The Canadian investment advisory landscape is being overwhelmed by the challenging circumstances of diminishing fees, increasing regulation and industry consolidation. Issues like these are putting intense pressure on independent advisors to find their place in this evolving environment. One way to help sort through the data is to look at potential clients in terms of how they seek advice, identify which of these client types best suit your style and then draw up a value proposition which aligns your skill set with the appropriate target clients.
Clients who are looking for investment advice generally fall into three categories; selective customers are in the majority and they look for qualifications, affiliations, products, track records and/or fee levels; traditional customers usually choose an advisor based on a referral or personal recommendation; and assistance seeking customers are those who know what they want but need help to complete the process. It is this last category which is likely the most underserved in the market as there are many tech-savvy individuals who are not familiar with how to put together a comprehensive financial plan. Assistance seeking customers are less fee conscious as they generally understand the value-added benefit of being guided through a challenging process.
Historically, investment management firms have used a one-way style of advertising to promote brands and products. Technology and social media are changing how customers consider their options. To some extent technology is commoditizing the investment services industry but at the same time allowing consumers to find more detail and focus on product benefits and prices. This opens up opportunities to get ahead of the competition and engage customers in a new and relevant way.
Given the rapid changes brought about by social media, advisors have to rethink their role. A key way to do this is to determine the type of client an advisor is best suited to work with and set out a value proposition for these clients stating what they are uniquely able to provide to this target market. In this example there are five steps to putting together a value proposition: first, who are the target clients; second, what is the problem these clients need to solve; third, what can be offered; fourth, identify how this solves the problem; and lastly, contrast how the solution is an advantage over the alternatives.
Using these five steps, an example value proposition could be to target assistance seeking clients. The target can also be narrowed down to clients within a profession such as engineers or doctors. The types of problems that need to be solved could range from thinking their account size is too small for an advisor, to not fully understanding the products they have researched online. The product or service that can be offered as a solution will be determined by each advisor’s affiliation and expertise. The solution can then be evaluated to determine how it solves the problem and its advantages.
Putting it all together, an example of how an advisor can compose a value proposition to help clients in today’s disruptive environment could be; “The goal of my business is to assist small business owners who are computer literate but need guidance in setting up an overall financial plan. My familiarity with drafting Investment Policy Statements, access to a wide range of investment options, and my technological expertise will help my clients develop a financial plan that is otherwise challenging and inefficient for these clients to do on their own.” With such a plan in place, an advisor can then use social media to be identified as a targeted specialist and a sought after solution provider.