Editor’s note: This article is a modified excerpt from The Financial Advisor’s Success Manual, a book by David Leo and Craig Cmiel outlining exactly how to develop and implement structured systems so you can grow to the next level. It includes dozens of easy-to-use worksheets, ready-made templates, sample scripts, and guides. You can find additional details at David Leo’s website. Copies can be ordered from Amazon, B&N and by emailing David. Horsesmouth subscribers who order the book from David can also receive a free 30-minute strategy session with him.
In our book, The Financial Advisor’s Success Manual, we state that, “You have thought about it, perhaps even written something down intending to define it, and perhaps awkwardly discussed it with clients saying something to try and distinguish yourself and your services. The fact is, it is not easy to truly develop a clear and concise answer to the question, “Why should I do business with you instead of anyone else?”
Perhaps only some clients or prospects have actually asked this question directly, but you need to work on the assumption that 100% of your clients and prospects have thought about this question and would love you to answer it without having to ask—just like many advisors want clients to know why they are different and better than anyone else, without having to state it.
Providing value
Advisors need to recognize that their unique value proposition (UVP) or unique selling proposition (USP) has two distinct parts, value and uniqueness. Every advisor has the ability to unquestionably deliver value. If you are an effective wealth manager, you will deliver services such as:
- Lifestyle and retirement planning
- Retirement income planning
- Consolidated net worth statements
- Education funding planning
- Risk management assessment
- Insurance assessment and planning
- Health care analysis and funding
- Multigenerational family wealth planning
- Trust and estate planning
- Personal liability planning and management
- Liability planning and management
- Investment management services including personalized asset
allocation modeling, investment policy statement, investment management, tax-effective investment structure, track progress-to-goals/performance monitoring, advice on held-away retirement assets, beneficiary reviews, portfolio manager reviews, tax loss harvesting
- Proactive communications including portfolio reviews and progress tracking and check-in service calls
- Topical and educational events
- Accountant-ready tax package (Dec. statement, 1099, realized gain/loss)
These services are but a subset of deliverables advisors can provide to their clients and each has value, value which you must believe in. More importantly, advisors need to validate that these services have value to their clients. As we state, value is in the eyes of the client, so advisors need to answer the basic question: “What’s in it for me?” (the client or prospect) or “What do you have to say that will improve my life?”
It’s important that your client or prospect understands that your deliverables have an inherent value in terms of time and effort saved and wealth made and/or protected, as well as in the reduction of various toxic emotions like worry, stress and anxiety. The value of reducing toxic emotions is difficult to measure monetarily but important to consider. The value of time and effort saved and wealth made and/or protected can be subjective but is quantifiable.
The fact is, however, while these services have value, they may or may not be unique to you. I believe the depth and breadth of the values you deliver start to contribute to your uniqueness. That is, “walking the walk” is more unique than “talking the walk.”
Don’t overlook this value-laden role
Also, if you are in your 50s or older, like the vast majority of your clients, you and they have already encountered some combination of gastroenterologists, pulmonologists, dermatologists, podiatrists, cardiologists, ophthalmologists, proctologists, urologists, nephrologists, internists, among other medical specialists they have to work with. What would it be worth to have someone who understands each of these specialties and who could coordinate the delivery to you? Concierge doctors may do that, but your primary care physician primarily refers and helps without providing the breadth and depth of coordination that is often needed.
One of the values you can provide is that of a concierge provider for financial services by being a single source for financial planning, investment and financial advice, insurance, mortgage, banking, debt planning, estate planning, financial education for the family, education planning, accounting and taxes and even health care planning among other services as needed. You can provide tremendous value and differentiation as that provider. It is called “comprehensive wealth management,” but I see it rather as being your client’s “personal chief financial officer (CFO).” You may not actually execute all these services but you can coordinate them, understand them, explain them and integrate them as your client’s CFO.
Creating uniqueness
What about “uniqueness” or “differentiation”? While you deliver trustworthiness, integrity, technical competence, dedication, education and comprehensive services, these are not differentiators. These are all important qualities, but financial advisors must be all these things and will claim them. If all advisors claim these qualities, clients cannot differentiate among advisors. These are barely the entry price for a good advisor and should be basic expectations for every prospect and client. Whether or not every financial advisor meets the same standards for each of these qualities is moot until one’s actions disprove the claim.
When working with prospects and clients you must demonstrate these qualities by your actions, not only your words.
Uniqueness embodies the question, “How am I different from other FAs doing what I do?” It says that something or someone is unlike anything or anyone else or very special or unusual. While there are differing estimates of the number of practicing financial advisors in the United States, Reuters has counted about 285,000 of them. The Bureau of Labor Statistics estimated the number of “personal financial advisors” in 2014 at 249,400 (and growing by 73,900 through 2024.)
