On a recent trip to Dubai to visit with Pershing clients, I took time to explore the souks in search of gifts to bring home. Amid the specialized bazaars for gold, spices, and perfumes, vendors also peddled pashminas, rugs, and silver. Three things struck me as I stopped at each little shop:
o How much each store’s offering looked like the others;
o How quickly they were willing to negotiate price;
o How likely they were to position their products as superior without any verification of the claim.
Many financial professionals do the same thing. As one advisor wrote to me, “It’s clear that using comprehensive wealth management or fee pricing is not unique any more as advisors of many stripes can claim some variation of this. Even the advantage of fiduciary may be eliminated by Congress. What can we do to differentiate our firm from the rest of the market?”
Clearly financial services organizations face challenges in staking out a position that sounds substantially different to prospective clients. Let’s take a look at the public positioning of a few examples as of early March 2010.
The Web site of Charles Schwab & Co. tells prospective clients to get advice from Schwab because of a “fact-based disciplined approach, time-tested investing principles, personalized to your situation and goals, premium advice without premium price.”
Merrill Lynch, the largest traditional stock brokerage firm, says clients should rely on their financial advisors because of “a one-to-one relationship based on trust, financial advice tailored to your needs, world class research and insights and the resources of Bank of America and Merrill Lynch.”
One of the country’s largest banks, JPMorgan Chase, says: “J.P. Morgan offers individual and family investors a world-class asset and wealth management platform through our Private Bank, Asset Management and Private Wealth Management teams…We foster long-term client relationships by offering tailored solutions designed to help individual investors and families achieve their unique financial goals.”
On the Web sites of some of the country’s leading independent RIAs, the language goes something like this: “Everything we do is driven by our clients’ financial objectives. We deliver personal wealth strategies and investment management programs tailored to achieve each client’s individual goals.”
We could continue the comparison by looking at mutual fund companies, insurance companies that offer financial planning, trust companies and virtually every independent financial advisory firm.
Using a Gimlet Eye
Discount brokers, wirehouse reps, banks, and independent advisors have different ways of capturing an economic benefit for themselves while leveraging their unique strengths. Some price by transaction and others by fees, but beyond this, one must parse their messaging with a critical eye.