Three Components to Successful Marketing for Advisors
The ‘rule of three’ is a writing principle that suggests that groups of three are very effective. I believe this is especially true when it comes to RIA marketing. From my experience, those RIAs that are most successful share three basic characteristics:
I believe this that is where the ‘rubber meets the road.’ Sharing your knowledge and insights with clients, prospects and centers of influence through content is one the most effective marketing strategies. Blogs, webinars, whitepapers, infographics, podcasts are a few ways you can share your thought-leadership and viewpoint. Before you start though, there are a few questions that need answers to get you there:
- What are you most passionate about and what makes your firm different than others?
- Is there a particular niche or unique client type that you best serve?
- Who within the firm is best to tell your story? It doesn’t have to be the firm’s principal, but they should be someone who will be fully committed to the role.
- Most importantly, be authentic and speak about what you know. Steer clear of the latest fads and avoid competing with or copying others.
How do you cut through the clutter? To start, make sure your message is clear, concise, and easy to understand for the reader. Always have a compelling call-to-action (CTA)which offers value to your reader. Think about what the next logical step in the process that may provide additional insight and engagement. For example, if you’re writing a blog article, you may want to reference a ‘Download a whitepaper…’ or ‘Attend a seminar to learn more…’ Try not to make it too sale-oriented, instead focus on the educational benefit to the reader.
In addition to your purpose is your plan. The old adage ‘plan your work and work your plan” may be cliché, but is often the difference between success and failure to execute your marketing goals. Begin by defining very specific and measurable goals. Try to set short and long-term goals that are both reasonable and achievable. Next, develop a strategy which details your tactics, resources, budget, and schedule.
There are two factors to your commitment – financial, determining a budget that aligns with your return on investment (ROI), and personal; who’s going to actually doing the work and how much time are they willing and able to put in.
As a small business, how much should you allocate to marketing? Although opinions vary, this fairly straightforward explanation from the U.S. Small Business Administration provides some guidance:
“Many businesses allocate a percentage of actual or projected gross revenues – usually between 2-3 percent for run-rate marketing and up to 3-5 percent for start-up marketing. But the allocation actually depends on several factors: the industry you’re in, the size of your business, and its growth stage. For example, during the early brand building years retail businesses spend much more than other businesses on marketing – up to 20 percent of sales. As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.)”
Once you’ve determined a budget, develop a process which closely measures both your cost and the return on investment (ROI). There are many ways to do this. Investopediagives this simple example, “take the sales growth, subtract the marketing cost, and then divide by the marketing cost: (Sales Growth – Marketing Cost) / Marketing Cost = ROI.” How you look at the ROI of any marketing campaign ultimately comes in the form of increased business growth. The main purpose is to track your efforts over the course of the year and beyond.
A few things to keep in mind in maximizing your return on investment:
- View all marketing initiatives as ‘works in progress’ — look for small ongoing adjustments which can often have great impact on the results.
- Conduct after-action assessments — take the time to review what worked, what didn’t, and what needs improvement. Analyze all aspects of your effort and set qualitative and quantitative goals for the future.
On a personal level, be sure that whoever is managing your firm’s marketing, be it a staff associate or outsourced consultant [for on this, read my IRIS article, 5 Advantages of Working with a Virtual Marketing Director], it can be wise to start with a smaller project to make the process less overwhelming. Select someone who has both strategic and tactical experience. It’s great to have someone who’s able to tell you what you’ll need to do. It’s another thing to have the hands-on skills to get the job done. Since marketing is a long-term investment, it’s worth your while to find and develop someone with the right mix of talent, values, and work ethic to be a true resource and extension of your firm, and lead this effort.
As small and entrepreneurial businesses, RIAs need to approach marketing in the most efficient manner with constantly keeping an eye towards both short and long-term goals.
The Lies Spread by Bankers About Cryptocurrencies
I had a chat with The Financial Times the other day, and provided lots of background as to why I don’t think cryptocurrencies are the choice of criminals. The comment that was reported was the following:
Chris Skinner, a financial technology author, said it was “complete rubbish” to suggest the main use of cryptocurrencies was criminal. “There is some criminal activity associated with some cryptocurrencies but it is quite minimal,” he said. “It’s a myth that the financial community want to promote.”
I feel I need to explain this further, so here goes.
My response was in answer to Vasant Prabhu, Chief Financial Officer of Visa (the card network) who made two claims:
1) Most people have no idea what they’re doing with cryptocurrency investments; and
2) Cryptocurrencies are mainly being used by criminals.