One can reasonably conclude that being totally unique (i.e., “unlike anything or anyone else”) would be extremely unlikely. Yet there is always a possibility to be a Katie Ledecky or a Michael Phelps, although even they take a silver or bronze at times.
- Being “very special or unusual” is a great goal, but it’s important to remember you are not competing against 285,000 other advisors. You have a niche or a geographic area that significantly limits the number of your direct competitors.
- Furthermore, you only need 100 or 150 clients of the right quality to be a successful advisor.
- Also remember what has been called the Law of Fractional Advantage. This law says that “all you need to do to win at anything is to be slightly better than your competition.”
- Sam Silverstein, looking at 2008 data in the world of golf, noted that Tiger Wood’s “scoring average…[was] 67.91.” He went on to say that “the second rated golfer on the top scorer list, Mike Weir, had a scoring average of 68.56. As good as Tiger [was], and as dominant as he [was], the only difference between [Tiger] and the number two player on the scoring list is 65 hundredths of a point.” As said, “a small advantage can make a large difference in results.”
Your job is to gain a sustainable edge (real or perceived) over your competition. Differentiation or uniqueness does not have to be in absolute terms, but in performance relative to competitors. Kenichi Ohmae states, “If you are fighting with a competitor who has equal qualifications, effective and persistent execution in critical functional areas may be the only differentiating factor.” Walk the walk!
Getting the edge
We believe that if you provide effective and persistent execution in the critical functional areas to be discussed—the “six core client-facing processes”—you will be differentiated from your competition. These six core processes include the:
- Intake process
- Financial planning process
- Risk management process
- Investment planning process
- Client service process
- Planning and review process
These processes are discussed in detail in The Financial Advisor’s Success Manual, but the value of your deliverables in aggregate from these six processes can provide differentiation. We also outline 16 elements or deliverables to which you can commit to define your differentiation. If you do them all and work hard, consistently, and if you implement and provide effective and persistent execution, you will be in excellent shape on value and differentiation. For example:
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We suggest you provide written service level agreement (SLA) or service promise to your clients. The purpose of the agreement is to ensure the proper deliverables, commitments, and reminders are in place to provide consistent communications, service, support, and delivery to the client by the FA and her team. The agreement provides accountability and responsibilities of the team and presents a clear, concise, and measurable description of your service provisions to the client. The agreement provides the client and FA with matched perceptions of expected service with actual service support and delivery.
Most clients don’t know the extent of services you provide on their behalf. The SLA is a written reminder and addresses all the elements a “wealth manager” delivers and offers to deliver including financial plans, estate plans, education plans, communications plans, charitable giving, and the 30-40 or more deliverables outlined in your service model or promise.
The SLA is customized with or by each FA by client or tier. Service level agreements need to be approved by compliance. This is the place where you define and discuss the values you deliver with your clients. This is the place you ask your clients if they value those deliverables and gather their perspectives. This is also your opportunity to manage expectations and behavior.
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We further suggest advisors send written summary letters after each portfolio review meeting. The letter would include an appropriate thank-you, a meeting summary, which would follow the agenda, any follow-up responsibilities of both your team and the client and a summary of the service feedback you received and comments on what actions you are planning to take. A tentative next meeting is also included. In my experience, most advisors do not deliver this summary letter.
These letters also serve as the summary you would include in your client relationship management (CRM) system.
- We also stress you are a financial planning-based practice. In addition to developing a plan with the client, you hold them accountable to the plan for their actions (e.g., spending, saving, investing) to make sure they stay on track for their goals. The intent of a differentiated approach to financial planning is that it addresses much more than a picture of client net worth and a cash flow analysis.
These are a few of the points we outline, but a UVP is more than your deliverables. The above are extremely important, but they are about what you do, not who you are. We have also pointed out in other articles that who you are is essential to attracting clients who value what you value and believe in what you believe in, e.g., trustworthiness, integrity, financial planning, competence, dedication and comprehensive solutions.
Given their importance, we believe you should start your “story” talking about who you are and your personal beliefs such as:
- Acting as a fiduciary by always acting in your client’s best interests.
- Having a team that always does what it says you are going to do.
- Caring about your client and their money and how it affects their life and that of their family as much as they do.
- Providing comprehensive financial planning by acting as your clients’ chief financial officer.
- Basing all your advice on a formal and focused financial life plan, one that is ongoing to adapt to their changing life situations.
- Having the technical competence to provide the expertise they need to implement the best possible financial plan.
- Providing financial education so the client and their family has confidence in your actions as well as their actions.