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Being chartered, certified or a life planner is no differentiator

To be truly successful in 2015, advisers must differentiate their business proposition by being commercially astute not just technically excellent, argues David J Scarlett in this interview with Rob Kingsbury

David provides an example of one firm that used the premise to build a valuable business through professional connections.


Adviser firm differentiation

Rob Kingsbury: If there are enough HNW clients around to provide for a viable business why should adviser firms bother to differentiate themselves?

David J Scarlett: There are a lot of High Net Worth clients around but probably less than most advisers think there are. But it’s not the total number of people out there with enough money that’s relevant, rather it’s whether the right kind of people are coming to your firm for advice and why they would choose your firm over any other firm?

RK: Presumably they will choose a firm because its service is better than its rivals?

DJS: That’s a key phrase. Many advisers say to me, we think we are ‘better than’ the other advisers in our area. But a new client will not be attracted to your firm because you are ‘better than’ any other firm; let’s face it they haven’t a clue if you are or not until they have experienced your service, and even then they may have nothing to compare your service against. It’s not being better than or more qualified than, it is being different to. Are you noticeable as being different and importantly, as a result, somebody the client feels is relevant to their lives?

RK: Surely qualifications are a differentiator?

DJS: Many advisers come to me and say I’m a Certified or Chartered Financial Planner and those qualifications and what an adviser has done to gain them are important. They give advisers greater technical competence and greater confidence in advising because of that.

However, that still doesn’t attract clients and many professional connections and HNWs don’t give a hoot if you are certified or chartered. Many don’t even know what that means and when they do know they couldn’t care less. What clients want to know is: What have you got to do with me? Why is your service of any interest or importance to my life? Why should I come to you rather than someone else? Answering those questions is what makes a firm different.

It’s a vastly and rapidly changing world. Consumers are more sophisticated – they won’t accept what they would have done 10 or even five years ago. They want quality service and to be attracted by something that is attractive and relevant to them.

In the past advisers could make a good living by being technically competent, having integrity and working their socks off. But advisers in 2015 cannot hope to survive in the way they have done in the previous 5-10 years. They are going to have to learn to be commercially astute not just technically excellent and know how to attract clients as a business person and entrepreneur not as a technical financial planner or adviser.

RK: So how can adviser firms make themselves different?

DJS: First let’s get out of the way the things advisers often think make them different but don’t.

I hear advisers talk about being holistic financial planners as if that makes them different. Most clients, even sophisticated investors, haven’t a clue what you are talking about. They don’t know what a non-holistic financial planner is and they don’t know what an holistic financial planner is. It’s a pretty meaningless phrase.

Another phrase used as a differentiator is ‘we are Life Planners’. As advisers we might be excited by life coaching and there is no doubt when integrated with financial planning it creates a powerful way of doing financial planning. But the general public hasn’t a clue what life planning is in relation to financial planning, so until they experience it face-to-face that’s simply a non starter as a means of trying to be different. It is meaningless to the consumer. We need to talk the language they are excited about not the language we are excited about.

Here are three ways to start being different:

1. Choose to become an expert in a niche market. A niche market is not the pensions market or the IHT market. That’s a technical competence. You need to learn to talk the language of the human being you want to work with and you need to be able to articulate and describe what kind of human being you want to work with – that is your niche market. And in my experience, those advisers who choose to focus on a very specific target market win out consistently over those that don’t.

2. Choose to become expert in a particular technical area. This could be estate planning or later life planning, but if you decide to become an expert then you have to be not just technically competent but brilliant in that particular area. The public doesn’t buy good, the public doesn’t buy competent, the public buys into ‘are you an expert and are you brilliant at what you do, yes or no?’ If you’re not they’ll find someone who is. And if you are expert in a defined area you need to make sure that when you communicate your expertise the public actually understands what you are talking about.

3. Choose to become superb at understanding and delivering true value. That is understanding and delivering to your ideal client, the human being you would love to work and engage with, what they really, really value. Unless you know what your ideal client truly values then what you are delivering is a bit of a hit and miss. It may be brilliant and it may be delivered with integrity and hard work and give masses of service but that does not mean that the client truly values it or even really wanted it in the first place.

RK: How can advisers find out what their clients truly value?

DJS: Most advisers could find out if they do two things.

1. Conduct good quality research. And that’s not designing questions that you send out because then the questions can be skewed to give you the answers you want to hear. It’s knowing how to ask the right questions or getting a professional researcher to do it for you.

2. Testing, testing, testing. Once you’ve researched what clients truly value, then testing the results with your ideal client market until you find something that a) they really really want you to deliver and  b) they will pay you highly for.

I’ve coached individuals who are able to charge ongoing fees of between £5,000 and £10,000 per annum as a minimum without any recourse or link to assets under management. How do they do that when 99% of advisers cannot? Simply, they have done their research and found out from their client type what they truly value. And not just any client but their ideal perfect client they would really like to work with.

That’s differentiation or at least the starting point.

RK: Can you give us an example of how this has worked for an adviser firm?

DJS: I met an adviser last year and as part of helping her stand out from the crowd I set her the task of interviewing solicitors over a period of two months. 15 solicitor practices offered to see her. The questions we set to ask them were designed not to present what her value proposition was to them but to find out what they would truly value from working with her.

When she had spoken to them they told her what they would value and asked that when she had developed her new proposition – which they had helped to design – that she come back and present it to them.

She took two to three hours out a week to work on the project. After she had gone back and presented it, 13 of the solicitor firms said they wanted to work with her. And she will get quality clients as she has set a minimum limit of £500,000 investable assets.

Tell me how many advisers have that number solicitor firms willing to deliver to them clients with half a million pounds to invest? And she did that in five months, part-time by first finding out what her clients, in this case the solicitors, really valued.

Visit David J Scarlett’s website


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