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Hosted by Financial Advisor Coach, Ray Sclafani, "Building The Billion Dollar Business" is the ultimate podcast for financial advisors seeking to elevate their practice. Each episode features deep dives into actionable advice and exclusive interviews with top professionals in the financial services industry. Tune in to unlock your potential and build a successful, enduring financial advisory practice.
Ray Sclafani (00:00.334)
Welcome to Building the Billion Dollar Business, the podcast where we dive deep into the strategies, insights and stories behind the world's most successful financial advisors and introduce content and actionable ideas to fuel your growth. Together, we'll unlock the methods, tactics and mindset shifts that set the top 1 % apart from the rest. I'm Ray Sclafani and I'll be your host.
The multi-tactic marketing approach, creating a game plan for high growth firms. While some advisors are content with maintaining a lifestyle practice that allows them to generate just enough income to support their lifestyle without feeling pressured to grow the business, many more advisors dream of steadily and strategically building their firm into a billion dollar advisory business. A firm in growth mode is not just more profitable with more revenues, it's magnetic.
drawing in new clients, top talent, and potential buyers like never before. But here's the catch, growth demands strategy. If you're serious about growth, it's time to sharpen your marketing game to attract those high value clients you're gonna need. According to the latest Kitsis report, effective advisor marketing has become an increasingly complex and costly challenge. In the past three years alone since 2021,
client acquisition costs have skyrocketed by 75 % according to Kitces, with a median acquisition cost per client now at $3,800. This dramatic increase underscores the critical importance of adopting more efficient and innovative marketing strategies. Now, I don't question Michael's study, but I would like to submit that while costs appear to be rising, the lifetime value of advisory clients is still extraordinary.
Moreover, the durability of the recurring revenue is attractive to driving enterprise value. Therefore, it's time to invest wisely and sharpen your marketing approach. Now I'm not suggesting spend money like a drunken sailor, but it's about being intentional and strategic. Industry data clearly shows that high growth advisory firms invest more in marketing than their less growth focused peers in the percentage of revenues, which translates
Ray Sclafani (02:20.758)
into an even wider disparity in actual dollars spent when you factor in the generally higher revenue levels achieved in growth-focused firms. These firms tap into an array of diverse marketing tactics, including client appreciation events, seminars, webinars, search engine optimization, even targeted content. This all enhances the organization's visibility and enables them to attract and cultivate profitable clients.
They emphasize scalable marketing strategies and optimizing the use of digital platforms. There are four pillars to Kitces's research. High growth firms deploy a wide range of various marketing tactics, which maximize their reach and efficiency. But these four foundational tactics are nearly all true for successful advisory firms. The first is client referrals. No kidding, Dick Tracy.
Despite its scalable limitations, the vast majority, 88 % of firms, consider a strong referral network essential to the business's continued growth. As they grow, however, it's clear they tend to experience diminishing returns from referrals. My take is that building client advocates who want to remain engaged in helping your firm grow by providing more formal introductions is far more sustainable. Most advisors spend time reactively on referrals.
Most times referrals makes one party, either the client or the advisor, uncomfortable about the process. So it's more about digging deep with fewer relationships. In fact, in our experience, the best in the business have five to seven loyal client advocates, her advisor within the firm, who are each making three to four introductions annually of the ideal client. But these clients want to be engaged.
They know how to articulate the value proposition of the firm. They are influencers. They also are eager to want to help the firm grow. They're deeply connected to the founder, the controlling owners, the advisors, and they're part of the advisory board for the firm. You these kinds of relationships are spread throughout all of the industry. But what I notice is most advisors and leaders of advisory firms are not as intentional.
Ray Sclafani (04:41.12)
about cultivating and developing further these loyal client advocates. When I ask groups of advisors, raise your hand if you actually believe you could spend a little more time going a little bit deeper and looking at your best relationships and building these loyal client advocates, every hand goes up. There's always room for improvement in deepening and building these loyal client advocates. That's number one pillar. I would say actionable item number one, you want to dig deep in looking at your client roster.
doing an analysis, where have the best referrals come from and figure out over the next 90 days, over the next 12 months, how can you schedule some time each quarter with those very best referral sources and just deepen that relationship. Magical happen just with that activity alone. Number two pillar, content creation. High growth firms extensively use blogs, videos. You're listening to this podcast by way of example.
