 and I'm keeping 15, then that's $15,000 that I can use to reinvest in my business and grow the machine bigger and bigger. The person who spends all the money and has no cash flow is limited with marketing options. The person who makes $50,000 per month and spends all of it cannot make investments into his or her business. That person cannot try marketing experience or experiments and have marketing experiences. Stop doing this. Stop. Nobody cares, literally. Not a single person cares. I’ve been there. I've had fancy watches and stuff like that. I've never gone crazy. I've never spent obscene amounts of money, but I’ve had little trinkets here and there. They're all meaningless. They don't mean anything. [06:55.8]

The third reason you need to evaluate your specific situation is because you might be further along in your marketing journey than the next person. All of these things are unique to you. That's the reason why blanket recommendations that you get from the internet might not work. You might already have marketing assets that you can use. If that's the case, then you can spend money faster and in greater quantities, and it will still make sense for you.

Let me give you an example. A financial advisor with a good website, a good LinkedIn profile and a good lead magnet who can run online ads can pour money into them and have them generate a far greater return on investment than a financial advisor with a bad website, a bad LinkedIn profile and a bad lead magnet, simply because the advisor with the good marketing assets is going to have a higher conversion rate, and if the advisor with a higher conversion rate puts money into it, it leads to more appointments, more clients, and it is what is going to lead to exponential growth, which is the feedback loop. We're going to discuss that a little bit later. [07:52.5]

The same is true with financial advisors with niches and without niches. I did a webinar not too long ago and I said that business owners wasn't a niche and a financial advisor asked me, “What about entrepreneurs?” Are you freaking kidding me? There are more than 30 million small businesses in the United States alone. If you try to target business owners and I target something like chiropractors in the Tampa area, I'm going to smoke you every time, which also means I can spend more money on my marketing and I can grow my business faster, as long as I'm smart with my cash flow.

These are all reasons why blanket recommendations do not work and I want you to understand there should be no such thing as a marketing budget, not because just the blanket recommendation doesn't work, but because—here's the practical reason, the reason that puts money in your pocket—you should keep spending on good marketing until it stops working. Are there cash flow restraints? Yes. Should you have test budgets where you test something to see if it works? Yes, that is not a marketing budget. That is a test budget. But a, quote-unquote, “marketing budget”? No way. [09:02.8]

I apologize for getting nitpicky with the words here, like test budget versus marketing budget, but it bugs me when people ask questions about marketing budgets, because assuming your marketing is working, there is no reason why you should put a cap on it. The inverse of this is the idea that a marketing budget supposes that you should spend money no matter what, even if your marketing doesn't work. If you set a rule to spend 5% of your revenue or marketing, no matter what, then that could be a waste of 5% of your revenue. Your marketing should serve you.

How do you know for sure that your marketing is working? That's why I talk a lot about tracking. I talk a lot about measurement, and that could be an entire podcast episode by itself. I don't think I'm going to do it because I reserve that stuff specifically for Inner Circle members, but there's a reason why I say to keep campaigns running until they don't work anymore, because there will probably come a day when they stop working. [10:00.7]

The issue here is that human beings are primed to think linearly. Marketing doesn't work that way. At least most marketing doesn't and/or not for very long, okay? I know I'm speaking in generalities here, but just take it. Take it. Take my word for it. Marketing really doesn't work linearly. If you put a dollar into your marketing campaign, it might start off by giving you $2 back, but then it gets down to 1.50. Then it gets down to 1.10, and then you should consider pausing it or changing something.

Hey, financial advisors. If you'd like even more help building your business, I invite you to subscribe to James' monthly paper-and-ink newsletter, “The James Pollard Inner Circle”. When you join today, you'll get more than $1,000 worth of bonuses, including exclusive interviews that aren't available anywhere else. Head on over to TheAdvisorCoach.com/coaching to learn more.

You also have to consider the opportunity cost of your marketing dollars and you do that by asking yourself if you are getting the highest and best use of your resources. You could spend a dollar here and get $2 back, but if you spend a dollar somewhere else, you could get $3 back. [11:10.5]

Ahem, ahem, that's one reason why I say, ahem, ahem, to have multiple marketing strategies, ahem, ahem, because by having multiple marketing strategies, you can identify your opportunity costs and, therefore, maximize your dollars. But, hey, what do I know?

A good example of how linear thinking harms us is when we're hungry. Let's say that you haven't eaten anything all day and a nice juicy steak, oh my goodness, it seems like it would be wonderful. You eat one, a nice, let's just say, eight-ounce steak. It tastes so good. You're not hungry anymore and it's a wonderful experience.

If one steak did all that good for you, you start to think about having a second one, so you eat a second eight-ounce steak. But, wait, it's nowhere near as good as the first one because it comes with diminishing returns and sometimes, that happens in marketing, too. [12:05.2]

I think we fail to realize that everything in excess reaches saturation. This is another reason why I talk about multiple marketing strategies because it's literally the Holy Grail of marketing and it's something that I beat into my Inner Circle member's heads because, if you only make cold calls, for example, eventually you are going to hit a limit, a.k.a. saturate that strategy.

Everything in excess reaches saturation. There is an upper limit with cold calls, either with your efficiency or your effectiveness. Let's say that you master your craft and you work 24 hours a day, seven days a week. That would be the upper limit. Your returns would be diminished past that point. Once you are a total master and you are filling every waking minute with cold calls, you cannot improve past that point. There is no more growth at all, period. None, not even linear. [12:59.7]

I'll give you another example. I'll give you an example outside of financial advisor marketing and financial advisor businesses, because financial advisors tend to get these examples a little bit better because they're not as close to the industry.

