Marketing of Financial Advisors - What Makes one Financial Advisor More Marketable Than Another and What Doesn’t?

Marketing of Financial Advisors. What makes one financial advisor more marketable than another and what doesn’t?

       With the growth of financial services over the past decade, just performing regular comprehensive financial planning is not the differentiator it once was. Technology has experienced a tremendous advancement during the past ten years, which has forced financial advisors in the direction of providing more holistic financial advice in order to add value to the services they offer. But what really makes one financial advisor more marketable than another? How should financial planners promote themselves in order to be more profitable? The role of marketing in the field of finance is now to be examined.

       According to a survey made in 2004, “there were an estimated 340,000 people calling themselves a “financial advisor” “ (Kitces 2013). These days, the number of people who consider themselves comprehensive financial planners and wealth managers is even greater, given the growth of the CPA (Certified Public Accountant)/PFS (Personal Financial Specialist) designation. With the increase of the number of financial advisors, the competition between them has also increased. For those advisors who struggle with sl^[1]ow client growth, there is a natural desire to try to overcome the challenge by creating a wider net for new clients. The strategy to do that is pretty straightforward – if their current marketing approach isn’t attracting many or any clients in general, it must be because the net is not being cast widely enough. To attract more clients, financial advisors get more flexible by offering to work with and be an expert for “anyone” who’s willing to pay for their services. However, establishing a wider net for potential clients can actually reduce the effectiveness of the firm’s marketing. By doing more of everything-for-everyone, the firm becomes less differentiated, less unique, and therefore less appealing to anyone in particular (Kitces 2013). By making the net wider, the number of potential clients may increase, but the number of prospects who actually become clients is often decreases. In other words, the marketing process of widening the net may result in more prospects but no more actual clients (in fact, it may even be fewer clients). For instance, instead of closing 30% of the next 15 clients, firms cast a wider net and close 10% of the next 30 clients, bringing in fewer clients (3 instead of 5) despite working twice as hard in prospecting (30 prospect meetings instead of 15) (Kitces 2013).

        So what is the way out of this wide net marketing trap? To understand the way out, it’s first necessary to get a better understanding why the wider net marketing approach is so ineffective when it comes to converting prospects into clients in the first place. The main issue with the expanded net problem is that by doing everything for everyone, the advisor is not uniquely represented and differentiated as being the best at anything for anyone. Let’s imagine four advisors: the first specializes in attorneys, the second specializes in doctors, the third and the fourth are generalists who will do anything for absolutely anyone. For example, what happens when a district attorney who needs a financial advisor, begins the process of searching for one? The attorney will likely interview three of the advisors – the one that specializes in law, and the two generalists. Clearly, it makes no sense for the attorney to see advisors who specialize in doctors. At the end of the interviewing process, which of the advisors will have the most credibility for being able to solve the attorney’s problems? Who do you think is most likely to win the attorney’s business? The advisor who specializes in the precise needs of that attorney, or the two generalists who would do everything for everyone? The answer seems pretty clear: the advisor who specializes in law is going to win over the majority because he is the one has a priority over the others. Now imagine the same situation, but a doctor who is looking for a financial advisor. The doctor will most likely also interview three of the advisors – the one that specializes in doctors, and the two generalists, as there is no point for him to see advisors who ^[2]specialize in attorneys. Who do you think he will choose? The answer is again pretty clear: the advisor who specializes in doctors is going to win over the majority, because he is in the same field as the doctor.

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