How can one financial advisor differentiate him- or herself from all the other advisors in today’s marketplace? There is no simple answer. If there were, all advisors would follow the same strategy and we’d be right back where we started – with all advisors looking the same.
That’s why I was drawn to Scott McKain’s book, Collapse of Distinction: Stand Out and Move Up While Your Competition Fails. Although published in 2009, its message is even more important today. With everyone offering the same products and advice – which the public views as being commoditized anyway – it can be a real challenge to stand above the crowd.
Collapse of Distinction is an easily read book full of practical ideas. Although it’s not written specifically for financial advisors, its lessons can be readily applied.
McKain suggests three common factors that destroy attempts by entrepreneurs, as well as megacorporations, to differentiate themselves in their marketplace.
The first is our preference for evolutionary rather than revolutionary change. We tend to make incremental adjustments in our businesses in an effort to keep pace with or, perhaps, stay slightly ahead of the competition when what is really needed is something bold and innovative.
Second, many businesses do not know how to react to dynamic, new competition. Independent financial advisors, for example, now face competition in a form that didn’t exist just a few years ago – discount brokerages, online planning tools, web-based product information and lower minimum account sizes for separately managed accounts.
Typical responses have been to try to “outdo” this new competition by lowering fees, beefing up technology and broadening product offerings. But customers often still choose the new option because it appears to be “different.”
Third, there is the reality that familiarity breeds complacency. This happens in personal relationships and certainly in relationships between financial advisors and their clients.
The author also makes a very important observation: it often is not enough to simply create differentiation in the minds of your potential clients. You must, instead, strive for distinction.
A great example is found in the computer industry, in which PC manufacturers strive to differentiate their laptops from each other, while Apple Inc. occupies a “category of one” with its MacBook brand through an emotional connection with its users.
To get us out of this mess, McKain suggests four “cornerstone” strategies:
–Clarity. You cannot differentiate what you cannot define. So, developing a clear idea of who you are (and who you are not), what you offer (and what you don’t) and how you deliver your products and services (and how you won’t) are essential first steps.
To do this, ask yourself, your team and your clients: “What makes us different … better … unique … from our competition?” Capture those thoughts and any new concepts you want to promote in a short, powerful statement that intrigues you, your team and your clients, and provokes everyone’s emotional involvement.
–Creativity. Take your statement of clarity and find imaginative ways to express and execute it. McKain suggests making a detailed list of every point of contact that a client has with you and then choosing one around which to create five innovative strategies for enhancing the quality of the contact.
One financial advisor I know, for example, uses desktop-sharing software to walk new clients through their first account statement (and any time after, if asked).
–Communication. There are few better ways to communicate with others than through a well-told story that illustrates the key points of your message. McKain recommends the “three-act format” of storytelling: Act 1 is the introduction of the characters and the conflict they face; Act 2 describes the attempts by the characters to resolve the conflict; and Act 3 brings in the “hero to the rescue” resolution of the conflict.
Most of us have a treasure trove of real-life stories we can use to highlight how we have “saved the day” for our clients.
–Customer experience. There are three levels at which you interact with your clients. The first is processing: what they have a basic right to expect as a result of doing business with you. The second is service: steps you take to ensure that processing is efficient and enjoyable. The third is experience: when you add personalization to the delivery of your service.
McKain encourages business leaders to focus less on their unique value proposition and more on their ultimate customer experience to develop more engaged clients.
Those clients will, in turn, reward you with loyalty and advocacy. IE
Collapse of Distinction: Stand Out and Move Up While Your Competition Fails
by Scott McKain,
Thomas Nelson Inc.;
240 pages,
$14.99
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© 2012 Investment Executive. All rights reserved.