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How Financial Advisors Get New Clients, According to the Data

Date: January 18, 2023

A quick google search will deliver dozens of tips and strategies for how financial advisors get new clients but which ones are actually worth the time and money you need to invest? Conventional wisdom in the industry says that networking and client referrals are the most important, but generating new clients out of either is time-consuming and often slow to bear fruit. 

While they can still provide value, the data shows that the exact mix of marketing strategies you need to get new clients depends largely on what type and stage of growth your advisory practice is in. To demystify your decision-making a bit, we’ll review the top seven most successful strategies for getting new clients and which financial advisors they’re most suited to.

How Financial Advisors Get New Clients: The 7 Most Successful Strategies

According to Michael Kitces’s 2022 report on which marketing strategies financial advisors are using and what kind of results they’re seeing, most of the more than 1,000 firms surveyed used at least four different tactics for finding new clients. 

The study measured each tactic’s efficiency using a mix of client acquisition cost (which includes both hard dollars and the cost of the advisor’s time), average revenue per new client, and overall success rate (as a percentage of advisory practices that were able to generate at least one new client using the tactic).

Client Referrals

With a 96% success rate and the second lowest client acquisition cost, client referrals are definitely one of the most popular strategies for getting new clients. Of the firms that rely on this approach, those referrals accounted for an average of 48% of all the firm’s new clients in 2021. 

In addition to being effective, advisors prefer this approach because it doesn’t take much effort. By simply focusing on providing great service to your current clients—and potentially incentivizing referrals with a referral program—you can bring in qualified leads that are extremely likely to become clients. 

However, relying solely on referrals isn’t really sustainable. For one, if you’re trying to bring in higher net worth clients than you currently serve, your existing clients might not have the right connections to bring those referrals in. 

For newer advisors, you might not yet have the client base or strong client relationships you need to rely on referrals. But even for more established practices, each client can only make so many referrals before they just run out of people to send your way. 

In short, implementing a clear referral program is worthwhile, but this definitely shouldn’t be your only tactic for getting new clients.

COIs

Coming in second place with a success rate of 90% is cultivating relationships with centers of influence (COIs). While building those relationships takes time, once in place, COIs are a great source of steady new clients. 

Keep in mind that professional networking to meet and build relationships with COIs takes time and effort that larger, busier practices might not have. So, even though it might not pay off right away, it’s worth establishing those relationships when your practice is still relatively new and small.

Paid Web Listings

For a fixed annual fee, financial advisors can have a profile added to an online database where people go to find a financial advisor. According to Kitces’s 2022 report on marketing strategies, these listings boast a 79% success rate. That’s an impressive result considering how little effort is required to use it. 

The most popular sites financial advisors chose:

  • NAPFA
  • FPA
  • CFP Board
  • XY Planning Network
  • Garrett Planning Network
  • FeeOnlyNetwork

It’s a low-effort, high-yield tactic that works for just about any advisory firm. Once your profile is up, all you have to do is make sure the information is up-to-date and remember to pay the annual fee. 

General Networking

General networking at community events, volunteering, and other less formal strategies can pay off in the long run but it’s not quite as cost effective as the time you spend networking with professional COIs like CPAs and attorneys. 

Kitces’s report calculated this informal networking tactic’s success rate as 78%. So the odds of getting a client this way are still good, but the time and effort required might make it a less practical option for advisors who already have a packed schedule.

SEO Strategy

Search engine optimization (SEO) involves optimizing the content of your website to make sure Google can recognize it as a relevant result for your target audience. Although often overlooked—just 29% of practices have an SEO strategy—it’s surprisingly effective and it’s the cheapest tactic to implement. It costs nothing in terms of hard dollars and, after the initial time spent overhauling your website, it takes up very little time to keep it optimized.

With a success rate of 57%, it may not be as sure-fire as a referral but it’s a very low cost, low effort tactic that can turn your website into a steady passive lead generation tool. It’s even more effective for niche practices, who average a 67% success rate from implementing an SEO strategy. 

Social Media

With a success rate of 39%, social media turned out to be a surprisingly inefficient marketing strategy for most firms. While it didn’t generate as many leads as advisors hoped for, the leads it did generate were almost always qualified leads. Moreover, social media still turned out to be a great supporting tool for other marketing tools, like an optimized website, a webinar, or even as a way to strengthen connections with current and prospective clients. 

It’s ability to boost the results of other strategies and the fact that it’s relatively low cost still make social media marketing a useful tactic. That’s especially true if you use automated scheduling and other tools to reduce the time invested as much as possible. 

Client Appreciation

Hosting social events, sending out birthday cards, and other informal strategies that strengthen your client relationships are one of the best ways to improve retention rates and increase the number of referrals you get. But just 17% of advisors held client appreciation events in 2021. 

While the costs of hosting a dinner or golf outing might add up and you should avoid any hard selling or shop talk, these events are a chance to reinforce those existing relationships and open up the invite to your clients’ friends and family who might end up becoming qualified leads. Advisors who hosted client appreciation events saw some of the highest returns on the investment, too, with about $10,000 in average revenue per new client from this tactic. 

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