The wealth management space is crowded.
When my satellite radio went down in the car for a few days, I tuned into the good old news radio found on AM in nearly every city across America. I was blown away that most of the ads were dominated by financial advisors.
Some were plain old advertisers and others were promoting their show or their free report showing you how to conquer the financial world. It's clear to me that radio stations are less interested in quality programming to boost their ratings and more preoccupied with selling time to promoters who see that as the best way to convince an unknowing public that they are the ones to entrust your family fortune with.
Top that off with the huge budgets that the large international firms have for golf events, pro sports and primetime TV, and your clients see nothing but a huge come-on from hungry financial firms looking to be your clients' go-to person. Whether they believe it or not is unknown, but have you noticed that clients will sometimes ask a question that was ripped directly from an ad they may have seen? Crafty catchphrases are everywhere, and you are now grouped in with all the ads, shows and other propaganda that your clients see, read and hear, like it or not.
The ball is in your court to shape the view that your clients have of you. Have you ever surveyed your clients to see what they think you do for them? How they feel about your firm? What would they like to see more of and what they'd like to see added to your suite of services? Probably not. Progressive wealth management firms do, so why wouldn't you? Especially when you know that they are direct competition, every day, to your firm's wealth management practice.
First, know thyself
Before we can assess your competition, you need to know who you are. And not from your perspective, but from the perspective of your clients. To that end, as you may have guessed from the previous paragraph, I suggest that you hire an outside firm to assess the view that your clients have of your firm. This initiative should not be inexpensive if done right. It is the first invaluable step when beginning to shape the view of your firm by your clients and the outside world in general. If you don't do this, literally everyone who calls themselves a financial advisor is indeed your competition. If you do survey your clients, and then implement actionable steps to promote that brand and the deliverables you provide, none of them will ever effectively compete with you.
Allow me to give you examples of where your clients are comparing you to others that they've worked with or that they have heard of through their own promotional campaigns.
Have you ever been in a vibrant discussion with your clients over performance of investments? Don't get me wrong — we all have that conversation occasionally. But if that conversation for your firm is more regular than an isolated situation, you've got a problem. If your clients hear the BS slung by large firm advisors that their investment research is second to none and that they have offices and resources all over the world to corroborate data and make the best decisions for them, how can you compete with that? You can't. So come up with a better answer.
Some of those answers involve straight-up honesty. Something like this: "You know we do not have offices and resources all over the world. But what we do have is great technology. For a fee I can access the research of any firm that I want." But taking it a step further, it is not likely that your firm really does intense market research, so come up with an honest answer that really reflects how your firm would manage client portfolios.
For our firm, this is simple. We use the research of a few good sources and a hard dose of reality. The reality is what really shows how authentic you are, and that reality is this: Markets go up and markets go down. All markets do not act in lockstep, although they may at any specific point in time. Our research has led us to conclude that no investment manager in the world actually outperforms their benchmark every year or throughout a full market cycle. So rather than chasing winners and losers, we establish a diversified portfolio covering many bases. We will occasionally overweight or underweight certain areas when it appears clear that a specific sector or asset class should be ignored or embraced.
Follow up your process with setting expectations. Show them how this collection of investments has fared in the past, of course stating that past performance is no guarantee of future results (good or bad) and that you are targeting to reproduce the long-term results from the portfolio constructed. Some of the research firms or product manufacturers have wonderful educational material illustrating such. These trainings can be used for your staff as well as clients. One specific company that has terrific education about portfolio construction and performance expectations is Dimensional Fund Advisors.
With market performance looking pretty shabby for 2022, a lot of promoters' dollars are talking about guarantees and trying to scare the crap out of people who lost money in 2022. When a financial advisor uses the word "guarantees," you and I know that is code for annuities. But your clients do not know that, and they are listening.
Address this issue head-on with clients who ask and let them know that there are other options that may curtail losses, but that they come at a cost. In many cases, the cost is egregious, and it may last a lifetime. The promoters don't talk about the internal expenses of 3-4%, or the locks on your money, or the caps that may be on performance, or the weird methods you may need to implement to ever take advantage of the alleged guarantees or the adverse tax consequences when you eventually do take money out of your guaranteed investment.
The best defense
You can figure out how to best position your firm for prospects or from clients questioning your services or results. This is best done from an offensive position rather than one of defense. Do not wait to be grilled; instead, be on the offensive and have your branding campaign address the benefits of working with your firm in every moment that a client is thinking of you.
This starts with your firm's marketing and communications plan. I am surprised by how many accounting firms with wealth management divisions send newsletters that reek of an accounting firm. Articles about new tax laws, rules for financial reporting and other traditional A&A services — and nary a word about wealth management. This is not optimal if you are trying to compete with others who are only wealth managers.
Your newsletters should not be tax- or accounting-focused, but client-focused. The subjects contained in your newsletter can talk about all the above, but if your clients don't get the feeling that you are writing to help their financial future, you're going to lose them. They are interested in reading about their financial future and not so interested in reading about the stuff that they hire you to do for them.
Your website also needs to support the firm you want to be and not the one your clients see you as. Keep that website current, frequently publish new content through it, and make sure that your wealth management services have a prominent place on the site. Many of your existing clients may not even use your website, but they could with a little effort on your part. Prospective clients will only find your firm if the website is current, and you occupy a good spot in the search engine ratings. Ranking high in search is not my specialty, but I know that current content helps that greatly.
A key feature on your site is your portal, the secure place for uploading and viewing important information. This should be easily accessed through your website. Next is your newsletter. Your homepage should also be the place where your newsletter is housed, making it easy for clients to jump around if they'd like.
The last part of helping to shape the vision of your firm is the easiest. It is the reinforcement of your written words when you are face to face with your best clients. All the marketing consultants and search engine optimization in the world won't do a bit of good unless those messages are reinforced with face-to-face meetings. To do this, staff must be trained, and partners' communications should be intentional. To make sure that this happens, insist that all members of the firm include an agenda item for all appropriate meetings regarding something relevant to wealth management. Don't be shocked when the client looks you in the eye and says, "Why doesn't my advisor talk to me about that?"
When you hear those words, the wealth management engagement is yours to lose.
