A new survey claims that only 5% of RIA firms feel “advanced” at marketing and business development — and most don’t have a plan in place to improve on that situation.
Not only do 7 in 10 RIA firms not have a plan in place to guide them toward better business results, but that percentage has been unchanged since 2011, according to a Fidelity white paper presenting findings from the firm’s 2014 RIA Benchmarking Study.
“Firing on All Cylinders: Fueling Growth with Benchmarking Insights” notes that “high-performing firms” experienced a 17% compound annual growth rate in AUM from 2010-2013, compared with 11% among all other RIA firms participating in the survey. High-performing firms also reported a profitability margin of 66% (earnings before owner’s compensation) versus 48% among other firms, and noted $321,000 revenue per full-time employee in 2013, versus $245,000 among other firms.
As for what sets these high-performing firms apart, the report notes that they share four key attributes:
A Consistent Story
High-Performing Firms are focused on telling a consistent firm story. While about half (56%) of all firms agree that they have a clearly defined and differentiated firm story, only 43% agree their stories are tailored to the specific needs of target clients. The report claims that high-performing firms are 1.7 times more likely to tell a consistent firm story, with all client and prospect-facing associates describing their firm and its key differentiators in the same way.
An Ability to Articulate and Communicate Target Client Profiles
High-performing firms are nearly twice as likely to effectively communicate their target client profiles to help generate the right referrals, according to the report. Firms with a target client profile reported that 90% of new clients added in 2013 fit this description, compared with only 75% of clients on board prior to 2013. High-performing firms are almost twice as likely to agree that they effectively describe their target client profiles to both clients and centers of influence (COI), which the report says may help clients and COI identify the most appropriate referrals.
An 'Advanced' Referral Process
The report claims that high-performing firms are four times as likely to leverage COI referrals to the fullest. That’s key because referrals from existing clients and centers of influence account for 75% of all new clients for RIAs, according to the report. However, less than one-third of firms rate their referral processes as advanced, or even fairly strong, and only about one-in-eight (14%) say they have analyzed their client base to focus on the clients most likely to make referrals.
By the way, “advanced” runs the gamut from basics like thanking sources for referrals to working to understand their centers of influences’ target client profiles so they can send reciprocal referrals. The report says they are also more likely to review centers of influence data, such as referral status, at least monthly and to keep data up to date.
Talent and Resources in Place