All of this activity enhances brand visibility and engages potential clients by sharing valuable insights and well strategies. Remember that effective content creation requires deep understanding that the target audiences needs and preferences are amplified in all of your content. That will position you as a subject matter expert. My friend Mark Hurley wrote that white paper early in 2024, Welcome to the Jungle. One of the
Items in the white paper that Mark pointed out was this need to create some subject matter expertise and that marketing is going to get much more specific and firms that will succeed in attracting new clients, new revenue to their firms will be positioned as these experts in the marketplace. Okay, third pillar, SEO, search engine optimization and digital marketing. Effective SEO helps significantly boost your content's discoverability.
by driving more traffic to your website. High growth firms tend to invest more heavily in digital marketing, website, search engine optimization, allowing them to achieve better marketing efficiency through improved organic search rankings and enhancing the credibility of the firm and its advisors. Content creation pillar two goes hand in hand with SEO and digital marketing pillar number three. And the fourth pillar, educational events.
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Sometimes what is old becomes new again. I remember these educational events back in the day, hosting these periodic webinars and seminars will definitely help attract and engage high revenue clients. However, at times they can often seem expensive, but these events, they generate significant returns when you promote them effectively through multiple channels. Educational events further position you, here's the key, as a subject matter expert, fostering trust and engagement among prospective clients.
I was recently traveling with an advisor from Dallas to the Barron's 100 Conference, and I was able to interview him on stage and he was sharing with me some of the marketing tactics that he uses to attract one to $5 million relationships. And believe it or not, they spend a fair amount of money at a local steakhouse hosting dinners in the back room every month. And then once a quarter, they actually bring a larger dinner with clients and prospective clients together at the same steakhouse.
So this is a expensive endeavor, but it yields great returns. I had another advisor at the Barron's Conference explain to me recently that they focus exclusively on business planning exits. So they become specialists. They've actually gone out and gotten certification so they can actually host monthly webinars and quarterly seminars. And Saturday morning, for those that are selling the business within a 90-day period, they'll start a 12-week process on Saturday morning running in-person seminars at a local Marriott.
The point is these educational events is an important pillar if you're looking to expand and grow your marketing efforts. Optimizing your expenditure. Let's talk about the ROI here for just a moment. High growth firms differentiate themselves in their willingness to invest both hard and soft marketing dollars to fuel their prospect pipeline. Let's be clear, hard dollar expenditures are in the form of tactics outlined so far and the cost of marketing technology and data analytics.
tools such as CRM systems, marketing automation platforms such as HubSpot.com and data analytics software provide valuable insights into client behaviors and preferences. All of this allows you to tailor your marketing messages and tactics to better meet a target audience's needs. HubSpot.com, let's just talk for a quick moment. If you've got a marketing coordinator, a director of marketing, even some marketing interns, check out academy.hubspot.com.
Ray Sclafani (09:32.846)
There's a free platform of education and certification that will help get your team up to speed more quickly with some of this digital marketing and SEO marketing, whether you use HubSpot or not. The information and the education is incredibly valuable. I'll put that hubspot.com and the academy.hubspot.com in the show notes. These marketing automation systems streamline your process of nurturing leads and you've got personalized email campaigns.
targeted content delivery, you're managing client relationships more effectively if you use your CRM effectively. All of this pipeline management ensures no potential leads fall through the cracks. Even the data analytics measuring the ongoing effectiveness of all your marketing efforts can be well managed in your technology platform. So hard dollar expenditures, check out your tech stack. Let's talk about the soft dollar expenditures, including the value of advisor and staff time.
These account for 71 % of all advisor marketing expenses, according to Michael Kitsis, highlighting the importance of dedicating enough human capital to your marketing efforts. Firms with dedicated marketing professionals typically experience higher growth rates, greater marketing efficiency, and more robust client acquisition outcomes due to their focused and consistent marketing efforts. Did you know?
that an SEC marketing rule which took effect in November 2022 now allows you to use client testimonials and engage with third party review platforms, providing you to adhere to all of the specific guidelines, whether your custodian, broker dealer, compliance department can give you some guidance on that. It presents this new significant marketing opportunity to leverage positive client experiences, which should enhance your firm's credibility and reputation.
I'd encourage you to proceed cautiously, but check out the new SEC marketing role. At the end of the day, it's all about providing an exceptional client experience and quality advice. High growth firms prioritize client satisfaction and client engagement and recognize that all clients who are confident about their financial future, who feel financially secure and have a peace of mind in the plan and the outcomes that they've built in partnership with you.
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who build trustworthy relationships with your team members are far more likely to advocate for you, remain loyal, and bring their entire family and community to your firm. The most successful advisors focus on winning new clients and they master the whole client journey by ensuring exceptional service and quality of advice is delivered at every stage of the relationship. Regular communication, personalized financial planning,
proactive problem solving. These are all vital elements of creating a positive experience. And you must seek out client feedback to continually improve your service offering and then promptly address any concerns. If you don't ask, you don't know. And client-wise, we've developed a highly effective model we call the client-wise conversation, which will help you with some of these critical conversations and get the kind of feedback that you need.
