As the financial planning sector continues to evolve, consumers increasingly have more and more access to qualified advisors. Unfortunately, the evolution in financial planners is leading to a troubling counter-trend: as more people become financial planners, just being a financial planner will not differentiate you from other advisors. As a result, financial advisors are increasingly competing with each other.
Ask any client, or anyone for that matter, and a sure bet is they will tell you all financial advisors are the same. After all, they all sell mutual funds, insurance and other products, right?
So how can financial advisors differentiate themselves in an overcrowded pool? Stephanie Sammons, the creator of Wired Advisors and a former financial advisor, says, “In the business of financial services, differentiation is one of the biggest challenges which financial advisors face. In the age of social media, this challenge is going to become even more difficult.”
Sammons believes while the “Classic P’s” – price, product and performance – are necessary and expected to succeed in a wired world, you have to be willing to put the focus on what she calls “the new P’s” and forget the old ones.
“The classic P’s are a given. Clients have come to expect you’ve got a solid product, your price is fair, and the performance will be there. You’ve got to take a risk now, and be willing to be vulnerable in the age of social media if you want to differentiate yourself from the competition. You’ve got to focus on what clients and prospects care about and find ways to connect with them on a personal level around common interests,” she wrote.
Sammons’ new P’s focus on relationships – something she says is quite obvious, but not consciously utilized in business. For financial advisors who want to differentiate themselves from the competition, try incorporating the new P’s in your practice.
People: Clients are in charge, and they have more power than ever before, due to social media. The “People P” centers on the relationship and how you can best take care of and serve clients, prospects, and advocates, above and beyond anything you’ve ever done before.
With millions of people connecting, sharing, conversing, commenting, recommending and reviewing online, your clients and connections have the power to expand your influence in a positive or negative way, like never before.
If a client likes you and believes in you, the signals they share about you on social platforms have the potential to reach hundreds, if not thousands. If you upset a client, or don’t take care of them with good service, this signal can also be sent and have a ripple effect. If you want to stand out in the age of social media, you must frequently communicate, engage, empower, promote, and provide outstanding service to the most important people in your trusted network. How can you best serve them? How can you be a resource to them? What can you do to make their lives better? How can you become valuable and irreplaceable? How can you go above and beyond the average financial advisor?
Personal: If you want people to come to know, like, and trust you before they meet you, you must find a way to show your personal side. Social networking and blogging can provide you with a great platform for showcasing both the personal and business side of “you.” Share your personal story and let your business connections in on your personal life, while allowing your personality to shine through. Doing so will enable you to build trust and differentiate yourself from other financial advisors. If you use these platforms to solely distribute dry and mundane financial data, market updates, and money manager commentary, you will not be providing any way for existing and potential clients to connect with you.
Oprah Winfrey has been incredibly successful at connecting with people, without ever meeting them. Her magic in persuading people to know, like, and trust her has everything to do with her ability to show who she is, inside and out. You could even say she makes herself vulnerable, to a certain extent. There are other people in the public eye who do this well. Learn from them.
Passion: Don’t be afraid to be passionate. People with passion are like magnets. Online communities and connections are built around common interests and passions. Sharing what you are passionate about and making these things known throughout the social communities you are involved with can help separate you from the pack. With the transparency which social media offers, you have a tremendous opportunity to learn about what you might have in common with both clients and prospects, while they can also learn what you are passionate about in your life.
Become more focused and specialized, to truly become the “best-in-class” for a particular type of clientele, can be served effectively and profitably. While this might result in fewer prospects, real differentiation, ultimately results in more actual clients, allowing advisors to grow their businesses smarter, instead of just working harder. Differentiation is being pushed to the next stage: for consumers, it is no longer just about getting a financial planner, but a financial planner who’s specialized enough to solve my personal needs and problems. The age of the generalist is coming to an end. The age of the specialist has begun.
Here are other ways financial advisors can differentiate themselves:
Find a niche: Financial planners have been generalists. No advisor can be the best at everything for everyone. It is possible, however, to be the best for a particular group of clientele, with a genuinely unique value proposition unlike what any other advisor provides. Finding and honing a niche creates an opportunity to have something unique and the undisputed “best” to serve your target group of clients.
Establish a true Unique Value Proposition (UVP): Financial expert Michael Kitces says the UVP marketing buzzword has been around for a long time, but few advisors seem to have truly internalized its point. “If you want to grow your business, you have to demonstrate the unique value you bring to the table. Moreover, just being a financial advisor, with credentials and years of experience developing customized, individual financial plans for the needs of their clients, just doesn’t cut it. It is not an end point for differentiation anymore; now it is just table stakes, or the minimum to get a foot in the door,” he wrote.
Knowledge is power: Be clear on what makes you different and demonstrate this as you interact with prospects. Know – and understand – who your competitors are and be ready to articulate how your approach and services are better.
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