How much should I invest in marketing?
Let's find out how much marketing you can afford as an independent financial advisor.
Where I'm at?
Average assets per client$1,000,000Total AUM divided by number of clients
Gross lifetime profit per client$42,106Over 15 years, growing at 8%, discounted at 10%
Cumulative profit per clientYear 15: $42,106
How fast do I want to grow?
We aim for a 4:1 return: the profit a client earns in this window should be at least four times what you spend to win them. For most financial advisors, 12 to 24 months is standard.
AUM added per year$24,000,00024 new clients × $1,000,000 in average assets per client. That grows your AUM by 24.0%.
Your target cost to win a client$1,750A quarter of what a client earns you in profit over 24 months. Spend up to this much to win one client and the numbers still work.
Total CAC for the year$42,000$1,750 target cost × 24 new clients.
Can I afford this?
A good rule of thumb for small businesses is to spend 7% to 10% of their gross revenue on marketing. If you're spending less, you're underinvesting in your growth. If more, you probably need some external funding in addition to your current operations.
Total CAC for the year$42,000
Below 7%: you're underinvesting in your growthThe $42,000 is 4.2% of your $1,000,000 annual revenue. Small businesses typically spend 7% to 10%, so you have room to put about $28,000 more into marketing and still fund it from current operations.
Annual revenue$1,000,000Total AUM × management fee.
10% of annual revenue$100,000The most marketing you can fund from current operations.
Total CAC as a share of revenue4.2%$42,000 of $1,000,000.
