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4 Tips for a Value Proposition That Lands Clients

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It’s no secret that a well-defined value proposition sets advisors apart.

New research from global analytics firm Cerulli Associates looks at how advisors can identify their ideal target market and define a value proposition that is compelling to that audience.

“For example, an advisor with a defined value proposition might specialize in working with corporate executives who are concerned about planning needs such as managing concentrated stock exposure, minimizing taxes, protecting assets, and maximizing tax-deferred savings in retirement plans,” Kenton Shirk, associate director at Cerulli, said in a statement.

And, as Cerulli’s research points out, that advisor’s value proposition can be designed to solve for those specific needs.

A defined value proposition is especially important when it comes to referrals, according to Shirk.

According to advisors, 67% of their new clients are referrals from clients, friends or family members. A further 18% are referrals from other professionals, such as certified public accountants and attorneys.

 “An investor considering a new relationship with a financial advisor wants to understand the value that a potential advisor can offer before committing to a long-term professional relationship,” Shirk said in a statement. “Advisors need to articulate a compelling value proposition to not only prospective clients, but also to their referral sources. Because referral sources are the largest source of new business for advisors, it is critical that they understand the advisor’s ideal client profile and the value proposition that should be communicated to them.”

In its report, Cerulli offers a number of suggestions that can help advisors create their own value propositions.

“Advisors who take the time to define their practice’s value proposition often feel more confidence and conviction when communicating that message,” Shirk adds. “This confidence, in turn, injects more passion and enthusiasm into conversations with prospects, making the message more compelling.”

The research used in the report, the 2Q 2016 issue of The Cerulli Edge – Advisor Edition, is based on an ongoing survey of more than 7,500 advisors in the U.S. across channels conducted throughout 2015.

From the report, here are four tips for a value proposition that lands clients: Avoid clichés

1. Avoid clichés.

According to Cerulli, advisors frequently fall back on industry clichés and generalizations, which are used so often that they lose their meaning.

“A search of a few advisor websites typically reveals a discussion about the advisor’s broad range of wealth management services alongside images of mountain peaks or a retired couple strolling on a beach,” the report states.

Highly tactical marketing approaches don't always work

2. Highly tactical approaches to marketing don’t always work.

Advisors often begin by asking “what works?” However, according to Cerulli, that is not the right initial question.

“Instead, they need to start by crafting their overarching strategy, and that strategy should then drive their decisions about marketing tactics,” the report states. “This means defining an ideal client profile and, using that as a foundation, setting a differentiation strategy.”

Niche marketing can be effective

3. However, niche marketing can be effective.

Cerulli suggests that a niche marketing approach can force advisors to be specific about their target market and value proposition.

“The advisor’s message becomes highly tailored to their audience’s needs, making it more powerful,” the report says.

While only 6% of advisors indicate that prospecting and marketing are a major source of new clients, Cerulli finds that niche marketing is gaining some traction.

When asked to identify marketing initiatives that are most effective, advisors point to niche marketing. According to Cerulli’s survey, 68% of advisors have used niche marketing strategies. Of those, 37% indicate that the approach is very effective, ranking highest among all options, and an additional 59% consider niche marketing to be at least somewhat effective.

While some advisors worry that a niche strategy will alienate prospects who fall outside their stated niche, according to Cerulli’s research, these strategies also offer opportunities.

“They approach niche marketing as an all-or-nothing proposition and believe that narrowing their scope limits their opportunities,” the report states. “But in reality, a more targeted value proposition helps advisors better focus their marketing efforts with targeted tactics and messaging.”

Articulate your value to other audiences

4. Advisors need to articulate their value to other audiences.

Beyond just clients and prospects, there are other goals that demand a targeted value proposition, Cerulli says — for example, recruiting established or rookie advisors, buying another practice or forging strategic alliances.

According to Cerulli, advisors often struggle to build a differentiation strategy to attract established advisors to join their firm.

“They need a clear message that communicates value related to their infrastructure, support resources and brand,” the report says.

According to Cerulli’s research, nearly two-thirds of wirehouse and regional advisors who changed firms during the past three years indicated that concerns about the quality of their broker-dealer’s culture were a major factor influencing their decisions to move.

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