The Financial Advisor's Success Manual

How to Structure and Grow Your Financial Services Practice

The Financial Advisor's Success Manual

Authors: David Leo, Craig Cmiel
Pub Date: December 2017
Print Edition: $30.00
Print ISBN: 9780814439135
Page Count: 288
Format: Hardback
e-Book ISBN: 9780814439142

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Chapter One: Develop Your Differentiation Strategy

Progress is measured by the degree of differentiation

within a society. --Herbert Read

This chapter outlines reasons why a client or prospect should do business with you (instead of anyone else). It will help you define your Unique Value Proposition. You have read about and been asked about your differentiation. 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 to 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 percent 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.

Knowing, understanding and being able to crisply and clearly state your Unique Value Proposition (UVP) or Unique Selling Proposition (USP) will be of significant value for you as it will also bolster your own belief system and allow you to answer the question before it is asked. It's better to be proactive in discussing your UVP before you are asked what it is. Get it out of the way early, so your clients or prospects can focus on the rest of what you want to address without them concentrating on the "Why you?" question.

In this chapter we will discuss five key points that, if you master them, will help you deliver as effective a UVP as we believe exists in the financial advisory business today. We will:

1. Explain that a Unique Value Proposition has two distinct parts, value and uniqueness, and we will define both parts.

2. Define the elements of your deliverables and their value.

3. Explain the Law of Fractional Advantage and its applicability to you.

4. Discuss the need for effective and persistent execution in the six core client-facing processes.

5. Detail 16 elements that in aggregate will define your differentiation.

Key point one is to recognize that your UVP has two distinct parts: value and uniqueness. Every advisor has the ability to deliver each of the values we will discuss. The depth and breadth of the values you deliver start to contribute to your uniqueness.

Value is in the eyes of the client, so you 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.

Value should be discussed in context of our present-day industry. It may therefore be helpful to review where we have come from, and how client expectations have changed over the past decades. The landscape has changed significantly, triggered by product development, technological advances, new regulatory oversight, industry consolidation and the growth of fee-based businesses. Decades ago, clients separated banking from investing. Then brokerage firms began offering cash management services, then came the Glass-Steagall Act. Now many advisors working for large firms are connected with a bank (e.g., Merrill Lynch, Wells Fargo, UBS, and others). Clients might view their relationship with an advisor much more holistically today than they did decades ago when the advisor was a "broker" who helped identify investments and execute transactions. As the industry has become less transaction-based we have seen the growth of advice-based relationships, fee-based wrap pricing, and the use of technology to help manage and model portfolios as well as relationships.

The new administration may halt the implementation of Department of Labor (DOL) Fiduciary Standard regulations. The effect could be less mandated compliance work; however, it will not stem the tide of movement toward fee-based relationships (and perhaps continuing movement toward fiduciary relationships). Clients and advisors are continuing to grow more comfortable with these fee-based relationships. During one of the sessions on technology at a recent industry conference, the speaker asked the crowd of about 200, "How many of you would say that investment selection and performance is the primary driver of adding value to your clients?" Only two hands went up. While this was not a scientific survey, it appears to us that advisors do not see performance as their primary value to clients in today's financial world. The point of the question was to challenge the audience to focus on what clients really want and value, as it relates to the investment of capital and personnel, and aligning the advisor's value accordingly. Data points us in the general direction of Planning, Trust, Guidance, Communication, Education, and Personalization. It is in the absence of these and other client-driven value criteria that the business becomes commoditized and focused on trading, execution, costs, and performance.

Excerpted from THE FINANCIAL ADVISOR'S SUCCESS MANUAL: How to Structure and Grow Your Financial Services Practice by David I. Leo and Craig Cmiel. Copyright © 2018 David Leo and Craig Cmiel. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.

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