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March Madness: How to Move Your Value Prop to a Higher Bracket

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Advisors may have been feeling like they’re on winning teams lately, with the market up 7.5% over the past three months (as of February 28). But that has nothing to do with your skill; instead, it’s called being in the right industry at the right time.

The real competition is about clients, and today you’re playing against robots as well as other advisors. And the robots are looking like the Wisconsin Badgers in this year’s March Madness. Financial services research firm Cerulli Associates forecasts that the digital advice market will grow from $83 billion by year-end 2016 to roughly $385 billion by year-end 2021. Are you going to fight the so-called robos or join them? I believe that it’s vital for human advisors to view digital advice delivery as a friend, and not a foe that will eat their lunch.

So not only are you fighting the headwinds of tougher and confusing regulatory requirements and fee compression, you have digital advisors to contend with as well. You must still offer superior client service and run your businesses effectively while you market and grow your firms.

That’s a lot. But add one more thing: The investing public sees little differentiation among advisors in the marketplace today. They don’t understand what makes you special, so you have to show them. And the way to show them is to connect—you are more than a portfolio manager, which is the most commoditized aspect of your practice.

It’s up to you to beef up the ‘advice’ component of financial advice, then prove to your clients and prospects that you’ve got what they want. View digital investing delivery not as a force that will displace you but instead as a way to broaden your opportunity to deliver deeper levels of advice to a wider client base. Notice I said digital investing, not advice.

First, Define Your Value

Even as low-cost robos spread across the financial landscape, Cerulli notes that investors still value the role that advisors play in helping them understand the complexities of their finances. “Households’ perceived need for investment advice has increased since last year,” says Cerulli’s Scott Smith, who directs research on investor behavior. “With ongoing geopolitical turmoil, households continue to seek advice from a professional who can help them manage the turbulent times by focusing on goals and staying the course versus making panicked decisions that will have a negative impact on a portfolio.”

To best connect to clients in ways that highlight the value of advisory services requires developing a well-defined UVP—unique value proposition—that you can articulate. Your UVP describes how you can help solve your client’s problems, the services you provide and why you are the person who is most appropriate to handle their finances. It also sets up the cost-of-service conversation and positions your value.

So let’s talk about that. How are you different? Being the “trusted advisor” doesn’t cut it any more. You need to go deeper. 

Second, Define How You Provide Services, Not Which Ones You Provide

The ‘What’ are the services you provide. They are a trap advisors frequently fall into. Everyone provides similar services. It’s the ‘How’ that makes the difference and speaks directly to the client.

Consider your target audience or the niche group with which you want to work. Write down what you are doing already or can do to better serve them. Think qualitatively—what difference does your approach make in their lives? How do your principles and philosophy come into play? 

Next, write down your three favorite clients—ones who fit your ideal, are a pleasure to work with, have the right level of assets, maybe are a good referral source. Consider them one at a time. How have you helped them? Here’s what you need to include:

  • The clients’ goals and objectives
  • Their needs, concerns and challenges—what wakes them up at 3:00 AM?
  • How they view you
  • What problems you help them solve
  • What benefits you provide
  • Why the client came to you in the first place and how you helped them overcome challenges.
  • Specifically how you help them

You now have three stories of how you’ve made someone’s life better, in ways a robo can’t. Each story should give you an idea about specific attributes of your practice, ones that make you unique. These are more compelling to share than the fact that you provide goals-based financial planning. 

Talking about planning can feel like a foreign language to clients who may not have experienced it yet or who don’t understand why it matters, such as Millennials and even GenXers. But what is planning? Advice that is personal, and goes beyond the realm of the robo or any technology.

Third, Understand Technology’s True Role

The questions remain the same: “Tell me (financial advisor) what makes you different; why should I work with you?”  No matter how personal your approach may be, technology still plays a critical role. According to a recent report from Roubini ThoughtLab, 62% of clients desire the latest technology and 51% want responsive, round-the-clock service. So technology should be part of your value proposition, while acknowledging that the human advisor still provides the secret sauce.

Your clients really do want to look at their portfolio on their phone, and not during business hours. They do want to play—themselves—with ideas about what they might change about their financial lives, before discussing it with you. They want to see their accounts aggregated in one place and to be able to shoot you a message about a thought they had. You may think of these services as amenities, but to clients—particularly younger clients—they are rapidly becoming table stakes.

What is the next great value proposition that clients will be willing to pay for? What are the keys to building client connectivity that can’t be broken? How do you speak to what matters most to your clients? How do you build a business model that is good for everyone involved: you, your client, and your organization? Technology will play a leading role in your answers to these questions.

Fourth, Keep Your Message Clear—and Real

What if the next time someone asked what you do, rather than repeat a memorized, canned answer, you instead responded along these lines: “I’m a financial advisor, let me tell you about our clients…”

Then tell those humanistic stories that you wrote down about three clients you’ve helped in the past. If you have already incorporated technology into your valued services, weave in a story where the client portal or online risk questionnaire made a difference.

A word about jargon: just stop. People don’t understand it. A push for greater transparency in investments and fees should include client communication. Try using metaphors–they are a fantastic way to talk to clients.

For instance, financial planning is a “financial GPS for starting your journey,” or “bonds can act as a security blanket.” Help your clients or prospects get it, rather than being disappointed in their lack of financial literacy. Your clients have spent their time earning money—it’s up to you to explain the management part in ways they understand. If you work with doctors, for example, they don’t expect you to understand cardiac surgery. 

Fifth, Don’t Forget to Reinforce Your UVP

Unless your client is your mother, everything you do and say should reinforce your value. In a world where content is king and people are searching for services by asking “who?” or “how to?” questions rather than using keywords, such as ‘financial planning,’ be sure your website includes informative blogs and valuable tidbits of information with investing insights.  Make sure your web and social media presence positions your value from the perspective of the client.

The negative impact of the robo players is that they have focused the investing public on price, not value. We don’t choose our car, computers or even smartphones purely on price. We consider their benefits, the value they provide, and if those purchases will improve our quality of life. Your beliefs and philosophy about investing, along with your superior service capabilities, must factor into that price decision. If you have not articulated these foundational concepts effectively, then you are already down 10 points and playing zone defense when the robo solution steps in.

Express and demonstrate your value in a clear and compelling way if you expect to compete.

See these additional  blog posts by Nicole Newlin:

The Truth About Fiduciary Duty Delegation

The Myth of Beating the Market

The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All information presented is for illustrative and analytical purposes only. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.


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