KPIs for RIAs to Track • Financially Simple


As Registered Investment Adviser (RIA) firm owners, we realize that marketing is essential to success and growth. Yet, it’s often perplexing to us. You see, optimizing your marketing isn’t just about having a marketing strategy; it’s about measuring its performance through Key Performance Indicators (KPIs) to ensure that your efforts are paying off. In this entry, I’m going to explore the significance of marketing for financial advisors and dig into the essential KPIs that can help you refine your strategies, boost your client base, and ultimately, make the eight-figure exit possible.


Follow Along With The Financially Simple Podcast!

This week on The Financially Simple Podcast:

  • (00:50) Optimizing your marketing

  • (02:02) Referral marketing

  • (04:05) Seminar marketing & community involvement

  • (09:01) Content marketing

  • (11:23) Analyze each category’s performance individually

  • (12:56) What should you track?

  • (18:27) What is funneling?

  • (23:24) Common marketing pitfalls in RIAs


Optimizing Your Marketing Department: Changing the Game

Effective marketing is a game changer for financial advisors. It’s no longer enough to have exceptional financial expertise; you need to convey that expertise to potential clients and build your brand in a crowded marketplace. Effective marketing can help you connect with your target audience, demonstrate your value, and ultimately, acquire new clients.

But here’s the catch: it’s not just about throwing resources into marketing. To optimize your marketing efforts, you need to track the right KPIs to ensure your strategies are effective and delivering the return on investment (ROI) you desire.

Key Marketing Practices for Financial Advisors

Before we get too deep into the weeds surrounding the KPIs you should track, let’s explore some common marketing tactics employed by financial advisors. Understanding these practices will provide context for why certain KPIs matter. Of course, we’ve already discussed niche and internal marketing, but there are many other marketing strategies that RIA owners could choose to employ. Let’s take a closer look!


Related Reading: Niche Marketing: When Is the Right Time For RIA Owners to Explore?


Referral Marketing

Referral marketing, often referred to as word-of-mouth marketing, is a method where your existing clients promote your services to new clients. It’s a powerful and cost-effective way to acquire new business.

More than half of new RIA clients are gained through client referrals—yet only 12% of advisors actively pursue that channel of business growth. Think about that, friends! We are vastly underutilizing the power of referral marketing in the RIA space. I meet advisors at trade shows all the time, who will tell me that they want to start a podcast. I usually respond by saying, “That’s great! How is your referral marketing?” Inevitably, they scoff at this question and say something like, “I don’t do that. It doesn’t work.” Yet, that’s not what research tells us.

In fact, the 2022 Kitces Research Survey on Advisor Marketing revealed that 93% of advisors had gained new clients via referrals in the previous year. Referral marketing can significantly impact your client acquisition and should be a focus in your marketing strategy.

Seminar/Event Marketing

Seminars and events are a classic marketing tactic for financial advisors. They involve planning, organizing, and executing events to promote your brand, services, or expertise. Traditional seminars—or as I used to call them, “lick-a-plates”—and virtual webinars have long been staples in marketing for financial advisors.

According to the same Kitces Research Survey, 55% of advisors use seminars and events to reach new prospects. Virtual events, such as teleconferencing and webinars, have also become popular avenues for advisors over the past few years. When including these virtual meetings into the larger category of event marketing, we see an 8% boost (63%) in the number of financial advisors using events to attract potential clients. It’s essential to track the performance of these events as part of your overall marketing strategy.

Branding & Community Involvement

Your brand and community involvement can have a significant impact on your success as a financial advisor. A strong community involvement strategy goes beyond writing a check; it’s about creating a lasting impression in your community. There are so many ways to get connected and make an impact in your community, you’re sure to find one that aligns with your firm’s values and mission.

In fact, marketing advisory firm, 3FoldComm, suggests joining “a local chamber of commerce and participate in its philanthropic programs, identify a group of other businesses with similar charitable interests, or adopting your employees’ passions and supporting the work they’re already doing.

You see, engaging with your local chamber of commerce, participating in philanthropic programs, and supporting causes that align with your values can create a halo effect around your RIA. This halo effect can influence consumers’ favoritism toward your services, leading to brand loyalty and equity. A strong brand and community involvement can set you apart in a competitive market.