At the beginning of 1970, almost 50% of Americans were considered overweight. This number crawled up to almost 60% by the end of 1980. In the mid-2000s, almost 75% of Americans were deemed overweight. There were people projecting out from these numbers from 1970 to 1980 and the mid-2000s, saying that all Americans would be overweight by 2048, but they arrived at that conclusion by using false linear regression. If things work like this in real life by 2070, over 115% of Americans would have weight problems. That's not going to work. That doesn't exist. You can't have 115% of Americans. The growing trend is not a straight line, no matter how it may look. [14:02.6]

The bottom line is that thinking in terms of a marketing budget, it's a mistake because it lends itself to linear thinking, which can be devastating. I don't want you to do that. If you're someone who is adamant about having a total budget, if you're going to do that even after listening to this podcast episode, I at least want you to break it apart using my multiple marketing strategies philosophy.

I want you to take 1% and put it in Place A. I want you to take another 1% and put it in Place B and so on. I want you to track them and use the outcomes to inform your decisions for next year's budget. That isn't perfect, but it's like getting a heavy smoker to go from two packs a day to one pack a day. It's not ideal, but it's better.

The final lesson I'm going to give you and the final reason marketing budgets … I think I’m going to share two more things. The final reason marketing budgets don't make sense is because of feedback loops. Feedback loops are related to linear thinking in the sense that they're not linear at all, because feedback loops can either be reinforcing or balancing. [15:06.0]

In reinforcing loops, elements perform the same action, resulting in exponential growth or decay. A balancing loop, on the other hand, is kinda sorta … not kinda sorta, it is like a thermostat. If it gets too cold, the heat kicks on and it brings it back to normal. A lot of financial advisors have balancing feedback loops with their comfort zones.

Let's say a financial advisor is programed to make $200,000 per year in personal income. If it's December and that advisor is only at $150,000, he will push and strive to do whatever it takes to get back to his comfort zone. Likewise, if it's December and he's already at $200,000, he will likely coast for the rest of the year because of his internal balancing feedback loop. He is in his comfort zone. [15:54.2]

Tracking your metrics and applying what you learn and being consistent can lead to an exponential growth feedback loop. This is a reinforcing feedback loop, not a balancing one, a reinforcing one, and reinforcing can either be exponential or it can lead to decay. But, again, tracking your metrics, applying what you've learned, being consistent can lead to exponential growth, because if you split-test two things and you get a winner, then you can test against the winner and then you can test against that winner, and if you're trying multiple things, the 80-20 rule kicks in, which means one of those things is going to get you 80% of your results and, by definition, you will have exponential growth.

I don't care who you are. I don't care how you feel about this. It is literally math applied to business. These are mathematical principles. If I keep finding things that get 80% of your results and I stack them on top of each other, and I build a business around that, I will get exponential growth, period. [17:00.8]

You renting the same trade show booth every year does not lend itself to exponential growth. It is the same thing repeated over and over and over and over. I am finding things that win. I'm putting them together. I'm finding the stuff that gets 80% of the results and, boom, exponential growth happens.

On the other hand, with the decay, not getting adequate sleep, that can lead to a decaying feedback loop. You sleep poorly, so you don't do well in business, which stresses you out. Since you're stressed out, you don't sleep very well. That makes the problem worse. This is why I stress that your business is a reflection of you, not because I want to sound like some guru or anything, but because this is math. The numbers in your business are subject to feedback loops, which can either have exponential growth or decay, and the best way to avoid the decay is to improve yourself as a human being because you and your decisions cause the decay to happen, so you want to avoid that. [18:04.0]

The final thing I want to talk about, and I will leave you with this, I promise, is that some financial advisors will dupe themselves into trying to get the biggest bang for the buck instead of trying to get the biggest bang. This is a seductive mistake that traps a lot of people, including me. I fell for this for a long time. I want to make sure you don't do the same.

I was a return-on-investment chaser. I thought I was being smart. I figured if I could buy a $20 book and use it to make $500 in my business, and that's a 25x ROI. Great deal, right? Sure. But my mistake was focusing only on investments with a massive ROI. You might be like James, Wait, didn’t you just talk about opportunity cost? Aren't I supposed to be maximizing my dollars? Yeah. Yes. But the problem is that these investments with massive, massive return-on-investment returns I guess, they're few and far between. What I should have been doing is trying to get the biggest bang. [19:04.3]

Let's walk through some numbers. Continuing with the book example, if I buy a $20 book and I use it to make 500 bucks in my business, that's a 25x ROI, but only $480 profit. That's nothing to write home about. But if I go through a course for $2,500 and I 4x my money instead of 25x, I only 4x my money, that's $10,000 and $7,500 profit. Now we're talking. Let's imagine that I hire a consultant for $50,000 and that consultant only nets me a meager 1.5x ROI. That's still $25,000 in profit.

We've gone from a 25x ROI in books to, let's say, a 4x ROI in courses to only a 1.5x ROI with consulting and one-on-one help, but the amount of money, the net profit, is much, much greater. I want you to think about that. If you're trying to get the biggest bang for your buck, try focusing on getting the biggest bang, period. [20:11.2]

So, should you have a marketing budget? To recap this entire episode, no. But I know a lot of you aren't going to listen to me. You're still going to have your goofy little marketing line item and basically throw most of the money away. For the few of you who are going to listen to me, this can help you quite a bit, and I hope you enjoyed it.

With that said, I’ll catch you next week.

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