Ranking the Top 10 “Differentiators” for Advisory Firms

September 2, 2014

by Bob Veres

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Lately, I’ve been receiving feedback from my newsletter subscribers on the broad subject of “differentiators;” that is, things that make you stand out from the advisory firm down the block or across town.  When prospects are looking for an advisor, what are the most important – and least important – characteristics of an advisory firm in the increasingly intense competition for their business?

If we have a clear idea of what foregrounds one advisory firm ahead of others, then we can deliberately cultivate those characteristics.  This “differentiation awareness” is a powerful competitive advantage.

The problem is, nobody has ever compiled a comprehensive list of differentiators, much less ranked them according to importance.  So, to fill that obvious void, I’ve identified 10 differentiators that I’ve personally seen advisors use in their positioning and marketing.  They are sorted from the least to the most effective.

Of course, this is a subjective list.  I’m going to ask each reader to do two things:  Tell me if this list is out of order, and which differentiator you would put ahead of which others.  And second, there will be survey questions sprinkled into the text which will give you an opportunity to offer feedback and help all of us better understand the value of the various differentiators.

You can post your responses to the questions, and a corrected ordering, on the APViewpoint discussion forum1.  I’ll collect responses and provide a working summary of what the community thinks.

Without further ado, we begin the list with:

10.  National or global branding of your firm.  Many of you have been (and some of you are) associated with a large firm that advertises nationally, working in a branch office with a huge sign on the street-facing side of the building, and perhaps the same sign near the top of the largest downtown office building.  The firm runs advertisements during the Super Bowl.

This undoubtedly attracts clients.  We know this because younger brokers who have no experience or expertise beyond what they received from a two-week marketing training course are currently providing investment advice to high-net-worth individuals.  For those people, the power of the global brand is all-important.  And I know brokers who are reluctant to leave their wirehouse firms because they worry that clients are more loyal to the brand than they are to the individual who represents the brand.

But I also know many former brokers who, when they left the firm, ended up taking more than 90% of their former client base with them.  After they set up shop, they became the local branch’s worst nightmare.  In a competitive situation, they would give the prospect a tour of hidden fees and captive investment recommendations.  Of course, a series of scandals, regulatory breaches, whopping fines, enormous trading losses and other negative headline-grabbing activities have diminished the value of these global brands.

For a seasoned advisor, I think this is currently the least valuable of the differentiators.  But a few independent planning firms that are establishing national brands clearly believe otherwise.

My poll question: If an experienced advisor were to join a clean, new nationally-branded financial planning entity that has offices in most major cities, would that help her gain new business and the trust of clients?  If so, should this differentiator be ranked higher?

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