How advisers can protect their businesses from the onslaught of cheaper competitors

Presidential candidates Donald Trump and Bernie Sanders are unknowingly teaching us a good lesson about how to be successful financial advisers.

In one corner, you have The Donald, an unfiltered, highly opinionated billionaire. In the other corner, you have a populist who wants to tax Wall Street, break up the banks and make college free for everyone. And the funny thing is, they both won their respective party’s primary in New Hampshire.

Your “you” advantage

You can’t go to a financial industry conference these days without being inundated with sessions on robo-advisers and how to change your business to overcome the threat of automated technology. And the recent TD Ameritrade Institutional’s National LINC 2016 conference in Orlando, Fla., was no exception.

But TD Ameritrade did something really smart and went beyond the requisite technology sessions. They brought the “human” back into finance.

As I sat through numerous sessions I began to see an important thread that connected them. It’s not about having the coolest technology or the most highly scaled business. It’s not about being an alpha-generating money manager.

Instead, it’s about being more of the one thing clients will always pay dearly for — you.

The keynote speaker who drove this point home was best-selling author and branding expert Sally Hogshead. She made one comment that crystalized the idea that no technology can ever “out-you, you.”

Having modern technology is table stakes, but by doubling down on your “you” advantage, you can build a moat that will protect your business from the onslaught of cheaper competitors.

Ms. Hogshead’s message was, “You don’t have to change who you are, you have to become more of who you are.”

Think about how that applies to Donald Trump. He has the biggest personality and leverages that by being fully transparent in his speaking and actions. He says what he thinks without concern about how it will “play in Peoria.”

Mr. Sanders is the polar opposite of Mr. Trump yet he is also highly popular. One reason for the popularity of both of these candidates is that they are being true to what they believe and they present their message in a candid, almost off-the-cuff way. They’re transparent, and the public eats it up.

What clients want

Business will get more difficult in the future as competition from technology solutions and nontraditional firms entering the industry wreak havoc on the unsuspecting adviser. But there is a way forward.

Here are five insights inspired from the current political scene and the TD Ameritrade conference that get to the heart of what clients want from you.

1. Be more of who you really are.

Thank Sally Hogshead for this one. Part of Mr. Trump’s popularity stems from the fact that he makes no apologies for who he is. You either love him or loathe him. And those people who love him — really love him.

As an adviser, let your personality shine. Accentuate what makes you, you. Stop trying to please everybody. You only need about 100 solid clients per adviser at your firm, so don’t water down your message. Deliver a strong message and you’ll attract the right kind of clients who connect deeply with who you are.

2. Create a community around your tribe.

Along with being more of who you are, “Use technology to create a tribe within your universe of clients, a community of clients that want to be with you and understand what you stand for,” said Joe Duran, the founder of United Capital, to a standing-room-only crowd. Mr. Duran said in the olden days, it was about trying to make everybody happy, but today it’s about creating tribes.

As an adviser, are you creating ample opportunities for your clients to come together and socialize? Do you stand for something that they can believe in, feel good about, and feel a part of? Is there a common thread among your clients, or are they a disparate group of people whose only commonality is you? Building a tribe is not about excluding people. It’s about going deeper with the people you can best serve and help the most.

3. Be transparent about the price of your services.

Voters are fed up with politicians because they lie. They also twist the truth and leave out important facts hoping voters won’t notice. Fortunately, we have the liberal and conservative sides of the press calling out the opposite parties so politicians can’t completely hoodwink the public.

As an adviser, publish your fee schedule on your website and be darn proud of it, because you’re worth it. I find it very frustrating when I hear advisers talk about the importance of “transparency” yet when I go to their websites, I see nothing but fluffy pictures and canned commentary, and not a fee schedule anywhere in sight.

4. Connect with clients’ stories.

Dave Isay, founder of the independently funded organization StoryCorps, stood in front of the TD Ameritrade crowd and showed videos of short stories told by Americans that brought the crowd to tears. From the heartfelt love story that ended in death to the mother who forgave the man who murdered her son, these stories touched the audience in a way that no algorithm ever could.

As an adviser, what’s your story? Why did you get into this business? Wealth adviser Bill Keen, a client of mine, recently published a podcast where he shared a story about how his childhood experience as a 10-year old sitting in an apartment with his dad, waiting for the unemployment check to hit the mailbox, had shaped his career as an adviser.

And don’t just share your story, be genuinely interested in getting your clients’ stories, too. Not sure how? Start by asking your clients this question, “Tell me about a time when_________,” and fill in the blank with whatever you’d like to know about your clients. Once you know your clients’ stories, they’ll feel heard. And then you can do a better job coming up with a personalized plan that meets their exact needs and desires.

5. Co-create plans with your clients.

In days of old, advisers had all the knowledge. With no internet and no CNBC, advisers were the gatekeeper to investment information — and clients had to pay dearly for it. Today, information is free and clients no longer blindly trust that their adviser is omniscient.

As an adviser, your role has evolved from the dispenser of wisdom to the co-creator of plans. This is one area where technology really shines. You now have the ability to co-create financial plans with your clients in real time where you can show them the consequences — good and bad — of the choices they make. Your value lies in helping them make smart decisions about their money and their lives, not in trying to add 50 bps of alpha.

Putting technology in perspective

I love technology just as much as the next person, but it has its limits. The message I took away from the TD Ameritrade conference is this: Don’t automate the humanness out of your business.

We can all try to one-up each other with the latest technology but ultimately, what clients care about is being happy and financially secure. Never lose sight of that. Use technology to enhance the client experience and use your humanness to make a profound impact.

Steve Sanduski is president of Belay Advisor. Follow him on Twitter @SteveSanduski or connect on LinkedIn, and subscribe here to receive his blog and podcast updates.

Related Topics: RIAs