The question most advice firms cannot answer

At a recent Owner’s Table session we hosted in the PROpulsion Community, I asked a group of practice and business owners one question. What could a prospective client say about your firm that they could not say about the firm down the road? We spent most of the next hour talking about independence.

And I understand why. Independence used to be the thing that set you apart. You were tied or you were independent, and that was the entire story. The discussion was a good one, but I realised something while listening. When someone asks us what makes us different, we answer with the category we belong to. However, hundreds of other firms are part of that same category, so it cannot be the thing that sets you apart.

In addition to this, the FAIS General Code of Conduct already defines when a provider may describe itself as independent. It is a regulated claim before it is a marketing message. Clients are also getting easier access to products every year, so a position built on product access gets weaker every year. If independence is your whole story and proposition, your future is in the hands of the product providers.

The job and the business

Most of what I heard that afternoon, and most of what I hear when I speak to owners, describes the job: I meet clients. I build relationships. I give advice they can trust. All of this is true, and every good adviser says the same thing.

When I asked what makes the firm different, the truthful answer from almost everyone was “me”. The adviser is the difference. For a one-adviser practice this is true – right up to the day you want to step back, sell, or hand over to a successor. If the business is built entirely around you, the relationships cannot transfer, and then the value cannot transfer either. The business retires with you.

This is the change in thinking I tried to convey in the session, and I want to convey it here as well. Stop thinking about how you do your job and start thinking about what you are building into the business, so that clients choose the business, describe the business, and recommend the business, even if you are the only adviser.

How most firms position themselves today

If you open 10 advice firm websites, I am willing to bet that you will read the same page 10 times: We are independent. We offer holistic financial planning. We put clients first. Then a list of services. Retirement planning, estate planning, investment planning, risk planning. It is all the truth, but none of it helps a prospective client choose, because the firm down the road says exactly the same thing. When everyone sounds the same, you end up competing on price and personality, and that is a hard way to run a business.

What a better position looks like

A better position answers four questions in words a client can repeat to a friend. Who do you help? When do they come to you, in other words what has just happened in their life? What changes for them once you have done your work? And what proof do you have?

“We offer holistic financial planning” gives the client nothing to work with. “We help business owners who are three to seven years from selling their business to get their business value, personal wealth and succession working as one plan, using our Exit Readiness Review” tells the client who you help, when, what changes and how. A happy client can repeat that sentence at the next braai without you there. The proof is what you can show, such as client stories, a documented process, or a service calendar the client sees from the start.

This is important for growth as well. According to Dimensional’s Global Advisor Study, referrals bring in roughly half of all new clients. Yet Dimensional’s investor research shows that only about one in five clients referred anyone in the past year. Clients cannot refer what they cannot describe. And according to Kitces research reported by Financial Advisor Magazine, advisers who are known for a speciality have clients with roughly a quarter more investable assets and charge slightly higher fees.

I believe two fears keep owners from doing this. The first fear is turning work away. A more focused position is a marketing decision. It has nothing to do with who you accept as a client. You keep taking the work. You just stop trying to talk to everyone at once. The second fear is starting from a blank page. You do not have to. The position is usually already in your client base, in a group of clients you serve unusually well without even realising it.

Start here

Write your one sentence this week. Who, when, what changes, and what proof. Say it to five existing clients and watch their responses. If they lean in, you have found something. If they nod politely, keep working on it.

Stay curious!