In the first part of this series of blogs—The Biggest Trap Advisors Face When Marketing Themselves—I suggested why widening your client prospect net may be self-defeating, resulting in a lower close rate. In this blog, the second and final in the series, I’ll explore why that’s the case, and how you can find a path out of the wider net trap.
So what’s the path out of the wider net trap? To understand the way out, it’s first necessary to better understand why the wider-net marketing approach is so ineffective at converting prospects into clients in the first place.
The fundamental issue with the wider net problem is that by doing everything for everyone, the advisor is not uniquely differentiated as being the best at anything for anyone. For instance, imagine a world with five advisors: the first specializes in doctors, the second specializes in entrepreneurs, the third specializes in teachers, and the fourth and fifth are generalists who will do anything for anyone.
Now imagine what happens when a doctor who needs a financial advisor begins the process of searching for one. The doctor will likely interview three of the advisors—the one that specializes in doctors, and the two generalists, since it doesn’t make sense for the doctor to see advisors who specialize in teachers or entrepreneurs.
At the end of the process of interviewing advisors, which of the advisors will have the most credibility for being able to solve the doctor’s problems? Which is most likely to have worked with other doctors the prospect knows and trusts for referrals/references? And who’s most likely to win the doctor’s business: the advisor who specializes in the precise needs of that doctor, or the two generalists who do anything/everything for anyone/everyone? The answer seems pretty clear: the advisor who specializes in doctors is going to win over the overwhelming majority of doctors as clients, compared to the other two.
Now imagine that an entrepreneur begins the search for a financial advisor. The entrepreneur will likely interview three of the advisors—the one that specializes in entrepreneurs, and the two generalists, as clearly it doesn’t make sense for the entrepreneur to see advisors who specialize in teachers or doctors. At the end of the process of interviewing advisors, which of the advisors will have the most credibility for being able to solve the entrepreneur’s problems? Which is most likely to have worked with other entrepreneurs the prospect knows and trusts for referrals/references? And who’s most likely to win the entrepreneur’s business: the advisor who specializes in the precise needs of that entrepreneur, or the two generalists who do anything/everything for anyone/everyone?
The answer again is pretty clear: the advisor who specializes in entrepreneurs is going to win over the overwhelming majority of entrepreneurs, compared to the other two.
Now imagine that a teacher begins the search for a financial advisor. The teacher will likely interview three of the advisors—the one that specializes in teachers, and the two generalists, as clearly it doesn’t make sense for the teacher to see advisors who specialize in entrepreneurs or doctors. And once again, the likely outcome of this process is clear: the advisor who specializes in teachers is overwhelmingly likely to win the prospective client’s business.
The end result of this process: by casting the net wider and wider, the generalist advisors have more and more prospect meetings, but it simply leads them to lose out on more and more business to other advisors that are perceived to be more specialized, trustworthy, competent, expert, and capable of solving each particular client’s problems. Note that in the end, each of the specialists had one meeting and got one client, while the generalists each had 3 meetings and no clients. The generalists worked drastically harder doing more prospecting for clients, with drastically inferior results.
Sure, in the real world the generalist advisors can and do still win a client here and there, since not every potential client has a specialist who serves them in the first place, but that would clearly be an uphill battle. And as more advisors become specialists over time, the pool of prospective clients who don’t have a specialist serving them shrinks. If the advisor responds by trying to cast the net wider, the paradoxical end result will just be an increase in prospective client meetings but not an increase in new clients, as the generalist advisor loses out to competition that is more targeted, more specialized and more likely to be perceived by the prospective client as the ideal solution.
Crafting a Niche
So how does the advisor escape from the paradoxical trap of the wider net? Simply put, by turning around 180 degrees and moving in the opposite direction, with a goal to become more specific, specialized and focused. The goal is to spend less time in meetings with prospective clients, but become so focused that the advisor wins the overwhelming majority of the prospects that are seen, because now the advisor is the specialist with the best solution that attracts clients away from the generalists.
In other words, this is why the movement towards specialization and having a “niche” matters so much. In a world where just being a financial planner was a differentiator—as was the case for the past several decades—the mere fact that the advisor could credibly claim to offer the service was sufficient.