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Practice Management > Building Your Business

How to Compete in a Saturated Market

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Take a few minutes to read brochures, look at websites and listen to the spiels of advisors describing their businesses: No wonder people looking for financial help find it hard to tell the difference between the many options.

Not only are many descriptions generic and poorly conveyed, but the variety of business labels—advisor, consultant, wealth manager—further complicates the marketplace for consumers. Perhaps regulators should consider overseeing financial services firms based on what they call themselves. If nothing else, this would force our industry’s different providers to describe what they do in terms the consumer can understand, and direct the enforcers to the relevant sins committed by these firms.

The point is the lack of clarity in financial services business models and the profusion of practitioners plying their trade using virtually the same branding has created a saturated market. How do the great companies succeed in this environment?

Mike Harris, a serial entrepreneur in the United Kingdom, says “to compete in a saturated market, you have to stand out in glorious Technicolor. And you have to make your competitors look dull and boring.” While many birds find shelter by blending into the trees, we notice the ones that stand out with bright colors, distinctive loud calls and impressive abilities.

At the recent Pershing European Client Conference in London, Harris exhorted participants to think differently about their businesses and to break free from the crowd. He knows what he’s talking about. Harris has created several billion-dollar enterprises including First Direct, Egg PLC and Garlik Ltd., and wrote the bestselling book “Find Your Lightbulb: How to Make Millions from Apparently Impossible Ideas.”

Harris criticized the idea of companies hiring consultants to teach them “best practices” instead of helping them to innovate and differentiate. He pointed out how dull and boring businesses can become and how that stagnant attitude eventually rubs off on the people who work for them.

Harris said, “When you make your company stand out in glorious Technicolor, you liberate curiosity and insight, and evoke determination. You rid your business of its dull pallor, blind spots, boredom and bureaucracy.”

As entrepreneurs, many advisors find their lives anything but boring, but check to see if employees share your exuberance and if the marketplace sees your firm as something special. Ultimately, the question regarding both clients and employees should be: “What will attract them to my firm, and why would they stay?”

Our industry suffers from the tyranny of best practices. We mimic the strategies of others, seeking out what worked best for competitors and attempting to apply similar tactics to our own businesses, without first considering whether differentiation might create a better result.

Harris noted that too many businesses focus on the process of innovation rather than the leadership required to drive innovation. Quoting Steve Jobs, the brilliant founder of Apple, Harris relayed the famous line, “We’re here to make a dent in the universe.” He added, “In business, we must first define the dent.”

In this vein, Harris advised firm owners to investigate three questions:

  • What is the purpose of my business, beyond making money?
  • What do I want to be known for?
  • How do I want to leave people feeling?

Your Purpose

Defining your mission is important, especially when discussing your business with people whom you wish to recruit or promote. While the financial rewards of the advisory business are compelling, the work would be exhausting if money was the only motivator. Benefits also include intellectual challenge and a degree of independence. But is personal fulfillment your firm’s purpose?

A quest to fulfill personal goals contributes to business success, but does not create a dynamic strategy for building an enduring enterprise. When the firm’s purpose centers on the impact you hope to make on individuals and families, your community or even your industry, then you have something others can rally to.

The risk of course is over-promising and under-delivering, so investment performance would probably not be your best statement of purpose. However, a philosophical belief in an investment approach could be differentiating and could help you organize your business. Another differentiator could be the desire to help certain categories of people who are easily identifiable as communities of common interests or common needs.

What are you known for?

Think hard about what you want your firm to be known for. Many advisors offer muddled messages, claiming to be superior or different. Take this opportunity to define your purpose and lift your brand above the masses. Ask your clients or your centers of influence how they describe you when referring others to you—of course, this means they must be comfortable making such referrals.

For example, one successful advisory firm has made it known that it prefers to work with clients who have a commitment to community service or philanthropy. The reason for the firm’s existence is to help individuals manage their wealth to help serve the greater good. How is that for a compelling message?

Some may feel that narrowing the firm’s purpose will alienate potential clients. On the contrary, marketing studies reveal that firms with a strong brand—a specific market, a technical specialty, an identification with a certain community—attract more clients exponentially over those who function as generalists with no clear identity.

How do you leave people feeling?

The issue of client happiness is particularly provocative, especially in the context of the financial services business. Our world revolves around charts and facts, currency and symbols. While financial professionals strive to connect on a personal level with individuals, many find it more comfortable to revert back to the data.

A recent white paper sponsored by Pershing Advisor Solutions LLC, “Women are not a Niche Market,” (see “Women Are Not a Niche,” July 2012, Investment Advisor) validates the peril of failing to consider how clients feel about their experience. This study confirmed that women do not want to be treated differently from their male counterparts. Equal treatment does not translate to identical treatment, however. Women often have different life circumstances from those of men and varying degrees of experience with finances. Advisors must modify their approach to forge productive relationships with individual clients, moving beyond stereotypes to draw on a deep understanding of each investor’s unique investment needs, goals and concerns.

If clients are not happy with their experience, they will look elsewhere for a better fit. What do you want your clients to feel after they have worked with your firm? Peace of mind. Trust. Confidence that they are becoming smarter investors with your help.

How do your current clients describe the experience of working with your firm? Client satisfaction involves more than delivering on the expected performance and executing the recommended plan. You must go above and beyond to ensure that your clients walk away with a positive impression of your firm and a willingness to sing your praises to whomever will listen.

It is in your best interest to conduct some research. Your clients, prospects, competitors and employees can tell you what they believe your purpose is, what you are known for and how you make people feel. Listen to their answers and look through their eyes. Do you see your advisory firm as noticeably superior and more visible than the competition?