If you run an RIA with $50m, $100m, $250m or $500m of AUM, you've probably heard advice along the following lines. Spend 5% of revenue on marketing. Spend 1% of AUM. Spend more if you're a high-growth firm.
They're memorable numbers. But they say nothing about what you need to spend to deliver a specific amount of growth.
A $100m RIA wanting to add $5m of AUM has very different marketing needs to a $100m RIA wanting to add $30m. And an advisor who gets most new business through referrals has a different cost base to someone deliberately building a paid acquisition engine.
A better question than "what percentage of AUM should we spend on marketing?" is "what can we afford to spend to deliver the amount of new AUM we want?"
Once you know that, the marketing budget becomes a math problem. Take the AUM you want to add, then work backwards through average client size, close rate, show rate, qualification rate and cost per appointment. You end up with a budget tied to a business outcome rather than an arbitrary percentage.
This article walks through how to do that. Every number below rests on stated assumptions. None of them are promises, benchmarks or expected outcomes.
Start With the Growth Target, Not the Marketing Budget
Say you run a $150m RIA and want to add $20m of client assets over the next 12 months. Start with that figure.
Don't start with "how much should we spend on Facebook," or "how much do other RIAs spend," or "could we get away with $2,000 a month?"
Your outcome is $20m of new client assets. Marketing is one of the inputs required to deliver it.
Step 1: Divide the AUM target by average new-client size
Assume your typical new household brings $1m of investable assets:
$20,000,000 ÷ $1,000,000 = 20 new households
Change the average client size and the number changes immediately. At $500,000 average you need 40 households. At $2m you need 10.
This is why percentage-of-AUM budgeting is so crude. Two RIAs with identical AUM can have completely different economics depending on the size and type of household they want to serve.
Step 2: Work backward from your close rate
Say 25% of qualified appointments turn into clients. To get 20 new households:
20 clients ÷ 25% = 80 qualified appointments
So you need 80 qualified appointments that actually happen. At a 20% close rate you'd need 100. At 33%, around 61.
Your own sales process determines this. Don't pick a close rate because it sounds good. If you've turned 12 clients out of 60 qualified meetings over the past year, your historical close rate is 20%, so start there. If you don't have enough data yet, pick a conservative planning assumption and state it as an assumption.
The aim isn't to get an attractive number out of the spreadsheet. It's to work out what hitting your target actually requires.
Then Work Backward Through the Funnel
Those 80 qualified appointments are ones that actually take place. That's different from the number you need to generate. Some prospects book and don't turn up. Some book but don't meet your definition of a qualified prospect. Both belong in the model.
Step 3: Account for the show rate
Assume 70% of booked appointments turn up. To end up with 80 completed meetings:
80 ÷ 70% = approximately 114 appointments booked
At an 80% show rate you'd need 100. At 60%, around 133.
This is why focusing purely on booked appointments misleads. A campaign booking 100 appointments isn't necessarily better than one booking 70. You need to know what happens after the booking.
Step 4: Account for qualification
Say only half the appointments your campaign generates meet your criteria for a qualified prospect, whether that's minimum investable assets, age, location or service fit.
To get 114 qualified appointments booked, you need:
114 ÷ 50% = 228 total bookings
The complete funnel under these assumptions looks like this:
- $20m new AUM target
- 20 new households
- 80 qualified appointments delivered
- 114 qualified appointments booked
- 228 total bookings generated
Terminology matters here. Before using these numbers to inform budget decisions, define what you mean by "appointment," "qualified appointment," "show" and "client." Otherwise you'll be comparing different things.
Now Put a Cost on the Appointments
Once you know how many bookings the model needs, you can work out the budget. Assume for this example that the total cost of each booked appointment is $500:
228 × $500 = $114,000
Divide across 12 months and you get $9,500 a month.
That's more useful than "we should spend 5% of revenue." You now have a model saying that if you want $20m of new AUM, with an average new household of $1m, a 25% close rate, a 70% show rate, a 50% qualification rate and a $500 cost per booked appointment, your modeled acquisition requirement is about $9,500 a month.
Change any of those assumptions and the budget moves. An average household of $500,000 rather than $1m means twice as many clients. Improving the close rate from 25% to 33% means fewer qualified appointments. A show rate dropping to 50% means more bookings. A cost per appointment of $300 instead of $500 cuts the required spend by 40%.
That's the value of building your own model. You plug in your own numbers.
