Whether you are an executive in an investment services program, or an advisor, the most important question you should be asking yourself in the rapidly evolving landscape of our industry is, What is our differentiation in a commoditized industry?
If you can’t answer that question with conviction, you risk becoming obsolete. The pace of change in our industry has increased due to technology and economies of scale among the big players. The little guys are getting squeezed by a combination of fee compression, commoditization and dramatically increased client expectations. Being primarily transactional isn’t going to cut it any longer and if you haven’t accepted that fact, you better be near retirement. If not, your best hope is differentiating your offerings.
The best advisors in our industry provide service to clients who have a high degree of need based on the significant assets they have accumulated and the related complexity of their situations. Advisors who can do this are often able to increase the fees they charge while most of the rest of the industry is being pressured to decrease charges. Top advisors are effectively de-commoditized.
There’s a big difference between how top advisors think of clients' needs, and how the rest of pack understands them.
The caveat is, there’s a big difference between how top advisors perceive understanding and servicing their client’s needs, and how the rest of advisors understand this dynamic. So what does it take to differentiate yourself by providing that personalized, needs-based service like the top advisors?
First, understand that clients have soft needs and hard needs.
The hard needs are related to money and investment management: retirement, health care, asset protection, estate planning, paying for college and so forth. And if you work in a bank or credit union – good news – your ability to deliver on these needs often surpasses those in the independent channel assuming you have good relationships with other departments in your institution.
But the soft needs are more important to clients. These include taking care of loved ones, freedom from worry, having more discretionary time and accomplishing life’s purpose. Advisors must seek to understand what these things mean for their clients. They can only hope to do this by being interested, curious and asking the right questions.
The best way to understand these client needs is to have a truly exceptional discovery process.
It’s your thoughtful, well-constructed and repeatable process that will allow you to stand out and avoid becoming commoditized out of business. It’s worth putting significant work into defining and crafting your process. Your success depends on it.
You must realize you’re not in the business to provide products; you’re in the business to provide a service. And your service must be indistinguishable from your process. So, what makes for a good process?
In your clients’ eyes, the worth of your value proposition correlates directly to the number of their soft and hard needs you fully understand and solve for in an exceptional manner.
Delivering this value is dependent on how well your clients feel you know them, and in turn whether you become their trusted advisor. (Hint: If you’re not managing the majority of their investable assets then you’re not their trusted advisor.) How well you know your clients is completely dependent on your process.
Think about your personal experiences as a consumer that created wow reactions. Can you use those lessons now with your your clients?
Think about your personal experiences as a consumer that created wow reactions. Why were they different? How were they different? How can you translate them into the services you offer to inspire a wow reaction from your clients?
Blake Morgan, a client experience consultant and the author of “The Customer of the Future” describes memorable client experiences as “something that used to be hard is now extremely easy; you got something you didn’t expect, more than you thought you would; you learned something that greatly improved your life.”
Don’t think generic, think exceptional. How much of an impression would it make among your top clients if you not only remembered their birthdays, but also sent their kids or spouse simple but thoughtful gifts on their birthdays? If you knew their favorite restaurant and sent them a gift certificate on their anniversary. If you knew their favorite band and sent them concert tickets. If you sent them an early release of a book by their favorite author?
The Oppenheimer Funds CEO Advisor Institute, in their “Client Engagement Toolkit” says about client recognition, “If it’s not extraordinary save your time and money, and don’t do it! What you need to understand about your top clients is that, given their stature, everyone is trying to get on their radar screen. That being the case, our industry’s typical generic client recognition model doesn’t have a chance to show up on that extremely cluttered screen.”
Advice given in this toolkit includes “Dumping all the traditional generic models you have been taught through the years: no more generic bottles of wine, candy, flowers, cards, notes, etc. If the client is a big James Bond fan, send him a model of the famous Aston Martin DB7 driven by Sean Connery in the early films. If his young son is a huge Derek Jeter fan, consider sending a signed baseball to the son to thank that client for a "wonderful referral.”
Survival of the Fittest
Your client experience must be choreographed and defined, and not left to chance. Start with a vision of a client experience that communicates a high degree of quality, then storyboard the process that will fulfil this vision. Make sure to create an emotional connection with your clients. Once implemented, be sure to get good feedback from your clients along the way so you can do course correction and improvement over time.
Again, your ability to survive in our increasingly competitive and commoditized industry where client expectations have increased depends on how much conviction you have when answering the “What is our differentiation in a commoditized industry?” question.
Internalizing the messages above and building a practice that delivers on key differentiators will enable you to survive and flourish in the competitive years ahead.
