Advisors today face a major challenge. It is becoming increasingly more difficult for us to draw clear distinctions between ourselves and our competitors. This so-called “crisis of differentiation” is not likely to reverse course anytime soon. In fact, if anything, the trend is likely to accelerate.
The Labor Department’s fiduciary rule – or if not “The Rule,” a similar future rule – will make marketing oneself as a fiduciary virtually meaningless. Competing on price will also become more difficult as consumers continue to have more low-cost options for investments and advice. Even the internet, which for the most part has enhanced our businesses, has added to the “problem” by making it easier for consumers to compare greater numbers of advisors, independent of their location. Bottom line… it’s going to continue to get harder for advisors to stand out from the crowd.
So what’s an advisor to do? Ultimately, there are only two ways to put distance between yourself and “the field.” You can either be better than everyone else, or you can be different than everyone else. For most advisors, the latter of the two options is the better choice. Being “better” is simply a much harder sell.
“Better” is, by its very nature, subjective and open to interpretation. And let’s face it; we are an industry of braggarts, where everyone is telling everyone else that they are the best. There’s often little to nothing to separate those claims of braggadocio from one another. So that leaves us with “different.”
Interestingly enough, recent history provides us with one of the most compelling examples of this concept in practice. Love him or hate him, advisors can learn a thing or two from President Donald Trump about separating oneself from a crowd field. Long before Trump faced off against Hillary Clinton in the general election, he faced what, arguably, was an even bigger challenge: securing the Republican nomination. In the general election, Trump only needed to beat one person, but recall that to secure the Republican nomination, he had to beat 16.
No doubt, Trump spent a good amount of time talking about how he was “better” or “the best” at this and that — he is Trump after all — but that’s not how he won the nomination. Sixteen other Republican candidates for president also told voters why they were the “best” choice, but in the end, they all fell by the wayside. Trump won the nomination by having a very distinct message that, for better or worse, stuck out. The other 16 candidates were just too similar. It was like walking into an ice cream store where they offer 17 flavors; chocolate, and 16 flavors of vanilla. There’s regular vanilla, French vanilla, Tahitian vanilla… you get the idea. If you like vanilla, you’ll pick the one you like best, but what if you like chocolate? Well, there’s only one choice. 80% of the visitors to our fictional ice cream shop might like vanilla better than chocolate, but chocolate would likely still be the number one seller!
This is, in fact, exactly what played out in the Republican primary. In sum, Trump’s opponents had greater support — at least initially — than he did, but they were all competing for the same voters and ended up cannibalizing one another’s efforts. Trump, on the other hand, spoke to a smaller group, but in a unique voice. That approach worked well enough to give him the Republican nomination, and ultimately, the presidency.