A Simple RIA Marketing Budget Formula
You don't need an elaborate financial model. Just run five calculations:
- New AUM target ÷ average new household AUM = clients needed
- Clients needed ÷ close rate = qualified appointments needed
- Qualified appointments needed ÷ show rate = qualified bookings needed
- Qualified bookings needed ÷ qualification rate = total bookings needed
- Total bookings needed × cost per booking = annual acquisition budget
Divide by 12 for a monthly figure.
What matters is that every assumption is visible. If someone tells you your RIA should spend $8,000 a month, ask what AUM target that's based on, what average household size, what close rate, what show rate, what qualification rate and what cost per appointment. If they can't answer, the budget is a guess.
Your Client Lifetime Value Sets the Upper Limit
The other half of the picture is what a new client is worth. You shouldn't work out your minimum marketing spend without also working out the maximum acquisition cost your business can justify.
Take another example: a typical client with $1m in AUM, a 1% annual fee, a 70% gross margin and an average relationship of 200 months.
They generate $10,000 of revenue a year. At a 70% gross margin that's $7,000 of gross profit a year. Two hundred months is around 16.7 years, so:
$7,000 × 16.7 = approximately $117,000 modeled lifetime value
Now say you want to hold a 3:1 ratio of lifetime value to acquisition cost:
$117,000 ÷ 3 = $39,000
Under this example, spending up to around $39,000 to acquire a client sits inside a 3:1 framework. Call it a $40,000 cap.
That doesn't mean you should spend $40,000 on every client. It means that under these assumptions you have a ceiling against which acquisition costs can be judged.
The caveats matter. Your fee isn't fixed at 1%. Clients add and remove assets. The relationship might not run for 200 months. Margins vary. And there are onboarding costs, advisor compensation, technology and compliance costs that a simple gross-margin calculation doesn't capture.
So rather than treating lifetime value as a magic number, treat it as a financial model. It's still worth running, because it shifts the discussion. If a client can reasonably be expected to generate tens of thousands of dollars of gross profit over the relationship, spending a few hundred dollars to drive an appointment isn't automatically expensive. The real question is whether the whole acquisition process produces clients at a reasonable cost.
Do Not Confuse Cost Per Appointment With Cost Per Client
This is usually where budget conversations go wrong. A $500 cost per appointment doesn't equate to a $500 cost to acquire a client.
Go back to the funnel above. Of 228 bookings, 20 turned into clients, which is 11.4 bookings per client:
11.4 × $500 = $5,700 to acquire each client
Against a modeled lifetime value of roughly $117,000, that's an LTV to CAC ratio of about 20:1, comfortably inside the $39,000 cap.
That looks excellent, and it's only as good as the assumptions underneath it. If half the appointments don't show, the economics change. If a lot of bookings aren't well qualified, they change again. If the advisor closes 10% of qualified meetings rather than 25%, the cost per client more than doubles.
Which is why what you should really be measuring is the cost of acquiring a client and the AUM generated, not bookings or leads.
What Different Marketing Budgets Actually Buy
There isn't one budget every RIA should aim for, but there are significant differences in what different spend levels can deliver. These are practical planning tiers, not guarantees of performance.
Under $3,000 a month
At this level, think carefully about what you're trying to build. The budget can support foundational work: testing, content, improving the website, referral initiatives and limited paid experimentation.
What it usually won't support is a strong paid acquisition machine plus the people and infrastructure needed to run it. That's not because $2,000 is useless. It's that you'd be asking $2,000 to do the job of $10,000.
For a small RIA with limited resources, this is a sensible point to strengthen the fundamentals before pushing into paid acquisition.
$3,000 to $10,000 a month
Enough to start taking marketing seriously, but limited scope for a specialized paid acquisition program. You can test creative, audiences, landing pages and follow-up, and generate enough activity to learn what might work.
There's less margin for error, though. If a campaign needs several weeks or months of testing before it's worth pursuing, a small budget makes that learning painfully slow.
This range suits a firm building toward a bigger program, particularly one that already has a strong internal sales process.
$10,000 to $25,000 a month
At this point the economics start to stack up for an RIA serious about paid acquisition. For this sort of model, $10,000 a month is a more realistic starting point than trying to build a whole growth engine on $2,000 or $3,000.
At $10,000 a month, annual acquisition spend is $120k. At $15,000 it's $180k. At $25,000 it's $300k. Significant sums, so they should be matched with equally significant growth ambition.
Taking the earlier example, $10,000 a month delivers around $120k a year. If the economics say that chasing a $20m AUM target needs $114k, the two at least line up directionally. That doesn't mean $120k will deliver $20m. It means the budget is big enough to pursue the target under the stated assumptions.
Above $25,000 a month
Here you're not deciding whether you need marketing, you're deciding how aggressively to scale it. $25,000 a month is $300,000 a year; $50,000 is $600,000.
