One of the most common questions we get when we are talking with financial advisory firm and accounting firms is “what should we be spending on marketing?” Because people seem to always be looking for direction on how to structure their marketing budget, we wanted to share some of the latest research and recommendations. Of course, your actual numbers will vary depending on desire to grow your practice versus simply maintaining brand visibility. More on this later in this article.

Adaptation and Innovation in Recent Years

Let’s begin with some research from Hinge Research Institute and the Association for Accounting Marketing. Annually, these two organizations team up to conduct research on how successful accounting firms are allocating their marketing budgets. They connected with 140 firms that represented 523 offices and 23,072 full time employees, with a combined revenue of $6.7 billion. The results are so comprehensive and enlightening that we want to share! Read on to see how your firm stacks up against the industry benchmarks. And you might want to grab your free copy of the 2021/22 AAM Marketing Budget Benchmark Study.

Looking back at 2020 and 2021, both individuals and businesses experienced so many compounding changes and stresses as we were all forced to adapt very quickly. The study provides a fascinating glimpse into the results of various methods of adaptation/innovation and how it has impacted the industry.

85% of firms tried out new marketing strategies and business development efforts – and two-thirds experienced successful results. Many implemented new digital marketing tools and shared timely resources with their clients. When you compare 2021 marketing budgets with 2019 budgets, it’s clear that it became more crucial to designate adequate marketing funds. Marketing expenses doubled from 1.5% (2019) to 3% (2021) and the average firm increased revenue by 10%.

How Much Do Financial Advisory and Accounting Firms Actually Spend on Marketing?

According to the Hinge Research Institute, high-growth accounting firms experience an annual growth rate of 10%. Their marketing budget (excluding compensation) is usually around 2% of revenue and around 3% of revenue (including compensation).

  • When comparing digital vs traditional marketing priorities, high growth firms designate 42.9% of their marketing budget for digital marketing and average growth firms prioritize 46.3% of dollars toward traditional marketing efforts.
  • Since 2019, high growth firms have increased their marketing dollars by more than 8 percentage points.
  • High growth firms make it a priority to have access to a wide variety of marketing experts, either in-house at their firm or through utilizing outside consultants, agencies or freelancers.
  • The top marketing expenses – excluding compensation – were as follows, starting with the highest:

1. Outside consultants, Agencies or Freelancers (13.9%)

2. Memberships & Dues (9.6%)

3. Pay Per Click Advertising (8.2%)

4. Social Media (7.4%)

5. Email Marketing (6.3%)

6. Marketing Technology (6.2%)

7. Sponsorships (6.1%)

8. Website Maintenance Expenses (5.6%)

10. Internal Marketing Education & Training (4.0%)

Financial advisory firms also generally spend around 2% of their annual revenue on marketing expenditures, and they also spend 20% of their personal time on marketing. According to Michael Kitces’ article on “The Most Efficient Financial Advisor Marketing Strategies and The True Cost to Acquire a Client” he says that the financial advisory community is remarkably inefficient when it comes to marketing. He claims that often the marketing tactics which financial advisors think will work for them, are more time-consuming and expensive in reality. Based on the many years I’ve personally spent working within financial advisory firms, I also have found this to be true. There seems to be a high level of dependence on marketing strategies that depend on the advisor’s time rather than investing in marketing tactics that will consistently produce leads for them.

Here are some marketing strategies that top performing financial advisory firms are consistently using:

  • Client referrals
  • Search Engine Optimization (Organic SEO)
  • Networking/COI referrals
  • Marketing Lists
  • Paid Per Click Online Ads (PPC SEM)
  • Seminars / Webinars

Tools to Help You Create Your Marketing Budget

The experts at XY Planning Network point out that “not knowing your budget for growth is a huge missed opportunity to feel empowered and positive about growing the firm.” When you don’t zoom in and select business priorities, it’s tempting to focus more on your challenges instead of spending time on your opportunities. XY Planning Network shares powerful advice and 3 considerations for defining your marketing budget, such as looking at the “time cost” of marketing efforts and which numbers to assess in building the financial value of a good prospect. Once you determine the value of your ideal prospect it’s easier to decide much you’d like to invest in marketing.

If you’re a small business that has been operating more loosely, it can be pivotal for your growth to create a marketing budget. Take advantage of help and free templates that are available online. Hubspot offers marketing budget templates which can direct where the dollars go, and ensure your budget matches your priorities.

To create a small business marketing budget, we encourage you to consider these factors:

  • What are your firm’s growth and long-term business goals? Are you looking for aggressive growth, are you building it up to sell, do you need to attract more experienced or younger staff?
  • What is your firm’s annual revenue? The more revenue, the more you can afford to invest in marketing staff, tools and outside resources.
  • Do you have internal marketing resources? (i.e. experienced marketing staff, broker/dealer tools etc)
  • What is the overall size of your firm? How many producing professionals does your marketing need to support?
  • Does your firm already have a strong marketing infrastructure in place? Or do you need to create a marketing plan from scratch? Update or refresh your firm’s website?
  • Does your firm’s marketing need to support or train your firm’s younger team members and emerging leaders?
  • Are you looking to increase your digital marketing efforts (i.e. inbound leads from your website) or are you willing to spend more personal time on networking and sales?

In Conclusion

We all know we need marketing to grow our practices. Especially in this post-Covid area where we depend on the digital world to research services, meet with other professionals and reach new audiences. Investing in the creation of a strategic marketing plan – and then consistently implementing it – is the key to creating sustainable growth for your firm. If you have further questions around your marketing budget, please feel free to schedule a time to talk. I’m happy to help you brainstorm your budget. Happy marketing!

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