With the first point, I agree. In fact, I loved the John Oliver Show that discussed crypto and started with the line that cryptocurrencies are “everything you don’t understand about money combined with everything you don’t understand about computers”. A perfect combination for idiots to invest in. I agree with both Vasant and John, as many people are buying cryptocurrencies for no other reason than other people are buying them.
The second point I completely disagree with. Mr Prabhu said cryptocurrencies were a “favourite” for criminals.
“It’s very hard to get dirty money through a banking system. Cryptocurrency is phenomenal for all that stuff . . . Every crook and every dirty politician in the world, I bet, is in cryptocurrency.”
This is complete baloney and is a smokescreen being created by financial people to deflect the real purpose of cryptocurrencies, which is to use software and servers to manage value rather than buildings and humans. In other words, cryptocurrencies have the opportunity to reduce or even replace banks, which is why I find it interesting how often I hear a financial person say that bitcoin and cryptocurrencies are just for criminals when it’s blatantly not true. Unfortunately because they are in a position of authority, politicians believe them; and unfortunately, because they are also in a position of authority, the media believes them; and unfortunately, because they are in a position of authority, the public sometimes believes them too.
Most law enforcement authorities however, state that the levels of criminal activity with cryptocurrencies is so tiny today that it doesn’t matter and, specifically, does not warrant deflecting their time and energy to investigate them. Just to illustrate this, the total worldwide investment in all cryptocurrencies is around $300 billion today. Even if criminals were running 10% of that, it’s still just $30 billion. That is an insignificant amount compared to the trillions being laundered through the traditional financial system, mainly through offshore companies buying up properties.
From The Telegraph, November 2017:
Organised crime generates income equivalent to around 2.7pc of global GDP. Around $1.6 trillion of this is laundered to disguise its criminal origins: financial crime is undoubtedly a worldwide problem.
From What Mortgage, February 2018:
Julian Dixon, CEO of Fortytwo Data, whose research found that more than a third (37%) of all suspicious activity reports (SAR) across the entire legal sector were related to property: “For criminals, the vast amount of cash involved in property purchases provides the perfect cover for laundering the proceeds of drugs, terrorism and firearms offences.
From The Times, February 2018:
Rob Wainwright, director of [Europol], revealed that 3 to 4 per cent of the £100 billion of illicit cash circulating in Europe is laundered through anonymous digital currencies such as bitcoin.
So that’s around £4 billion max right now. That’s less than a particle of a drop in the ocean of crime globally.
Now, the concern may be that cryptocurrencies offers the opportunity to launder funds. This is possibly true and is why I said there is some criminal activity with some cryptocurrencies which is tiny today, but might grow over time. Even then, it is speculative and too early to call. For example, that paragraph from The Times is factually incorrect, as bitcoin is not anonymous. In fact, nearly all digital transactions can be tracked and traced online, and therefore offer the worst use case for money laundering.
This is why the only currency that criminals currently use in any volume for illicit activity is Monero, because it is nearly an equivalent of digital cash. Nevertheless, the total market cap of Monero is $3 billion, and even if half of that is criminal activity, it’s totally insignificant on a global scale.
All in all, it is obvious that most financial people have created this myth of criminals opting for cryptocurrencies for two reasons:
1) it is to protect their turf, as they don’t want to lose their role as intermediators of finance; and
2) it is to deflect the authorities from looking at the true perpetrators of illicit monetary activity, namely the banking system.
Bear these two points in mind when I say that banks were built for the physical distribution of paper, which is why cash and property are the physical assets that are the preference of criminal choice. If you didn’t know it, London is actually the money laundering capital of the world:
- British registered companies and British-based banks helped move at least $20 billion of the proceeds of criminal activities out of Russia between 2010 and 2014.
- Transparency International’s research found 766 UK corporate vehicles involved in 52 large scale corruption and money laundering cases approaching valuations of £80 billion.
- Around half of the 766 companies alleged to have been involved in high-end money laundering were based at just eight UK addresses.
- The Home Affairs Select Committee hearings found that the London property market is the primary avenue for the laundering of £100 billion of illicit money a year. No wonder first time buyers cannot get on the property ladder.
If anything is the preferred market for money launderers then it is banks, not cryptocurrencies. No wonder financial people are trying to deflect the media elsewhere.
Bottom-line: as all things move to digital distribution of data, the trail to audit such movements get easier because they can be sniffed out and monitored; as a result, most criminal activity will continue to leverage the weak links in the chain, which is the physical distribution of paper through cash and property assets in the traditional financial system.
I’ve written a lot on this in the past and would point to these two blog entries for more:
- Laundering-as-a-Service (a bank USP)
- Money laundering is most likely to wash with your local estate agent
And there’s also a lengthy but worthwhile read about why bitcoin cannot be regulated, as it is protected by America’s first amendment and the right to free speech.
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