At this level you need a clear model of how you acquire clients and real operational capability: enough advisor time to take the appointments, follow-up systems, compliance, creative production, landing pages, tracking, and advisors able to turn opportunities into clients.
More spend won't fix a flawed funnel. It just lets a flawed funnel spend more.
When Paid Acquisition Probably Is Not the Right Move Yet
There's a minimum level of business maturity before paid acquisition makes economic sense. As a rule of thumb, firms with fewer than three advisors, under $1m in revenue or under $100m in AUM usually get more from improving their fundamentals first.
That isn't set in stone. A smaller firm with a profitable niche, good average client size, strong close rates and healthy cash flow may well be able to start earlier.
But think carefully. Paid acquisition drives volume. If the firm can't qualify, follow up with and close that volume, it's spending money for nothing.
Before committing significant money, a firm should be able to answer a few questions. What is each new client worth? How much could the firm spend to secure one? How many households can existing advisors reasonably take on? Who handles new inquiries, and how quickly do they follow up? What makes a prospect qualified? What proportion of qualified meetings result in a client?
If the firm doesn't know the answers, that's where to start.
What to Do Instead If You Are Below the Threshold
Being below the threshold doesn't mean ignoring marketing. It means the aim is different.
Understand the economics. Average AUM on a new client, revenue per household, gross margin, retention assumptions and historical close rate. Everything else sits on top of these.
Improve the conversion process. Someone comes to the website today. What happens next? Who calls them, and how quickly? How many follow-ups do you send? What happens if they don't book, or book and don't turn up? A better sales process makes every future marketing dollar go further.
Build the positioning. "Comprehensive wealth management for individuals and families" gives a prospect no reason to choose you. The firm needs to be clear about who its client is, what problem it solves and why it's different.
Build the referral engine. For a smaller RIA, more value tends to come from existing clients and professional referral partners than from funding every new opportunity through advertising.
Make the website work. You don't need a big site. You need one that quickly shows who you help, what you do, why someone should trust you and what their next step is.
None of this is wasted if you later move into paid acquisition. It makes the paid acquisition system more effective.
The Costs People Forget to Put in the Marketing Budget
The easiest way to understate marketing spend is to count only advertising. A real acquisition program has several other costs.
Creative. Paid ads need video, static ads, copy, editing, testing and new variations as campaigns develop. Don't assume one ad runs forever. The budget should allow for continuing production.
Landing pages. Ads don't work in isolation. The prospect needs somewhere to go, which means design, development, copy, testing, hosting and maintenance.
Technology. CRM, scheduling software, call tracking, analytics, forms, automation and reporting. Some firms already have this, others need to build it. Either way it belongs in the model.
Follow-up. Creating a lead isn't the same as converting one. Someone has to pick up inquiries, confirm appointments, chase people who haven't scheduled and develop opportunities that aren't immediately ready. That's internal staff for some firms, external support for others, and the cost belongs in the budget.
Campaign management. Someone has to run the campaign, check the data, make changes, test creative, stay on top of budget, troubleshoot tracking and decide what to scale. Internal employee, agency or both. The cost of managing acquisition sits within acquisition.
If you spend $10,000 on ads and $5,000 on the systems and people that turn those ads into appointments, your budget isn't $10,000. It's $15,000. That matters when you calculate CAC.
Media spend versus total acquisition cost
A helpful approach is to separate the two. Say an RIA spends $10,000 a month on ads, $3,000 on campaign management, $1,000 on creative and $500 on software and tracking. The ad account shows $10,000. The business is actually spending $14,500.
That doesn't mean the extra $4,500 is excessive. Those costs may be exactly what's needed to generate and convert opportunities. But when you look at the economics, you have to include them.
How to Know Whether the Budget Is Working
The first mistake is judging a campaign too early. The second is judging it on the wrong metrics. A campaign can generate plenty of leads and still be poor value.
The most useful metrics for an RIA move progressively closer to revenue. At the top of the funnel, look at ad spend, cost per lead, landing page conversion rate and cost per booking. Further down, track booking rate, show rate, qualification rate, cost per qualified appointment and qualified appointment volume. Then look at business outcomes: close rate, new clients, cost per client acquired, new AUM, cost per dollar of new AUM, revenue from acquired clients and the LTV to CAC ratio.
The further down the funnel you can reliably measure, the better your decisions.
Do not optimize for cheap leads
A $50 lead isn't always better than a $200 lead.
Say you run two campaigns, each costing $5,000. Campaign A delivers 100 leads at $50 each. Campaign B delivers 40 leads at $125 each. On lead volume alone, A looks like the better campaign.
