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Industry Spotlight > Broker Dealers

Taking on the Goliaths

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Much like a modern day version of David and Goliath, independent advisors face overwhelming odds against the representatives of corporate giants who come to the field backed by overwhelming manpower and deep pockets for advertising and public relations support. Not content with their huge market share, today’s Goliaths don’t rely on passive referrals; they use proactive techniques to attract new clients. Staffed with highly trained serfs, their well-funded marketing departments study your customers’ and prospects’ buying habits and motivations. They don’t have to develop a relationship, build a superior product, or provide personal service. They’ve blitzed the market with such overwhelming media power that most prospects never consider any alternatives.

The Wall Street Goliaths’ mission is to build brand and sell product. Their strategy is to promote the advantages of their size and the comfort level associated with tradition. Trying to fight the industry giants head-on with more services or lower costs is a waste of your time. They will easily win those battles.

But don’t despair, you can prevail. The secret to defeating the Goliaths is to go deep behind their lines and attack them where they are most vulnerable.

I will be your guide in this struggle. This monthly column sets aside complicated and ineffective marketing strategies and turns battle-tested tactics into practical action steps. These steps aren’t designed to add to your workload, but will convert your current everyday activities into purposeful communication of your credibility to hold and gain ground in your market. Plus, you can cease wasting time and money on marketing activities that don’t work.

Most advisors unnecessarily spend substantial dollars on a great-looking bro-chure, Web site, or advertising with little or no return. They attempt to defend their client base with something akin to scattershot. I’ll show you a different path. I’ll tell you about professionals just like you who have outwitted the giant in their territory by precisely targeting their position.

Whether you acknowledge it or not, you are engaged in a marketing battle. Every day that you ignore it is ground lost. Unless you become proactive, you run the risk of your business becoming another casualty of brand-name aggression. Even friendly forces are acting in ways that will infringe on your territory. Consider, for example, Schwab’s recent announcement that its 350 retail offices will proactively sell and close business, or Wall Street’s continuing aversion to fiduciary responsibility. Tim Hatton, an independent RIA in Scottsdale, Arizona, put it to me this way: “Wall Street has spent tens of millions of dollars lobbying Congress” to differentiate investment education, which is really just touting past performance or the features and benefits of a product, from investment advice, the application of investing strategies, in order to absolve themselves of any fiduciary responsibility, i.e., liability. Hatton notes that even though these firms may solicit the purchase of a specific investment product, “their legal department argues that it still remains the investor’s decision.”

Goliath wants your clients, but he doesn’t want your liability. The unsuspecting prospect doesn’t know the difference of the scope of your services and defaults to the brand name.

So consider this column an ongoing invitation to arm yourself for the independent advisors’ marketing war.

Defining Mission Objectives

Yours is a heroic mission. Your efforts have the power to liberate countless victims from the grasp of the Goliaths’ propaganda machinery. Your battlefield lies in the prospects’ mental resistance anchored by complacence, denial, and rationalization.

As history demonstrates, whenever United States forces enter an oppressed nation suffering from decades of misinformation, corruption, and economic abuse, we encounter a population that has learned to function at that level and is resistant to change. Strategist B.H. Liddell Hart said, “The only thing harder than getting a new idea into the mind is getting an old one out.”

Today’s high net worth prospect has an existing brokerage relationship that they will not readily abandon–no matter how detrimental you are able to show them it might be to their financial well-being. Functioning under Wall Street’s marketing hypnosis, your prospects most likely don’t know what their needs are or why these giants’ strategies have consistently left them exposed to market trends, substantial losses, and high commissions.

The primary objective of your marketing mission should be to divert the attention of prospects and clients away from the industry giants by showcasing how you are different. Think for just a minute about your business model and all the functions you perform that the giants do not: benchmark reporting, avoiding conflict of interests, customization, broad range of investment options, open architecture, transparent pricing, local presence, and fee basis.

Goliath’s firms are working hard to blur the line between you and them but are only providing an illusion of your services. What can you do about that? Stand back and take a breath. Focus your time on communications with your clients. Encourage referrals. Make sure your expertise is as sharply utilized as it can be and take every opportunity to clarify your differentiation because prospects won’t easily see it.

Your secondary objective is to educate prospects. Through education, you help prospects understand how the markets work and what steps are necessary to successfully meet their goals, and then free them to make an informed decision to choose you as their financial guide.

Finally, your third objective is to win the allegiance of prospects and clients through full disclosure and accountability conveyed through a written investment process.

A Question of Survival

Let me explain why this is the direction you must take to survive in your chosen profession.

A few years ago, I wrote a book about my experience in the U.S. Army’s 5th Special Forces RECONDO School that became the basis of a program for the History Channel. The program chronicled the training of elite fighting units designed to operate within hostile territory, independent of large-scale forces. These Special Forces teams are always severely outnumbered, and yet they perform all the functions of a much larger organization.

RECONDO School taught its students how to maximize their nominal resources and utilize the agility, flexibility, and maneuverability unique to smaller units to operate in an enemy-dominated environment and achieve their mission: to find the enemy’s weakness and use that weakness to recapture territory and defend freedom of choice.

Today’s independent advisors compete for their territory against Goliaths such as Morgan Stanley, Salomon Smith Barney, Merrill Lynch, the big banks, and big insurance companies. The independent advisor is responsible for his or her own training, investment selection, back-office operations, customer service, client interface, managing staff, accounting and reporting, and selling. In other words, the independent advisor has to do it all without the massive support system enjoyed by giant competitors.

I believe there is much to be learned from this military analogy, drawing from my training to create a practical way to successfully market your services in the face of overwhelming competitive odds. These are proven tactics that will effectively balance the odds in your favor, primarily through the use of effective communication strategies such as writing, story-telling, and speaking.

A Simple, Powerful Weapon–the Written Word

In our culture, writing is the leading indicator of your knowledge. Not only are you perceived as an expert when your writing is published, but when your ideas and processes appear in print, you create credibility. When done correctly, writing gives readers something tangible and exposes them to new or alternate opinions. Your published thoughts give you entr?e to the minds of your prospects.

The Goliaths’ company policies dictate that their brokers are not allowed to promote themselves individually and are expressly forbidden from making unsupervised written contact with the public in general and prospects in particular. Their reasoning represents a major philosophical chasm between the independent advisors and Wall Street firms. They believe that the clients belong to their company, not to the broker: the broker serves the firm’s best interest. In direct contrast, the independent advisor serves the client: his broker/dealer (assuming he has one) only provides support. If there’s any doubt about priorities, just think about who signs the broker’s paycheck.

In addition, Wall Street’s due diligence departments are so gunshy, they do not allow their serfs to write a letter home, let alone an unsupervised e-mail, article, or book that attempts to educate clients with something that might not fit the company rhetoric. The liability is justifiable. The news media is full of stories of these firms defending themselves from scandal, insider trading, and other misadventures.

As we explain each tactic during the coming months, we will interview independent advisors and examine how it has worked for them. This column is designed so that you can put these tactics to work immediately and create a living marketing plan–no matter where you are in your career or marketing process.

Feel free to contact me at with your own practical ideas or stories. After all, we’re in this battle together.