Lessons of a Spend-Happy Advisor

Recently someone sent us a link to another podcast for financial advisors that caught our attention. The show was about accelerated growth and featured an advisor who has taken an aggressive approach to spending in order to build the business in a short amount of time.

Everything sounded great on the surface. This firm has grown to $200 million of AUM in five years by spending as much as $30,000 month in marketing. The revenue seemed to point towards a great return on the spending, but after listening a few times, we wanted to really dive into the business to determine just how profitable it really is.

This isn't a criticism of another advisor. Everyone has a method for running their business and it's great to see people having success. Instead, we want to evaluate each area of the spending and see what changes could be made to maximize profitability. That's the ultimate goal, right? We want to work smarter so let's find ways to do just that.

We'll lean on Bond Girl's marketing expertise to help us evaluate the strategies being deployed. Is everything being used effectively to reach the end goal? Would there be better ways to spend the money? What's missing with this marketing plan?

It's always beneficial to examine other businesses to see what lessons you can apply to your own operation and that's the goal for today's Profitable Advisor Podcast. You can see the full list of topics in the rundown below.

For more on this topic and other strategies to growing your business, join us over at RenegadeAdvisor.net.

Today's show rundown:

1:10 –  An episode from Dan's favorite TV show 'The Profit' about pricing relates to what we're talking today.

2:41 – Someone sent Dan a link to a podcast featuring an interview with an advisor that took on a ton of overhead to grow his business rapidly but there was no talk of profitability.

4:09 – Let's give some feedback on this interview and point out some things this advisor was doing wrong.

5:00 – So let's break down the numbers to start.

5:53 – Bond Girl shares her observations from this advisor's business.

7:08 – This was the most powerful sentence in this entire interview.

8:42 – Dan might irk some people with this statement on profitability.

10:17 – Applauding the fact that this advisor was essentially doing deficit spending was a problem.

11:11 – What bothered Bond Girl in the interview was the belief that you have to have a revenue growth goal to be successful.

12:17 – The infrastructure strategy to build before the revenue comes isn't a good plan.

14:30 – Let's talk marketing because that was a focus of the show as well. Here's how the numbers break down.

15:43 – Here are Bond Girl's takeaways on the marketing side of this business.

17:20 – We get why someone wouldn't want to share their behind-the-scene numbers but I don't think he even knew the numbers.

18:37 – If you're going to run a profitable business, you have to know where your clients are coming from.  

20:12 – Here's where he was spending his money. It starts with SEO, which Bond Girl isn't a fan of and she explains why.

23:01 – He also had a radio show in LA, a billboard, promotion at high school football games, and more. Most of this is ego driven rather than business driven.

24:50 – You can build a brand but it happens in the work you do.  

26:39 – We see a lot of waste with larger practices because they feel like they can afford it.

27:36 – A couple things he brought up were very useful and became 'aha moments' for Dan.  

28:36 – People often think their fees are too high but this podcast points out that planning fees more than covered marketing expenses.

30:07 – Of all the marketing, there was no list-building being done.

32:15 – In summation, this is an advisor that's not afraid to take chances and is being aggressive with his fees but there's some serious fine-tuning that can be done.

33:30 – Don't chase numbers just for the sake of chasing numbers.

35:19 – Time to do some math on the show and see what he's averaging per client.

35:56 – There's a lot you can learn from examining other practices.

37:01 – You also need to keep in mind what level of service you're going to give your clients.