How Financial Advisors Can Stay Ahead of Industry Commoditization

How Financial Advisors Can Stay Ahead of Industry Commoditization

In our second in a series of Critical Issues Facing Financial Advisors Right Now, we focus on perhaps the most significant threat to advisor success, much less survival—the commoditization of the advisory industry. The threat is significant because most advisors don’t even know it’s happening to them. In this extremely cluttered and highly competitive advisory landscape, advisors who don’t find ways to stand out in the crowd get swallowed by a sea of mediocrity, where clients dare not go.

Sound overly dramatic? In fact, it might be understating what is happening. Striving to be a knowledgeable, client-focused, and trusted advisor is no longer enough because that is what clients expect. Advisors must work each day at providing their clients with the unexpected. Otherwise, why should they choose you over any other typical financial advisor? Equally important is why should they stay with you when they can find so many others like you from which to choose?

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How Advisors Can Inoculate Themselves from Fee Compression

How Advisors Can Inoculate Themselves from Fee Compression

In our last post, we highlighted four critical issues financial advisors face in the aftermath of the COVID pandemic, impacting the way they approach their businesses and the way clients are responding. In the next month or so, we will take a deeper dive into these issues, the challenges they present, and how advisors can meet them head-on for a greater chance at success.

At the top of the list—an issue familiar to all and well-covered here in past blog posts—is fee compression.

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Overcome the Fee Discussion by Focusing on the Things that Matter to Your Clients

Overcome the Fee Discussion by Focusing on the Things that Matter to Your Clients

Among the many trends affecting the way financial advisors must operate these days, fee compression has been the most impactful. The discussion of fees charged by advisors has moved to the forefront due to the low costs and transparency of digital advice platforms and the highly competitive arena in which they find themselves. As a result, clients are more willing to confront their advisors on the subject of fees and the value they receive in exchange for them, catching many advisors off guard.

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For Great Financial Advisors, the Profit is in the Relationship

For Great Financial Advisors, the Profit is in the Relationship

The industry pressures that have weighed on financial advisors over the last few years will continue into 2021 and beyond, especially with the lingering effects of the pandemic. Fee compression, increasing regulation, heightened competition, and the commoditization of services are all part of an inevitable trend that threatens the survivability of many advisors. From now on, advisors who fall short of clearly differentiating themselves will have a difficult time bucking the trend, and advisors who fail to put their entire focus on their client relationships may be doomed.

Unfortunately, many advisors learn too late in their careers what I have stressed numerous times—that this isn’t a money business. It is a people business! For the first several years of an advisor’s career, the focus is almost solely on acquiring product knowledge, investment expertise, and planning skills. While that is essential for building necessary competencies, too few advisors come to realize that money management is not the lifeblood of their business—their clients are.

For financial advisors, the profit is not in the financial analysis or the transactions they conduct; it’s in the relationship.

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How to Clearly Demonstrate Value so Your Clients Don’t Question Your Fees

How to Clearly Demonstrate Value so Your Clients Don’t Question Your Fees

As a financial advisor, you know you bring value to your advisory relationships, which, in your mind, justifies the fees you charge. Your challenge is that, from your clients’ perspective, value is difficult to define. It doesn’t make it any easier when you consider that a client’s assessment of value is subjective, which can vary from client to client. A study by Vanguard attempted to quantify an advisor’s value in terms of how the right advice—primarily keeping clients from abandoning their strategy—can potentially increase a client’s returns by as much as 3% annually. The problem is that difference in performance isn’t apparent in your clients’ statements.

So, how do you demonstrate value in a way that makes your clients not feel the need to question why they’re paying the fees you charge—that they are getting their money’s worth? It may be as easy as simply giving your clients what they want.

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How to Build Your Story-Benefit Matrix

How to Build Your Story-Benefit Matrix

Last week I blogged about a useful sales tool called a story-benefit matrix, and why you should develop one for your practice. Just going through the process is beneficial: It forces you to think through a number of different ways your prospective client will benefit by working with you – and gives you an opportunity to help tell an illustrative story that will cement that case.

It’s basic “soft-skills” at work.

But it’s helpful to understand how to build one yourself, so let me help you with that.

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Don’t Let Your Niche Get Too Narrow

Don’t Let Your Niche Get Too Narrow

Having a tightly defined niche as a Financial Advisor is important. A research by CEG Worldwide confirms it – six out of ten advisors they surveyed said that focusing on a niche has been “tremendously or very positive” in helping them attract affluent clients. Only three percent said that focusing on a niche had had a “negative impact.”

So if focusing on a niche is so good, why are any advisors having a negative experience with it?

In many cases, it’s likely that these planners have fallen into a common trap: Their focus is too narrow.

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Best Target Markets for Financial Advisors: How to Choose The Best One for You

Best Target Markets for Financial Advisors - How to Choose The Best One for You

There’s no ‘one size fits all’ target market for advisors. A market that may be perfect for one advisor may be a poor fit for another. You need to narrow down to the best target market for you, based on your personal background, specialty, knowledge, interests, social networks and so on.

By identifying your perfect niche you’ll find it far easier to differentiate your practice and set yourself up as the ‘go-to’ expert.

If you’re struggling to identify the ‘right niche’ here are a few ways to get started.

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5 Reasons Why You Need to Connect with Clients on an Emotional Level

5 Reasons Why You Need to Connect with Clients on an Emotional Level

As an advisor you’re no doubt good with numbers; you’re an objective thinker. But to succeed in this business you also need to be able to create meaningful relationships with your clients. You need to have not only a high IQ but a high level of EQ (Emotional Intelligence).

According to a study by Harvard Business Review emotionally connected clients are more than twice as valuable to your business as ‘highly satisfied clients’.

Here are 5 reasons why rather than focusing on their financial plans you should get to know your clients on a personal level.

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6 Reasons Why You Should Specialize in The Kind of Financial Advice You Give

6 Reasons Why You Should Specialize in The Kind of Financial Advice You Give

In previous posts we’ve discussed the importance of identifying your ideal client in terms of their attributes – be it occupation, geographical location, etc. But if you are to stand out in a crowded market you also need to pinpoint exactly what you can offer your clients in terms of services.

As part of your marketing strategy aim to narrow down to the field or specialty you’re best suited to offer. Don’t try to be ‘jack of all trades’ by offering to provide advice on estate planning and taxation, and everything in-between. If you do, you’ll end up ‘master of none’.

People need to know you are the expert in your field, otherwise you won’t become highly referable. Here’s why you should specialize in the kind of financial advice you give.

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