Last week I spent a day with some other financial planners and we looked at the changes that are set to occur in our industry here in Australia and how we could position our businesses to be sustainable for the future.
A lot of the conversation revolved around pricing and service offerings, and we all shared ideas around what we were doing in this area. The changes set to occur in our industry provide us with a good chance to take a step back and analyse what it is that we currently do for our clients and look at ways we can improve in the future.
One of the main concerns of the financial planners in Australia is the increased competition that will come from industry funds and fund managers, both of whom will seek to provide limited advice to their members. This will place a lot of pressure back onto financial planners to justify the value that they bring to their client relationships.
In my opinion, these changes provide a great opportunity for progressive financial planners to differentiate their businesses.
Unfortunately, if you ask most financial planners, they think they already are differentiating their businesses.
By this I mean that most financial planners feel that their point of differentiation is providing tailored advice or tailored service to their clients. The problem with this approach is that almost every financial planner says that this is their point of difference.
Do you see the problem?
They all think they’re doing / saying something different from their competitors but they’re actually not.
The benefits of differentiation
The more I study service businesses like financial planning, the more I believe in the need to differentiate.
When you’re perceived as being the same as everyone else, your service becomes a commodity. And buyers make purchasing decisions for commodities largely based on price.
If you’re able to provide something that is different from everyone else, things change. Your customer now sees you as having something different. And because you’re different from everyone else, it’s more difficult to compare based on price – it’s not an apples versus apples comparison, it’s more like apples and oranges!
The other benefit of differentiation for financial planners is that it makes it harder for an existing client to go elsewhere. If you’re providing something completely different that they perceive as valuable, they’re not going to go anywhere else if you’re the only place that can provide what they want.
What does it look like?
I can’t say do ______ and you’ll be different because how you’ll differentiate your business is unique to you.
Things you need to consider include:
- Do you (or your staff) have unique skills or abilities?
- Is there a particular niche that you can focus on?
- Is there a certain area of advice that you’re good at?
- What are the outcomes that your clients want? What can you do to deliver these outcomes?
- Can you re-package something you already do in order to make it unique?
These are a few suggestions to get you started.
I believe that in the future differentiation will be a key strategy for financial planners to focus on. It will be a way we can stand out from the crowd and deliver something that is of great value to those who need it.
What do you think? How do you differentiate your services? What can you do differently?