Now say A delivers two qualified appointments and B delivers eight. B is more useful despite the higher cost per lead. Take it a step further: A produces no clients and B produces two. The winner is now the opposite of what you first thought.
What matters isn't the cheapest lead. It's the cost of acquiring the sort of client you actually want.
Give the campaign enough time to produce meaningful data
A campaign shouldn't be judged on its first few days. You need to test the creative, test the funnel, check lead quality, get appointments happening, have the sales conversations, close clients, and often wait longer still before the AUM shows up.
That doesn't mean spending blindly for six months. It means setting milestones before you start. Early on, are leads and bookings coming through at a rate that makes the modeled economics plausible? Mid-campaign, are people turning up, qualifying and having real sales conversations? Later, are qualified opportunities becoming clients at the expected close rate? And finally, is the cost per client acquired, and per dollar of new AUM, something the firm can afford?
The timeline varies with your sales cycle and volume. The principle doesn't: don't judge an acquisition campaign against a metric three steps above the business outcome you care about.
Know Your Break-Even Point Before You Spend
Before launching, work out the maximum CAC you could sensibly afford. From the earlier example, a modeled lifetime value of roughly $117,000 at 3:1 gives a cap of around $39,000.
Compare that with your own acquisition model. At the $5,700 CAC from the funnel above, there's plenty of room. At $35,000 there's very little margin for error. At $50,000 the economics don't stack up under these assumptions.
That doesn't rule out marketing, but it does mean at least one assumption needs revisiting. Perhaps the average client is worth more, or the close rate is better, or relationships last longer, or acquisition costs can come down, or the fee structure is different. Or perhaps the target is too ambitious for the current funnel.
The model lets you have that conversation before you spend the money.
The Budget Is a Constraint, Not the Strategy
There's a tendency to start with "we've got $10k a month," then expect the marketing team to find something to spend it on. That's backwards.
Start with the outcome. Work out the clients you need, the qualified appointments, the bookings and the acquisition cost. Then check whether the resulting budget makes financial sense.
If you need $12k a month and the firm can comfortably fund it, you have somewhere to start. If you need $25k a month and the firm can't afford it, you've learned something important before spending a penny.
Maybe the target needs revisiting. Maybe average household size needs to improve. Maybe the close rate needs work. Maybe the acquisition strategy needs rethinking. Maybe paid acquisition should wait.
All of which is far more helpful than picking a percentage of revenue.
A Practical RIA Marketing Budget Worksheet
Run your own numbers through this sequence.
Acquisition requirement
- Annual new AUM target ÷ average new household AUM = clients needed
- Clients needed ÷ close rate = qualified appointments needed
- Qualified appointments needed ÷ show rate = qualified bookings needed
- Qualified bookings needed ÷ qualification rate = total bookings needed
- Total bookings needed × cost per booking = annual acquisition spend
- Annual acquisition spend ÷ 12 = monthly acquisition spend
Acquisition ceiling
- Average client AUM × annual fee percentage = revenue per client per year
- Revenue per client per year × gross margin = gross profit per client per year
- Gross profit per client per year × expected relationship length in years = modeled lifetime value
- Modeled lifetime value ÷ target LTV to CAC ratio = maximum modeled CAC
Then compare the two. If your modeled cost per client sits comfortably below the ceiling, the plan is worth pursuing. If it doesn't, something in the assumptions has to change before you spend.
So, How Much Should an RIA Spend on Marketing?
There's no particular percentage of AUM that answers this. Your budget needs to be big enough to give you a realistic path to the growth target, while sitting comfortably below what your business could afford to spend on acquisition.
As a worked example, a hypothetical RIA looking to add $20m in AUM, with $1m average new households, a 25% close rate, a 70% show rate, a 50% qualification rate and $500 per booking, ends up with a modeled requirement of around $114,000 a year, or roughly $9,500 a month. That isn't a promise of performance. What matters is the method.
For a meaningful paid acquisition program, around $10,000 a month is a more realistic starting point than pushing a significant growth target off a $2,000 budget. And if you're below roughly three advisors, $1m in revenue or $100m in AUM, think carefully before spending at that level. More value will probably come from improving your positioning, sales process, referral engine, website and underlying infrastructure.
Once the foundations are in place, the question becomes much more straightforward. What do you want to add? How many clients does that need? How many qualified opportunities does that need? What does it cost to produce them? And what is each client worth?
Answer those, then build your spend requirement and compare it against what you can afford. That's how marketing goes from an expense you cross your fingers over to an investment you can actually track.
