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Practice Management > Marketing and Communications

5 Steps to Building a Growth-Focused Marketing Budget

By Mary Kate Gulick

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Every financial advisor has talked with clients about budgeting. It’s not about restrictions, you tell them. It’s about priorities.

Your budget is a tool to declare what’s important to you and allocate your resources in a way that aligns with those prioritized values.

The funny thing is that when it comes to marketing for growth, financial advisory firms, large and small, don’t always heed this advice. In fact, in an impromptu (and totally unscientific) LinkedIn poll I conducted last week, a whopping 57% didn’t have their marketing budget yet approved for the new year.

If you want to grow your firm in 2024 — whether organically or through M&A — then you have to allocate your marketing budget to your growth goals. Even in many enterprise-level firms, marketing is often considered an expense rather than a growth driver. So it’s no surprise that most firm marketing budgets resemble a wish list for the year instead of a strategic, prioritized plan.

If you’re still working through your marketing budget for 2024, here are five essential considerations to ensure that your spending is intentionally aligned with your business growth objectives.

1. Start with a clean slate.

Unless you were 100% thrilled with your outcomes from 2023, that year’s budget isn’t the right template for the new year. While it may feel like you’re reinventing the wheel, starting your 2024 marketing budget from scratch ensures that you’re asking the right questions and not just filling in the blanks.

A clean slate can keep you from carrying over activities that may not be progressing you toward your growth objectives, and just get funded year after year because … well, that’s what you’ve always done.

But when you’re trying to achieve goals you’ve never reached before, you’ll have to engage in strategies you’ve never tried before. And prioritizing new things usually means deprioritizing things that are not working (spoiler alert: That’s a good thing).

2. Know your total.

The question I get most often from small advisory shops, major RIAs and wealth platforms is this: How much should we spend on marketing? While there’s no one answer, there are a few tried-and-true ways to approach the question.

I recommend establishing a marketing budget based on a target percentage of overall operating budget or as a percentage of projected revenue for the year.

According to Deloitte’s 2023 CMO Study, companies allocating based on operating budget spent an average of 13.6% on marketing — accounting for 8.7% of revenue. In financial services, marketing accounted for about 8% of revenue.

For technology companies, marketing accounted for a whopping 21%. For most advisory firms, allocating between 9% and 15% of operating budget to fund marketing is appropriate. If you create and sell a technology product, think about allocating 13% to 18% to marketing.

3. Prioritize outcomes, not activities.

Most budget templates are dictated by finance and have pre-set categories — staffing, advertising, events, technology, sponsorships, etc. With a format like this, it’s very difficult to understand at a glance what outcomes your budget is trying to generate.

The solution? Categorize your budget by desired outcome.

Let’s say the three most important things you need to accomplish over the year are to:

  1. Add 25 new advisory firms to your M&A funnel
  2. Generate 1,025 qualified leads across five advisors with excess capacity
  3. Boost existing client revenue by 8%

Make those three outcomes your primary budget categories. If these outcomes are in order of priority, start by allocating the appropriate percentage of resources to each outcome.

Let’s say the business is projecting that M&A will be its most important and significant source of growth for 2024, likely to account for about 80% of new revenue. Then outcome A will get the most resources.

Outcome B is also core to your growth strategy, but organic growth will only account for 20% of growth. It will receive a significantly lower resource allocation. And outcome C will help organic growth, but not as much as outcome B. It gets even less.

4. Stay open to opportunities.

The smartest marketers know one thing for sure: They don’t know everything. And no one can predict every great opportunity for lead generation, share-of-wallet capture and advisor recruitment that will come up over the course of the year.

Every year, keep 20% to 25% of your marketing budget for backbone functions and opportunities that may arise. Backbone spending is for administration, mar-tech enhancements and other connective tissue that holds marketing plans together.

Your opportunity bucket is exactly what it sounds like … the strategic slush fund for when an ideal sponsorship, content partnership, or other unforeseen and well-aligned marketing tactic presents itself.

The worst-case scenario? You’ll have some money at the end of the year that you don’t spend. That’s a much better position than having to pass on an opportunity to surpass your goal just because you didn’t see it coming months earlier.

5. Communicate your decisions.

A marketing budget isn’t just a document for finance. It’s an action plan for your marketing team, a heads-up to the executive leadership team and a declaration to everyone else in the company who may be asking marketing for help.

When you can show how you’re prioritizing your resources, it’s much easier to say no to executive pet projects and non-marketing design work that somehow always makes it across your desk.

Putting a stake in the ground and saying, “This year, these are the three things we’re spending time and money on. If it’s not in the marketing budget, it’s not a marketing priority,” can keep your team free to focus on work with real strategic value.

That’s great for morale, retention and the quality of the work that really matters.

If it’s not budgeted, it won’t happen.

Remember, your marketing budget is more than just a spreadsheet. It’s tangible proof of your strategic priorities.

Start the 2024 budget with your most important business outcomes. No one will mind if the weekly YouTube video takes a back seat when your team is crushing its growth goals.

Mary Kate Gulick is executive vice president and head of agency for FiComm Partners.

 (Image: Adobe Stock) 

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