As we begin 2025, it may make sense to take stock of 2024. Did your business grow by 20% or more? Did you experience a spike in your personal income? Were your existing clients so happy that they provided a steady stream of referrals? If you’re typical of the industry, none of those things happened. 2025 can be a very different year for you, but you need to get started making changes now.
Advisor: Your Growth is Not a Function of Your Industry
The advisory industry has a big growth problem. Statista Market Insights predicts an anemic growth of just 2.78% per year for the next five years. Pundits may suggest it’s the commodification of asset management, changes in consumer expectations, or work that doesn’t appeal to younger professionals, but in the end, none of that has much to do with you.
Let’s start with one unassailable fact: how fast the industry does or doesn’t grow has nothing to do with you. Unless you live far off the grid, the available market will easily support massive growth in your business. There are 131 million households in the U.S., and 100 of them are all you need to earn a large income and own a thriving and valuable business. If they are the right 100, that is. Family offices are very successful with just one client.
You may say, “Sure, but most families don’t need a financial advisor.” Okay, fine, but there are over 27 million families with a net worth of a million dollars or more. We should face facts here: that you aren’t growing probably says a lot more about you than it does about the size of the market.
Advisors Fail to Grow for Just Two Reasons
The reasons advisors don’t grow come in just two categories of failure: you either don’t have a compelling value proposition, or, more likely, your ideal prospects simply don’t realize you exist. Both of those are fundamental weaknesses in marketing—and both can be overcome.
A survey by the Financial Planning Association found that 73% of financial advisors felt it was important to communicate value to prospects, yet only about half believed they were doing so effectively. In my experience training advisors, I’ve found very few who were able to state their value proposition clearly and effectively. Some just get a blank look.
Here is another statistic to consider. A survey by Broadridge found that advisors with defined marketing strategies onboard 50% more clients than those without them. I would suggest that the single most important piece of content in all your marketing is your value proposition for the simple reason that it expresses why someone would gladly pay for your services. How much they’ll pay and how profitable those fees are for you will be directly related to the prospect’s need for your services and the scarcity of those services. The ideal value prop is unique and vitally important.
This explains why 70% of all advisors who earn seven-figure annual incomes have a niche specialty. They can answer one critical question clearly and succinctly: what do you do that no one else does, and why does it matter to me?
A me-too value prop will differentiate solely based on your fees. The most attractive me-too offers are always the lowest cost, and the client is easy for your competitors to poach. The trick to attracting and retaining clients is to provide lasting value that can’t be easily replaced.
Job one for 2025 should be to create a compelling value proposition. Ideally, it will be unique and available only from you. If you do have a specialty, this exercise will be about how you express it, and that is more about your clients’ needs than what you do. Your value proposition becomes more compelling when clients understand how they benefit from working with you.
There is a simple formula to get you started. Simon Sinek developed it, and it’s just a fill-in-the-blanks exercise: what is your contribution, and what is its impact? Spend some time thinking about that, and don’t give up until you get it right.
Get Familiar with ROAS
As for the other reason for failure, it’s likely because you’re investing too little in marketing. That Broadridge survey had two other key findings: the average financial advisor spends $15,900 per year on marketing, and growth-focused advisors invest four times more than their non-growth-focused counterparts.
Just spending money on marketing is not enough, however. You have to target your ideal prospects, and you have to keep at it. The great brands, like Coke, Nike, and Mercedes, spend a huge amount on advertising every year, despite being household names with nearly 100% brand recognition. They all realize that they must continually reinforce their brand image and messaging, and so should you.
One of the really great things about the advisory business is that the money your fees are based on grows over time. Assuming a client’s 60/40 allocation grows at 6% per year for 20 years, and you charge a 1% fee on an initial account of $1 million and apply a discount rate of 7.5%, the net present value of that one client is $171,215. That’s just one client and not a particularly large one.
Marketers use the term ROAS, an acronym for return on ad spend. This is the key performance indicator for marketing, and you should start thinking about it. If nothing else, it explains why growth-focused advisors spend over $60,000 per year on marketing. Even a single client can make your marketing dollars very profitable.
These are just two of the keys to a growing and valuable advisory practice, but they are absolutely vital. Delivering great value won’t mean much if no one knows about it, and all the marketing spend in the world won’t create a high ROAS if you are advertising a mediocre value proposition. Get those two things right, and then you can turn to another hugely important success factor: scalability.
