Invest1 publisher2 min readPublished
Advisory marketing now buys a dollar of new client revenue for 70 cents
The Kitces Report's survey of more than 500 advisors has client acquisition cost down a third to $2,551 and the cost of buying a dollar of new revenue down 36% to 70 cents, against deals at 2.5 to 3.5 times revenue.
The Investor · Invest desk
What happened
- Revenue acquisition cost, the amount a practice must spend to generate each additional dollar of new client revenue, fell 36% over the same two years to 70 cents.
- The report sets that figure against inorganic growth, saying marketing remains far more cost-effective than M&A transactions often valued at 2.5 to 3.5 times revenue.
- Practices that display client reviews on their own websites spend 13 cents for each incoming dollar of revenue, against 86 cents for the firms doing the bare minimum.
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Why it matters
- decision An owner weighing a marketing hire against buying somebody's book can now price both sides in the same unit, and the gap runs between about 3.6 and 5 times per dollar of revenue in favour of the hire.
- constraint The study describes acquisition costs that anti-scale as firms grow, so a practice whose cost climbs as a share of revenue loses that advantage and ends up shopping for a seller instead.
- cost If the burden shifts the way the study describes, the money goes to payroll and vendors and the owner spends less time marketing.
- capability For the 87% of practices with no presence on review platforms, the report identifies a channel already open to them and says failing to establish even a basic one means overlooking a meaningful growth opportunity.
Run the two-year change backwards. Seventy cents divided by 0.64 puts revenue acquisition cost at about 1.09 dollars in the previous survey [1]. The typical practice then spent more than a dollar to buy a dollar of new client revenue and waited roughly 13 months to get it back [8]. Client acquisition cost works the same way: a third off $2,551 implies about $3,827 per incoming client two years ago [2]. Both series are self-reported by the more than 500 advisors surveyed [1].
The study says practices generate enough organic growth from marketing to absorb its cost in less than nine months [4]. At 70 cents against a dollar of annual revenue, that is 8.4 months [3].
"Or, stated more simply, one of the paradoxes of marketing success is that the firms that market most effectively are often the ones in which the advisor markets less (and the firm markets more on their behalf)!" the study said [6]. Marketing "consistently ranks among advisors' least-enjoyed responsibilities" [7]. Scaling it efficiently, the report says, "requires the cost burden to shift such that the advisor doesn't need to spend as much time marketing" [8].
The review-site data is the closest thing in the published charts to a test of that claim. A third of the firms that display reviews on their websites are growing faster than peers, against a quarter of the firms that use no review sites at all, a spread of eight percentage points [13][6]. The display group's revenue acquisition cost is 13 cents against 86 cents for the firms doing the bare minimum, about a sixth as much [14][5].
Which way the causality runs is not settled by those percentages. Wealthtender CEO Brian Thorp's platform is one of the third-party review sites the report names. He said in an interview that large firms' compliance policies, state-level regulation and an "imposter syndrome" keep advisors off them [16]. If compliance capacity is what gates adoption, the firms running review programmes are the ones that already had marketing staff. The eight-point spread may be measuring which practices could afford the infrastructure in the first place.
On the cost figures, treating marketing as a spend that scales is well supported at 70 cents per revenue dollar and falling [3]. The claim about the principal's own hours rests on the study's stated conclusion; the excerpt published with the charts does not include hours per advisor. Review-site adoption, meanwhile, has moved five percentage points since 2024, from roughly 8% of practices to 13% [11][12][7].
What to watch
- Whether the next Kitces survey holds revenue acquisition cost near 70 cents or lets it drift back toward the dollar-plus level implied two years ago.
- Whether review-site adoption breaks out of the 13% band, and whether state regulators loosen the testimonial rules Thorp cites.
- Whether RIA deal multiples compress toward the 2.5x end, narrowing the gap the report uses to argue marketing beats M&A.