3 Questions to Help Identify Your Unique Value Proposition

In financial services, you need to identify how you fit into the market — and how you stand out from the competition. What makes you unique compared to the rest? What do you offer that no one else does? What is our edge? Clients need to be wowed given all the competition in the market — especially if they are going to pay a fee.

The average financial advisor charges a flat fee of 1–2% of assets under management (AUM). Meanwhile, robo advisors offer management fees under 50bps, with the option to manage everything from a home computer. It begs the question: Why do clients need a financial advisor?

If you thought that clients were more self-serving nowadays, think again: According to a poll conducted by Nationwide Advisory Solutions, 74% of RIAs and fee-based advisors surveyed said that investors were more likely to work with a financial advisor now than before the economic downfall. So clients are out there — but how do you reach them? Answer: with a unique value proposition.

Defining your value prop is crucial to growing your client base, but going about it isn’t as easy. In order to identify your unique value proposition as a financial advisor, you need to ask yourself three questions: Am I offering unique opportunities? How fragmented is my client’s experience? Am I embracing a modern culture?

Answering these market-specific questions will help you understand your edge, ultimately enabling you to entice clients and keep them from seeking out other solutions and cookie-cutter investment opportunities.

Question 1:
Are You Offering Unique Opportunities?

At times, it can seem as though the market is saturated with financial advising outlets. According to the Bureau of Labor Statistics, there were over 200,000 employed personal financial advisors as of May 2017. The amount of financial health services spans the spectrum, with the highest concentration of professionals in securities, commodity contracts, and other financial investments and related activities. So what makes you valuable?

Consider for a moment the rise in technology, especially in the financial market. Robo advisors take a purely data-based approach to investing and allow clients to have a hands-off experience. Clients have turned toward these types of impersonal investing approaches after losing trust in financial institutions after the 2008 crash. Plus, low fee investments offered by robo advisors are also appealing, especially to individuals who are just starting an investment plan.

However, while robo advisors offer clients an alternative to the traditional investment advisory service approach, the types of investments they utilize are not exactly unique or interesting. As an advisor, this is where you can get creative and attract clients by offering unique investment opportunities that can’t be found elsewhere.

Many financial advisors are challenged when it comes to offering these unique investment opportunities. If you’re part of a large firm, it could be tough to find unique opportunities because most of these alternatives don’t scale to the entire firm. Or if you work with a broker-dealer (BD), that means investment opportunities need to go through a lengthy approval process. Or maybe you’re locked into the investment opportunities that your BD is pursuing, which halts the search for new, niche opportunities.

To combat this, make sure that you’re working with a BD who has a philosophy that backs finding and offering unique investment opportunities. This will help you formulate a unique value proposition, as clients will see you as someone with enticing opportunities they haven’t seen before.

Question 2:
How Fragmented Is Your Client’s Experience?

Clients typically seek out a handful of professionals to help address their financial health. They look to industry experts for property insurance, home insurance, mortgage services, taxes, and more. They’re accustomed to hiring individual firms for each part of their overall finances — which results in a limited perspective and often vague picture how everything fits together. For something so important, clients shouldn’t be spread so thin.

Also, when a client seeks out different services from numerous firms or individuals, the revenue gets dispersed. Sharing a client with other professionals means that you are missing out on money that could be yours if you offer more services. What today’s clients need is a more inclusive experience to help them visualize all of their financial investments and opportunities without having to piece together advice from their pool of finance professionals.

If you offer a comprehensive snapshot of their financial health, it helps make the client’s life easier because 1) there are fewer hands in their portfolio, leading to fewer errors and less overlapping, and 2) you have more control of their assets, and can thus help improve their returns in multiple areas instead of just one.

Question 3:
Do You Have a Modern Culture?

Culture is at the forefront of doing business because today’s clients want to know if the firm or individual advisor shares their core values. And culture doesn’t mean an eclectic set of hobbies or a feature-rich website. Instead, culture means pursuing (and showing your passion for) the goals and ethics that matter most to you while using emotional intelligence to understand your client base. If your culture resonates with your clients, it gives you a unique value proposition because you are more human, approachable, and modern. This, in turn, can help you establish trust with clients.

According to a survey conducted by Practical Perspectives, over half of the financial advisors working today won’t be working full time in 10 years. And because they will soon be retiring, there is an overwhelming sense of sticking with “doing things the old way” because it worked. In turn, this means many professionals in the finance world are hesitant to work toward a modern culture, and this is due to a number of reasons.

First, many seasoned financial advisors embrace the mentality of “if it ain’t broke” — their processes and methods worked before, so why should they change? Second, many financial advisors believe that millennials are not a viable market to chase after. They don’t see the need to take a more modern approach to financial advising because they believe millennials aren’t investing. But truth be told, millennials are the ones who will end up inheriting their parents’ money — parents who likely work closely with a financial advisor.

Both of these factors are keeping many financial advisors (and even the industry as a whole) from moving forward— and that stagnation opens up opportunities for you.