Content Marketing

Another big trend that RIAs are beginning to embrace is content marketing. Friends, this is my favorite type of marketing. Simply put, content marketing uses created content such as blogs or podcasts to reach a large prospect audience. How large? Well, with over 82 million podcast listeners in the U.S. (expected to exceed 100 million in 2024), there’s a massive opportunity to reach new prospects through podcasts. Blogging allows you to establish yourself as a thought leader and differentiate your services.

One significant advantage of content marketing is the ability to repurpose content. For example, you can record a podcast and then transcribe it into a blog post, effectively reaching different audiences with the same content. This is vital as more people, especially Gen Z, rely on online research to learn about finances. Now, as a quick sidebar, there are many social media accounts that offer financial advice that, frankly, if you were to follow, could be catastrophic. So, be sure you’re following credible accounts.

You see, content marketing enables you to dive deep into subjects that resonate with your target audience. For example, back when COVID first began to spread throughout the U.S., many business owners were being affected by mandatory closures. During this time, my team and I began putting out new and updated content surrounding the Payroll Protection Program (PPP) on a near daily basis. We understood the need and created content to fill that need. As a result, we created greater client “stickiness” and enjoyed unprecedented growth in our firm. People wanted to know how to approach PPP and we made it simple for them to do so.

Analyzing Categories Individually

So, we understand which tactics RIAs are using, but we have to go a little deeper. I’ll often talk with business owners and ask, “What is your ROI from marketing?” They’ll typically answer this question with no problem. But when I dig deeper and ask, “Where is it coming from?” They’re often dumbfounded by the question because they’re not looking at each category of their marketing strategy.

You see, we can’t simply look at the amalgamated results and be done. Understanding which marketing tactics are most effective is crucial. Therefore, tracking the performance of each category separately, is a necessity. By doing so, you can allocate your marketing budget more effectively and fine-tune your messaging to reach your desired target.

Unfortunately, many of us suffer from a form of recency bias. We’ll hear about so-and-so having success with billboard advertising and suddenly, we have to go and purchase a billboard ad. We always want the newest shiny object when it comes to marketing, but not every tactic will benefit your firm. Each category may yield different results, and knowing which ones are performing well can help you optimize your marketing strategy. After all, the ultimate goal is to spend more money on the things that get results and less on those tasks that are ineffective.

So, if we know that we must analyze each category individually, what should we track to ensure that each area is optimized?

KPIs to Track in Your Marketing Department

Friends, there is a difference between macro- and micro-indicators. For example, macro-indicators—often referred to as KPIs—may include things like top line metrics (i.e., number of leads to qualified leads). They help you to identify the overall success of your marketing plan. However, micro-indicators enable you to look at the effectiveness of each individual tactic. For example, you might track how many hits your blog receives on a weekly or monthly basis.

To effectively manage your marketing efforts, you need to understand how your strategies are performing and where improvements can be made. With this in mind, let’s take a closer look at some of the indicators you can track to ensure you’re RIA’s marketing is optimized.

Tracking Leads and Their Sources

One critical metric you should be tracking is the number of leads you receive and their sources. Surprisingly, a 2016 Investment News report revealed that only 38% of firms formally tracked leads. Now, I know that report is seven years old, but it likely hasn’t improved much, based on the conversations I have with so many financial advisors.

Friends, tracking leads helps you ensure that your marketing spend is optimized for maximum effect. It’s also invaluable for troubleshooting—if you’re generating 100 leads but only 2 are qualified, that’s a clear sign that something needs adjustment.

Leads to Qualified Leads Ratio

Another critical metric you should track in order to optimize your RIA marketing is your leads to qualified leads ratio. Let’s say you receive 100 leads from your marketing efforts, but only 20 of them are qualified. That’s a one out of five ratio, friends. If this is your ratio, you have a problem within your marketing department.

You see, what this tells us is that your messaging isn’t properly aligned with your target client. The last thing you want to do is to throw money into a marketing strategy that only attracts people who couldn’t do business with you in the first place. A well-crafted and targeted marketing message will speak specifically to your ideal client. As your ideal client, they should fit within your outline for what a qualified lead looks like.

Conversion Rate

Conversion rate is a critical KPI for assessing the effectiveness of your marketing strategies. The median conversion rates in the financial services industry range from 3.4% to 5%, depending on the sector and goals. In the Wealth Management sector, conversion rates between 1% and 3% are commonly observed for actions like account registrations, consultation requests, or fund subscriptions. Tracking your conversion rate is essential to evaluate the quality of your leads and the success of your sales efforts.

