RIAs are currently facing a dual-pronged problem: under-resourced marketing operations and changing demographic customer bases.
From a Cerulli Associates report, it is clear that traditional organic growth drivers are shifting as times drastically change.
Firstly, on average, RIAs allocate a mere average of 5% of total expense on their marketing effort. Only 14% of firms actually have a dedicated marketing function.
Where smaller firms are concerned, this leaves them with a bare-bones, or completely absent, growth team.
Secondly, more than half of RIA clients have been found to be aged 50 and over. A quarter are 60 plus. This implies that a large share of assets are, or will soon, enter the decumulation phase.
It begs the question, where is the money coming in and going out?
The report discovered 56% of RIA outflows last year went toward regular income withdrawals and one-time distribution. Firms are typically seeing 2-5% annual asset attribution from their existing clients (before any departures.)
At the same time, client acquisition methods are not changing tact. RIAs are seemingly waiting for referrals to arrive in their laps. Referrals are a winning tactic to get new business, drawing 74% of acquisition, but only 51% of RIAs solicit them.
So, what does this mean for fund marketers?
All of these findings identify that a more manageable, structured plan for asset growth is required, and that asset and fund managers should approach selling to RIAs in their distribution chain differently.
As RIAs face underfunded marketing budgets and are largely passive in their referral process, they become a channel without the means to regularly process new content, vet new strategies, or engage with proactive outreach.
With that in mind, packaged RIA materials should be shifted toward concise, decision-ready content. Advisors can then forward this to clients without wasting time on editing and translation that dominates long-winded thought leadership. This may see short-form content outperform denser pieces, too.
The types of messaging asset managers should focus on when positioning products should also change toward decumulation-stage planning, income-generation strategies, and usable templates that improve client communications.
These strategic pieces help to solve RIAs’ existing problems before they exacerbate. Even if the results of an aging client base and tighter resources may be stark, approaching advisors thoughtfully is a simple and achievable step to support growth concerns in a tricky time.
Source
Wealth Solutions Report, “Cerulli: RIAs Need To Offset Asset Churn With Marketing And Other Growth Efforts”
