When prospective clients ask why they should choose your advice firm over another, are you able to provide them with a compelling reason that clearly makes you stand out from the competition?
If you struggle to define the qualities that set your business apart, you run the risk of competing on price alone. This can be a precarious position, especially when pitted against new low-cost entrants, such as robo-advisers. It also means that you will likely attract price-sensitive clients who will readily switch to a cheaper offer. Fickle customers, combined with skyrocketing compliance-related costs that eat into revenue growth, are compelling advisers to reassess how to run a successful financial planning business.
The value proposition of every business is vital to creating a compelling reason to buy your services. For financial advisers, the need is amplified by the relative similarity of most advice firms.
If you have a value proposition that is both different from competitors and taps into the emotional and rational needs of the client, it provides a powerful competitive advantage. It's a reason for your business to be preferred and in demand. It's a simple law of economics that demand creates the potential for higher prices and profits. The aim is to create a distinctive offering that meets the needs of today's clients.
For advisers, the primary areas of differentiation come from:
- Being overtly client-centric
- Having a compelling investment philosophy
- Providing the best client experience.
Today's consumers expect services to be tailored to their needs and circumstances. They expect to be understood. They have low trust in business and institutions, so they need to understand how the advice services add value to their lives today and in the future.
When your business cultivates committed clients that appreciate your unique services, they are far more likely to be advocates for your business. Financial advisers with clients who understand their financial plan and are confident in achieving their goals are more likely to be satisfied with their financial adviser, resulting in a thriving advice business.
Advisers that aim to compete on value rather than price are increasingly matching Goals Based Advice with Goals Based Investing. Rather than funnelling clients into a standard set of products based on their risk profile - a common practice that fails to provide your business with a point of difference - Goals Based Advice works with the adviser's deep understanding of each client's personal goals. It ensures their capital is effectively matched to suitable Goals Based Investment portfolios managed by a professional investment manager. This helps improve the likelihood that their investment plan is delivered within the specified timeframe. Under this investment philosophy, investors can see a clear link between their financial goals and the investment aims and trajectory.
Goals Based Investments are usually best implemented via a discretionary managed account structure. This allows the investment manager to dynamically adjust clients' portfolios to capitalise on emerging and distinct opportunities and move away from poor investments to avoid significant capital losses. This results in a better customer experience and more time for the adviser to strengthen client relationships. Meanwhile, Goals Based Investing using a Dynamic Asset Allocation approach provides a strong point of differentiation for your advice business, helping cement your firm's value proposition.
Today, providing an excellent experience for clients is more critical than ever. Today's consumers expect their experience to be easy and entirely relevant for them.
We've all had both great customer experiences and poor ones. When people take care of you, understand you and make life easy, we're happy. When we have an experience that provides something more than we expect, it's worth talking about. Conversely, small areas of frustration can undo lots of good work in an instant. If you examine the client's journey with your business through their eyes, it's amazing how easy it is to identify moments that make a big difference to them.
Providing a superior client experience has become even more critical as regulators aim to raise professional advice standards, including introducing a code of ethics and the upcoming Design and Distribution Obligations. To be introduced in October 2021, the new DDO obligations require product developers and distributors to ensure that their investments match each client's goals. This alignment of clients' goals and their investment portfolios means it has never been more critical to focus on how to be a successful financial planner.
Dynamic Asset is a ready built, plug-and-play partner for advice firms that aspire to differentiate their advice business by implementing a client-centric managed account service using Goals Based Investment portfolios. Dynamic Asset's business solution helps differentiation and helps boost their firm's profitability through the efficiencies and scale that managed accounts deliver. Dynamic Asset's whole-of-business Managed Account solutions are available for super and non-super clients and are simple to implement. To start your journey, call Dynamic Asset today.