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Growth-focused advisors who spend US$5,000 or more on marketing a year are light years ahead of their peers who spend less than that amount in acquiring clients and boosting their assets under management.

Erikona/iStockPhoto / Getty Images

The winter months can be slow for some professionals, but not for Canada’s financial advisors. They’re at the peak of competition for new clients as March 2, the deadline for Canadians to contribute to their registered retirement savings plans (RRSPs) for the 2019 taxation year, fast approaches.

Although Canadians can contribute to their RRSPs throughout the year, many leave it until the last minute. That provides rich pickings for advisors seeking to win new clients, whether they’re millennials maximizing tax savings from their salaries or baby boomers sheltering their income.

Advisors hoping to build their books of business and boost their assets under management (AUM) during this year’s RRSP season should get serious about making a financial commitment to marketing and focus on bringing younger clients on board if they’re determined to separate themselves from the pack.

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A recent study from Broadridge Financial Solutions Inc.* of 406 advisors in the United States with more than US$10-million in AUM showed that growth-focused advisors – those who spend US$5,000 or more on marketing a year – are light-years ahead of their peers who spend less than that amount in acquiring clients and boosting AUM.

For starters, 43 per cent of advisors who spend US$5,000 or more annually on marketing brought 20 or more new clients on board over the previous year compared to just 16 per cent of all other advisors.

They also average almost twice the AUM (US$297-million) than their lesser-spending peers (US$154-million). A closer look suggests that 54 per cent of these marketing-focused advisors manage more than US$100-million in client assets compared with just 35 per cent of the lower-spending group. And 27 per cent of these bigger spenders manage more than US$500-million in assets compared with just 10 per cent of their lower-spending peers.

Although these marketing-focused advisors spend an average of US$1,451 per acquisition versus US$895 compared with their peers, their total asset figures show that money put toward marketing more than pays for itself – especially when it’s focused intensely on client acquisition. The study shows that 88 per cent of growth-focused advisors devote their marketing money to this activity compared with only 66 per cent of the lower-spending advisors. By doing so, these marketing-focused advisors are more confident in their ability to meet their goals.

In fact, the marketing spend appears to be the key variable between these two groups, who otherwise have similar acquisition strategies. Both groups of advisors offer a balanced mix between financial planning and investments. There’s also nothing to choose between them in terms of their target demographics; baby boomers and members of Generation X remain their primary targets.

Growth-focused advisors may spend more on marketing, but they also maintain a delicate balance while doing so. They invest in almost every channel, while avoid spreading themselves too thinly. For example, they invest heavily in digital channels, including websites and social media, yet still maintain a healthy presence at in-person events.

Donna Bristow, managing director, North American Wealth, Broadridge Financial Solutions Inc.


That logic is sound because Canadian investors overwhelmingly believe that the advisor-client relationship is a quid pro quo. Specifically, Canadians believe they should receive personalized financial products and services in return for sharing their data with advisors. Thus, a hybrid approach in which advisors bring more technology into their practices will also serve them well with the paradoxical demographic of millennials. This generation may be smartphone-fixated, but it also wants personalized service.

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That’s especially pertinent as we are almost midway through a decade (2016-26) when this demographic will inherit roughly US$1-trillion. The transfer of wealth will turn smaller clients into much bigger clients overnight. Yet, recent research suggests that more than one-quarter of affluent Canadians say they’re worried about how their heirs will handle their inheritance, and almost the same proportion doubt their children have the financial literacy to manage a potential windfall.

Despite these concerns, there’s evidence that baby boomers still have not addressed their children’s perceived shortcomings. Fewer than one in five say they have introduced their children to their advisor or taken them to a financial planning meeting with the person currently managing their money. This RRSP season will indicate if they are finally taking action.

*Donna Bristow is managing director, North American Wealth, at Broadridge Financial Solutions Inc. in Toronto.

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