Updated: Mar 21, 2021
Competitive advantages are difficult to attain and even harder to keep. Dean Holmes explores what you can do to put your financial planning business at the front of the field and considers what ideas need to be considered in order to achieve the holy grail of business - a sustainable advantage.
In the world of financial planning there are a range of things you need to do to be at the top of your game and if done well they are areas where you can differentiate yourself and stay ahead of your competitors. Let’s start with those first.
1. Market and Grow Your Online Presence.
Clients and potential clients are going to look for you online so you want to be where they can find you. Have a concisely written website that shows up on search – no waffling. Develop hypertargeted messaging which really helps to solve the unique financial problems of your target market. Become active on social media. You should be sharing your content across at least 2 platforms – Linkedin, Twitter, Facebook or Instagram. The best platform will depend on your where your audience spends their time. Engage with your audience on their posts too and deliver them real value in your insights.
2. Embrace Your CRM System
Used properly, customer relationship management software can streamline your business and free up more time for you to do what you do best, personally interact with your clients. Your goal is to create personal connections and a meaningful understanding of your clients’ lives. Use your CRM software to track their families and personal situations, their values, goals and interests.
3. Leverage Technology
One of the best ways to forge ahead of your competitors is to streamline the back end of your business with strong processes and become a technology ninja. The more tasks you can automate, the more efficient service you can provide.
As a starting point, advisors should utilise automated appointment calendars and offer high-quality video conferencing. Screen sharing hand drawn diagrams and charts via a tablet during meetings is a great engagement tool via video.
Some advice firms have adopted the use chatbots and robo-advice to provide customer service – although this is still generally the domain of larger practices. However, rote tasks like data collection and sharing, form pre-population, reviewing documents for completeness and accuracy, creating reminders for account management milestones – such as renewals, anniversaries or retirements can be undertaken by businesses of all sizes with robotic process automation tools. The way in which you report to your clients can be largely automated and there are also some compliance checking tools available. In broader terms there are many software products available which can assist with marketing, lead generation and management. The point being, if you are trying to manage all of these things yourself in a manual or labour-intensive fashion you will be well behind the eight ball in terms of time, cost and efficiency.
Advisors should outsource everything except the client relationship and value proposition and focus exclusively on the human connection to differentiate their services. From blog writing, to bookkeeping there are services that do it for you. Utilizing the vast resources available online via freelance services or offshore staffing solutions can boost your productivity and be economically advantageous.
5. Network With Your Peers
Whether it’s being an active member of a community like The Wealth Network, XY Adviser or Linkedin and Facebook groups there are real advantages to accessing the collective knowledge of your industry. Trade ideas, support one another and refer when appropriate. You might even meet your next business partner.
6. Co-plan with clients
The old financial planning model of selling products to solve financial problems has been dying for quite some time. The recent Royal Commission in Australia into the Financial Services Industry may well have been the final nail its it coffin. Advisors have been forced to rethink their client relationships and their role and expand the client conversation well beyond finances and investing, and to consider themselves co-creators of interactive plans that are unique for every client. Advisors need to take seriously their ‘best interest duty’ as governed by ASIC.
7. Measure Everything
The only way to get an accurate gauge on your progress is to measure each part of your business. Start by developing a consistent way to track clients’ progress relative to their goals and the financial plans you have created with them. At The Wealth Network we also use a scorecard system that tracks our tasks, opportunities, revenues, client contacts etc on a weekly and quarterly basis.
If executed well, the above strategies will put you ahead of your competitors, but ultimately these strategies can be adopted by any financial planning business and they will require constant innovation. Many business experts will tell you the key to business and investing success isn’t just finding a competitive advantage - it’s finding a sustainable advantage. Something that others either can’t or aren’t willing to do. But, finding something others can’t do is almost impossible. That leaves doing something others aren’t willing to do as the top source of your sustainable competitive advantage.
Here are four ideas to consider.
1. Learn faster
Stay curious. Someone with an average IQ but the ability to recognize when the world changes will always beat the person with a high IQ and rigid beliefs. The world is filled with smart people who get nowhere because their intelligence was acquired 20 years ago in a vastly different world than we live in today. The ability to realize when you’re wrong and when things have changed can be more effective than an ability to solve problems that are no longer relevant. This is especially true when it comes to the adoption of technology (because it changes so rapidly) and investing.
2. Empathize with your clients more
You need to be able to walk in your client’s shoes to understand what it is they really need from you and how they experience the process of working with you. Do you know what it feels like when someone loses your paperwork for an account application whilst you are on holidays and you have to go searching for a printer and a scanner to do over what you’ve already done? Or when someone takes a week longer than they should to make an investment and you miss out on $5000 worth of profits?
The inability to understand how your clients experience your product almost guarantees an eventual drift between the problems a business tries to solve and the problems clients need solved. Here again, a person with a lower IQ who can empathize with clients will almost always beat someone with a higher IQ who can’t put themselves in clients’ shoes. This is another area where hypertargeting helps. When most of your clients are from a similar subset of people you become more finely attuned to their particular set of problems and the way they think about things.
3. Be a better communicator
Business success is generally awarded to whoever is the most persuasive. That doesn’t mean the smartest or loudest. Most business edges are found at the intersection of trust and simplicity. Both rely on the ability to tell clients what and why you’re doing something before losing their attention.
This gets harder to do the smarter you are. There’s a bias called “the curse of knowledge,” which is the inability to realize that other people with less experience than you don’t see the world through the same lens you do.
I saw this recently when a financial advisor explained to an elderly lady that he was going to move her investments out of BHP into a diversified investment fund that gave her exposure into international indexes like the S&P500, the FTSE and the Chinese Index. Although the fund could effectively be bought and sold like a single share, this ‘sounded’ extremely complex and intimidating to her. Having gone a long way to awarding the advisor her trust, she suddenly walked it back from the pressure of having to get her head around the infinite complexity international markets. This needed to be communicated to her in a way she felt comfortable with.
Find ways of getting your message across that your clients relate to and understand.
4. Stay in the game longer
Rewards rarely come easy. You tend to get small, unpredictable ones in the short term and bigger, more predictable ones if you wait longer. It’s amazing how much of a competitive advantage can be found by simply having the disposition to stay in the game longer than your competitors.
Waiting longer gives you time to learn from, and correct, early mistakes. It reduces randomness and pushes you closer to measurable outcomes. It lets you focus on the parts of a problem that matter, rather than the chaos and nonsense that comes in the short run from people’s unpredictable emotions.
If you can wait five years when your competitors are only willing to wait two, you have an advantage that is both powerful and uncorrelated to intelligence or skill.