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BLOG. 4 min read

3 Types of Advisor Advocacy that Firms Should Pursue

For an asset manager, the long-term value of a relationship with an advisor goes far beyond sales, since advisors have a significant influence on their clients’ and peers’ perceptions of a firm as well. Turning them into advocates for your firm can increase that value immensely by opening doors and building trust with others in their network.

Our latest research explored three different ways that advisors can be advocates for an asset manager:

  • Firm advocates are advisors who believe in the firm enough to recommend it or its products to other advisors. It’s the broadest type of client advocacy and one with many benefits. Firm advocates are typically very loyal clients, investing more assets with the firm, buying more often, and with higher levels of retention than the average advisor.

But the recommendations themselves offer social proof—evidence that other advisors have used and found value in a firm and/or its products. This creates new prospects for the firm in a powerful way and helps convert existing prospects into clients—fueling new asset sources for the firm.

  • Salesperson advocates are advisors who recommend the firm’s sales consultant to fellow advisors, opening the door to new relationships. This advocacy is a sign that the salesperson is one of the advisors’ few trusted sources—one they talk to more often and turn to with their needs.

That strong relationship is a competitive advantage for the firm in an environment where the number of salespeople advisors meet more than once and trust is between zero and three for the majority of advisors.

  • Content advocates recommend and share content, which builds familiarity for the brand among advisors and investors. When a trusted source recommends content, it typically generates higher engagement and is seen as more trustworthy.

Providing good content for them to share is a key way firms can be useful to advisors beyond products—making it easier for them to educate and network with clients and colleagues.

Bottom line—all three matter. While you want more advisors to recommend your firm, getting them to recommend your salespeople and your content makes it more likely that they’ll do so. That’s because the correlation between salesperson advocacy and firm advocacy is 0.82, on a scale of 0 to 1, while the correlations between content advocacy and firm advocacy range from 0.73 to 0.81. So increasing the number of salesperson and content advocates will increase the number of firm advocates as well.

And based on our "Top Levers for Advisor Advocacy in 2023" research, firms have a lot of opportunity for growing the number of advocates in all three areas.

Firm and Content Advocacy has Been More Consistent than Salesperson Advocacy

In 2022, 37.4% of advisors were advocates for the average asset management firm. Although the number of firm advocates has been relatively steady over the last few years—with a small dip in 2020—the number in 2022 was at a five-year high.

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Source: SS&C RAC, Advisor Insights Survey, in association with Horsesmouth, Q3 2022

The table shows the asset managers with the highest share of advisors as firm advocates in 2022, with 64.4% of advisors who do business with Dimensional Fund Advisors (DFA) saying that they would recommend the firm to a colleague.rac-advocacy-2

Salesperson advocacy was a different story. After a peak in 2019—when 36.9% of advisors were advocates for the average firm’s salesperson—advocacy levels fell significantly in 2020. And those numbers are still climbing back to pre-pandemic levels, with 32.2% of advisors being salesperson advocates for the average firm in 2022.

But it seems to matter even more this year when it comes to driving advocacy for the firm. After lingering around 0.68 for the past few years, the correlation between salesperson advocacy and firm advocacy rose 21% in 2022 to 0.82, suggesting an even tighter association between the two.

Producing content advisors are keen to share with peers and clients is another key way to drive advocacy for the firm as a whole, with correlations between four types of content and firm advocacy ranging from 0.73 to 0.81.

Since different types of content may be of value to individual advisors, we measure content advocacy by four specific types of content: product, insights, value-add and the firm website. The result—the average firm had three in 10 advisors who were advocates of its website, product-related content and insights-related content.

The number dropped to one in five advisors for value-added programs. It’s unlikely the quality of firms’ value-add programs declined in 2022. It’s more likely that advisors simply had less time to spend with these programs last year than they did during the pandemic.

rac-advocacy-3

Source: SS&C RAC, Advisor Insights Survey, in association with Horsesmouth, Q3 2022

In short, all three types of advocacy — salesperson advocacy, content advocacy, and, best of all, firm advocacy — are valuable. While the share of firm and content advocates for the average firm has been more consistent than the number of salesperson advocates over the last few years, no firm is in danger of maxing out its number of potential advocates. So every asset manager looking to grow assets organically and increase loyalty should have ongoing efforts to increase all three types of advocacy among advisors. For more, read our "Top Levers for Advisor Advocacy in 2023" report on advisor advocacy.

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