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August 19, 2014 at 11:45 PM
Technology has taken over almost every aspect of life, from eating to driving cars. While client interactions are the bread and butter of the advisory business, robo-advisors are muscling their way in. Fox Financial Planning Network (FFPN) has released a white paper that shows how advisors and firms will need to change in order to compete with these online investment platforms.
“The new, low-cost competition from online advice platforms [is] providing the industry with a ‘wake-up call’ to evolve their firms,” said Deborah Fox, CEO and founder of FFPN, in a press release.
“The good news is there is an incredible opportunity for firms to defend — and actually improve — their industry position by focusing on building efficient infrastructure that delivers a consistent and outstanding client service experience with well thought out systems, adoption of best-in-class technologies and clear pricing and client communications,” Fox said. “These are all the things firms should have already been working on; so if the robo- advisors serve as a catalyst for firms to get into gear to do what’s necessary to evolve, more power to them.”
FFPN laid out 20 battle strategies for advisors. Here is a condensed list of 10 Best Ways for Advisors to Compete Against the Robos:
1. Become an expert at clearly articulating your value, and define your clientele.
If the client knows exactly what skill set you have to offer, you are automatically differentiated from online platforms. Personal service, then, becomes sort of a white-glove premium. “Articulating value comes down to effectively communicating how you are going to solve your prospects’ problems, significantly improve the status quo or handle the parts of their financial lives they choose not to,” the authors write.
By having a clearly defined client profile, you’re able to tailor the services you provide. The authors say that by not defining your audience, you open up the door for lower-cost robo-advisors to sweep in and steal your clients.
2. Specialize, and make your specialty known.
According to a Cerulli study, only 15% of advisors are specialists, and you can use that low percentage to your advantage. Robo-advisors can’t compete (yet) with advisors who specialize in categories like alternatives, complex fixed income and exchange-traded funds. Becoming an expert in a certain field, you incerease the chance that clients seeking specific expertise will proactively seek you out.
3. Add other areas of financial advice by enhancing the investment management services you provide.
Providing additional areas of advice to your target audience means adding more value. These areas should make the lives of your clients easier by assisting them with their problems or with making certain decisions, the Fox paper explains. The bottom line? The more your expertise is valued, the more your service is worth.
4. Embrace social media.
Many advisors have not caught up with the social media trend. This might seem odd since almost every person and business has gone digital, but this is a marketplace that many advisors forget about. Even if you’re not social media inclined, the Fox report suggests makine small changes such as tying in your LinkedIn profile with your website or blog. “Speak in your own voice and let your business and planning philosophies shine through in your writing. If you don’t have time to write your own content, outsource that job,” the report said. “It is one of the highest return on investments you can make because the majority of all worthy prospects will go online to research an advisor they are considering doing business with.”
5. Deliver 70+ touches per year, and use technology to facilitate them.
