Apr 8, 2022 – Here’s a hard truth: To most investors, financial professionals all sound the same. In a survey conducted, more than 60 percent of investors said they think all advisors make the same promises, making it hard to tell the difference between them. That same report looked at the marketing materials for the top 100 financial professionals (in Barron’s 2017 list) and found that most used highly similar language. One in four of those firms used the phrase “comprehensive portfolio management.”¹

There’s nothing wrong with comprehensive portfolio management, of course, but that’s a little like a restaurant highlighting that it sells food. (Would any financial professional offer non-comprehensive portfolio management?) It’s a baseline requirement of the industry, and it doesn’t give customers enough information to make an informed decision.

Instead, financial professionals need to get more specific in how they create and communicate their value to clients. That’s an age-old challenge for advisors, but it’s getting more important, in part because of the uncertainty of current markets. One study found that the number of investors seeking out professional financial advice has increased from 29% before the pandemic to 38% in mid-2021. Moreover, the No. 1 source for trusted advice is now a financial professional. (In the past, respondents cited them-selves.)² Robo-advisors are also growing fast, with projections calling for that segment of the industry to reach $1.2 trillion in assets by 2024.³ A decade or so ago, advisors could get by with generic marketing materials, but today that’s no longer true.

The good news is that because most advisors lack a clear and differentiated means of creating value, it’s relatively easy to stand out from the pack without requiring a lot of time or money.

Here are three ways to differentiate yourself in the value you offer to clients.

1. Identify a target market.

The core of any value proposition is identifying a niche: who you serve. For some advisors, this can come from their own personal background. If you’ve served in the military, you might want to work with military members and their families. After all, you’ve been in their shoes and have first-hand experience with the financial challenges they face (along with knowing how salary and benefits are structured in the military).⁴ Similarly, if you’re a divorced woman, you might want to specialize in those clients, or if you built your firm up from scratch, you could work with smallbusiness owners.

Identifying a clear niche helps differentiate you because you can build up deeper expertise in solving the specific problems of a particular group. You’ll have more credibility with that audience, reduce your competition, and increase your word-of-mouth referrals.⁵

Notably, your target market doesn’t necessarily need to reflect something personal about you. Sometimes it might come through sheer geography— if you live in a town where one company is a dominant employee, you can focus on working with those people. (If that’s the case, you could get to know someone in the HR department to better understand the company’s package of benefits.) Either way, you should have a clear target market and a clear means of creating value by helping those people address their financial needs.

Just as important, you should be able to rule out some potential clients if they don’t fit that profile.

2. Don’t mistake technology as a differentiator.

Technology is an amazing tool that has transformed financial services in the past decade, but it’s also essentially a leveler— not a differentiator. It becomes more accessible and less expensive over time, meaning that major Wall Street firms and small storefront advisors can now access the same kinds of tools. Instead of trying to differentiate yourself based on technology, think about how you can use technology to deliver a better experience to your ideal target client— based on that client’s needs and expectations. In some cases, that may mean relying less on the latest digital tools. Some customer segments, such as digital natives, will likely expect a digital-first customer experience with streamlined tools that give them 24/7 access to their financial information. But these tools can’t replace the human touch. Financial professionals need the ability to have conversations at key junctures in their clients’ lives, and truly listen to understand their needs.⁶ The real challenge is to use technology to support a meaningful and personalized customer experience.

3. Factor in behavioral finance.

Clients can often make irrational decisions that go against their own long-term interest, like panicking in a bear market and seeking to sell off stocks or trying to time the market to buy low and sell high. Those mistakes are pervasive because they tap into deeply ingrained biases and mental shortcuts that affect just about everyone. They feel like they should work. But because these challenges are so common, you can create value by teaching clients some of the basics of behavioral finance.⁷ For example, you can show them the implications that those decisions would have had in the past—the gains they would have missed out on if they’d sold off a portfolio at the bottom of the market in 2009.

By talking to your clients about the specific biases they’re most likely to face, you’ll help turn them into smarter investors. (And, as a side benefit, you may find yourself needing to talk them out of fewer questionable decisions in the future.)

In sum, there’s a clear reason that most investors think financial professionals are all the same: Many of them say the same things. But by following these guidelines, you can demonstrate and communicate your value to clients in a way that they’ll understand and that will help you grow your business.

For more ideas on how to create value, read our past blog on “Three Ways to Strengthen Your Firm’s Brand.”