Is it possible to provide great value and service to your clients but still end up missing opportunities with these same clients? Sadly, as the following case study illustrates, the answer is yes. 

Louis Packer’s financial planning practice was stagnating and beginning to lose long-term clients. He was dismayed and baffled: Clients often said that his firm offered great service at a fee equivalent to those of other financial advisors is his community.  

When one of Louis’ long-time clients, Audrey, called to say that she was switching advisors, Louis finally had the courage to ask, “Why?” 

He discovered that Audrey wasn’t leaving for lower fees and better service. She was attracted to one of his competitor’s approach—an approach that Louis didn’t provide.  

Audrey explained that she was switching to a financial planning firm that offered a service that she wanted and needed—a service that Louis did not. Audrey was interested in exploring ways she could exit her business while maintaining her lifestyle.  

In this blog, we will discuss how Louis’s competitor attracted Audrey, but first let’s review what most professional advisors provide: regardless of our profession, we provide the same process, products, and service as our competitors provide (or promise to). 

Just like Louis, each of us believes that our process, products, and services are better than the rest. But what Louis learned the hard way was that clients don’t (or can’t?) appreciate marginal improvements in process, product, and service. They can, however, appreciate how we differentiate our practices from those of our competitors.  

Just for a moment, step back and ask yourself: How is your practice different from your competitors’? Put another way, what do your competitors offer that could attract your clients and possibly already has?  

Using Louis as an example there are several possibilities: 

• Lower fees: Cost is a practice differentiator, but not one you likely want to pursue, much less maintain. And, as Audrey illustrates, cost is not the primary draw that attracts successful owners to professional service providers. 
• Niche services: e.g., Exit Planning or qualified plan design. 
• Niche products: e.g., Alternative investments. 
• Niche industry: Practice focused on clients in a specific industry: e.g., Steel building contractors. 
• Different fee structure: Value-based billing instead of AUM (Assets Under Management) fee or hourly.  

Whatever attracted Audrey was something that differentiated her new firm from Louis’s firm and his competitors. That sounds a lot like a competitive advantage.  

The lesson here for us as advisors is that if we are to maximize the growth of our practices, we have to charge less (low-cost competitive advantage) or provide something viewed as more beneficial to owners than our competitors provide (differentiation competitive advantage). 

Which leads us back to the question: How do advisors retain their existing clients and attract new ones? 

One approach advisors use to answer this question is to be acquired by a larger organization, e.g., a regional CPA firm, larger RIA, financial planning practice or law firm. These larger firms offer the specialized services business owners seek. Being acquired is a viable and common solution, especially for those interested in exiting their practices! 

A second approach requires advisors to differentiate their practices by acquiring expertise, tools, processes and/or products that clients want and need and that competitors do not offer. Remember, clients don’t buy our services because they like them. They buy them to solve a problem or seize an opportunity. Your differentiation proposition must do one or the other. 

A third approach is to acquire new, often larger, and more profitable clients. This strategy also requires you to differentiate your practice from competitors.  

With the exception of rolling your practice into a larger organization, an ideal strategy to create a competitive advantage based on differentiation is to enhance your core offerings and become a skilled Exit Planner. With this gained skill set, you will have the resources necessary to market your planning more efficiently, recruit other like-minded professionals to your planning team, and create and execute successful business exits for your owner clients.