Close Rate

The close rate is a KPI that can vary depending on the marketing tactic used to acquire qualified leads. For example, you should expect a higher close rate from leads obtained through referrals. Michael Kitces offers a valuable perspective on close rates, saying:

I think if you’re converting fewer than a third of your qualified leads, you’ve got an actual conversion problem. You should be over half of the people who are a good qualified fit to your services that are actually deciding to do business with you, and as one or two people noted here, a lot of advisors I know that have a really clear business differentiator, their conversion rate is over 80%. Now they may not see a ton of people, but they’re converting 80% of who they talk to and that’s kind of the point. That means you’ve clearly identified who you’re working with.

To determine your close rate by category, you’ll need to track qualified leads generated by each active marketing tactic. This information is critical because it helps you identify which marketing channels are most effective in converting leads into clients.

The Role of Funneling in Marketing

Understanding the concept of a marketing funnel is crucial to comprehending how marketing and sales processes work together. A marketing funnel is a structured path that potential clients follow, starting from initial awareness of your brand and ending with conversion to clients.

I like to think of it in my simple farmer’s terms. For example, If I have a five-gallon can of diesel fuel and I need to pour it into the fuel tank of my tractor, I need a funnel to ensure that I’m getting the fuel from the can into the tractor. Without it, I might get a few drops where I need them to go, but a large percentage of that fuel will end up either on the ground or all over me and my tractor. The same principle applies when we’re trying to bring new prospects into our businesses.

Here’s an example of a simplified marketing funnel:

  1. Fred Flintstone searches financial advice on his favorite search engine.
  2. He sees your blog in the top results.
  3. After reading your blog, Mr. Flintstone finds value in your expertise.
  4. He then clicks the Call to Action (CTA) to follow you on social media.
  5. Over time, Fred engages with your social media posts.
  6. He decides to sign up for the webinar you’ve been promoting.
  7. Mr. Flintstone then receives and opens a follow-up email that is automatically sent to all attendees.
  8. He clicks the CTA in the email to read about you on your firm’s website.
  9. While visiting the site, Fred explores your services.
  10. Convinced you can help, Fred clicks to schedule a meeting.

Friends, the marketing funnel helps you visualize the journey your potential clients take and how they move from one stage to the next. By understanding the funnel, you can identify where potential issues in your marketing and sales strategies may arise.

You can also use funneling to determine whether a problem lies in your marketing strategy or your sales strategy. For instance, if you’re generating 100 leads each month but only 2 are qualified, that’s likely a marketing issue. On the other hand, if you’re getting 70 qualified leads but only closing 1 or 2, that points to an issue in your sales process.

Common Pitfalls and How to Avoid Them

In marketing for financial advisors, two common pitfalls can hinder your success:

  1. Failing to Differentiate and Track Marketing Categories: Many firms lump different marketing categories together when tracking KPIs. This can lead to a lack of clarity about what’s working and what’s not. To avoid this pitfall, ensure that you’re differentiating and tracking the performance of each category separately. This helps in optimizing your marketing strategies effectively.
  2. Not Understanding the Marketing and Sales Funnel Correctly: A lack of understanding of the marketing and sales funnels can lead to misinterpreting KPI data. It’s crucial to identify where potential issues lie and whether they are marketing or sales-related. A well-defined funnel strategy can help prevent this pitfall.

The Role of KPI Data in Avoiding Pitfalls

Understanding KPI data is crucial in avoiding these common pitfalls. By differentiating and tracking the performance of various marketing categories, you can pinpoint which strategies are delivering results and which need adjustment. This data-driven approach allows you to allocate resources more effectively and refine your marketing processes.

Likewise, by comprehending the marketing and sales funnels and using KPI data effectively, you can make informed decisions about your marketing and sales strategies. You’ll be able to identify where potential issues exist and take corrective action to enhance your overall performance.

Wrapping Up…

Optimizing your marketing department as a financial advisor requires a combination of effective marketing practices and tracking the right KPIs. By understanding the marketing funnel, tracking leads, conversion rates, and close rates, you can fine-tune your marketing strategies and allocate resources more efficiently.

Look, I know life is hard. But my friends, life is good. Optimizing your marketing to drive toward the eight-figure exit can be frustrating. It doesn’t have to be. By tracking a few KPIs and understanding how the data can be used to refine your marketing strategies and processes, you can make optimizing your marketing at least financially simple. Hey, let’s go out and make it a great day!

Want to know more about using KPIs to optimize your firm’s performance and maximize value? Reach out to our team! We’re ready to help.



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