I would focus on asking 20 to 25 of your best clients every 90 days, what's the one thing you value most about my firm and I and how we serve you? Hey, what's the one thing you want us to change or improve about how we serve you? If you were going to describe the services our firm and I provide you to somebody else, what would you say? How would you describe what we've achieved together during all the many years we've worked together and among your other trusted advisors?
Who do you trust the most and why? I'll be sure to include the client wise conversation, these five questions and the how to go about setting up a meeting, how to collect this data and then what to do with it once you receive answers to these questions from your very best clients. I'll put all that in the show notes so you can download the client wise conversation. Hopefully that'll help you and your team. I'd also never underestimate the importance of a strong brand.
Branding plays a crucial role in differentiating you from your competitors. A well-defined brand establishes trust, credibility, and makes it more attractive to retain clients and bring in new clients. Consistency. High-growth firms demonstrate a willingness to invest in building a strong and recognizable brand that resonates with their target audience. You absolutely want to be the first call in your community, in your specialty.
Ray Sclafani (14:13.858)
So you've got to position yourself accordingly. So here are three things that I would consider doing. Develop a clear value proposition, ditch the pitch. There's a whole episode dedicated to this topic. It's not about creating a pitch deck or an elevator speech. Those are all really great. But instead, design an outline of your capabilities. And here's the key, the benefits for your clients. Second, deliver consistent messaging specific to your target audience.
and demonstrate subject matter expertise. Advisors are sometimes afraid of getting too narrow and too deep, but the old spray and pray bet a bunch on a hunch, smile and dial, broad audience, you you can't focus everywhere. You've got to really build out what that ideal client looks like for your firm. So start with a target market. Within that target market, identify a niche. Within that niche, build out your ideal client profile.
and be really specific. Remember, each time somebody says no, they don't want to work with your firm, there's somebody that's saying yes. And you've got to be really clear moving forward. If you're to build profitable firms and build profitable growth strategies, less is more. Find the right client that'll go along with you, not the one that'll churn and burn. And by the way, it's way harder to build a service model for everybody. Build a great service model for a select niche and a group within that niche.
The third thing is maintain a professional online presence. This is crucial to building trust and credibility with potential clients. Assign a member of your team to evaluate your branding efforts, your client acquisition costs, and ensure alignment across all marketing channels, your website, your social media profiles, your marketing materials, your client communications. There should be a lot of consistency. I don't just mean in the language. I mean in the look and the feel, the values that you project.
the color scheme, the pictures, the images, but also the content. Optimizing your client acquisition costs. Well, this is a foundational component of profitable business growth. By carefully tracking and analyzing your CAC, C-A-C, that's the client acquisition costs, leveraging insights from industry experts like Michael Kitsis, and I'll download in the show notes a link to the Kitsis report.
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implementing these strategic optimizations we've talked about, you'll be able to attract new clients more cost-effectively. The key lies in balancing the marketing investments, enhancing client experiences, delivering great advice, asking for feedback, establishing a strong presence, building a subject matter expertise, and then ultimately refining your acquisition strategies to remain competitive. I'll also include in the show notes an oldie but a goodie.
something I wrote years ago and have recently updated, 99 Ways to Improve Your Marketing. You'll find a link to that in the show notes as well. With each episode, there are typically a few coaching questions that are geared as learning and development opportunities if you've listened this far into the episode. I'd encourage you to take these questions back to your team and use one or two of them as a discussion topic at your next team meeting.
With regards to marketing, maybe the marketing team, the marketing department gets together, even if it's one or two folks or if it's 15 folks, pick out a few of these questions and go deep. First, let's talk about growth strategy exploration. How can you refine your current marketing strategies to align more closely with this multi-tactic approach outlined so far in this episode? And what steps can you ensure your firm is taking so that you're poised for sustainable, profitable growth?
Second question around niche marketing focus. How can you laser focus your marketing efforts to target a specific niche within your client base and how can you develop and showcase subject matter expertise that will resonate with a specific ideal client? Third question around marketing investments. How can you evaluate and optimize your current marketing expenditures in terms of hard and soft dollars to ensure they contribute the most efficient and effective client acquisition strategy?
And last, fourth question, let's talk about client experience and engagement. Discuss as a group, what specific actions can we take to improve the client experience within our firm? How we might focus this more so on client satisfaction and client engagement. So this leads to increased referrals and overall growth of your business. I'd go so far as to ask the question, who are the highest total relationship value clients?
Ray Sclafani (18:52.034)
That is the client's fees plus the fees of those they've referred your way. Add all that together and figure out what is the total relationship value of each of your very best referral sources. Well, thanks for tuning in and that's a wrap. Until next time, this is Ray Sclafani. Keep building, growing and striving for greatness. Together, we'll redefine what's possible in the world of wealth management. Be sure to check back for our latest episode and article.