Arguably, as a result of this traditional and generalised approach, the framework for adviser specialisation through targeted professional development has, by and large, been neglected and underused in the design and demonstration of a meaningful value proposition by advisory firms to their end client, writes Taylor Brunswick Group managing partner Greg Smith.
As we experience a rapidly and significantly changing industry in which disruptive technology, abundant access to information and regulation move advice towards a more homogenous output; the ability for advisory firms and their advisers to differentiate themselves from competition and the wider market has never been more relevant.
This differentiator can be achieved through businesses specialising in their offerings and providing a framework for their advisers to become specialists through professional development.
“The essence of strategy is in activities – choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand the competition.” Michael E. Porter, 1986
Specialisation will allow a business to focus on more specific groups of clients, if done correctly this will produce a higher perception of authority, create a compelling message that encourages clients to act and shorten the learning curve for advisers.
All of these factors will, in turn, lead to more client acquisitions, more favourable client outcomes and strengthen client retention levels.
Finding out where to specialise
To distinguish any specialisation, as a starting point the business should know who the competitors are, what they promise, what they deliver, and the ways in which they are similar or different.
The current combination of professional strengths, specialisations and areas of expertise that it provides is wholly unique the business.
Likewise, each individual client has a unique combination of needs, challenges and preferences that must be addressed.
It is at this specific point in which the capabilities and areas of expertise that the business has intersects with the clients’ needs that lies the foundation for shaping the most effective tool for building a meaningful value proposition; one based on relevant specialisation through a tailored and relevant professional development framework.
Creating segments – How data tells a story
To effectively understand where this point lies, the process of customer segmentation needs to be undertaken.
The work of segment creation begins by grouping together customers with similar characteristics and then being able to identify the parts of that data and where it crosses over (or should be crossing over) with your businesses expertise.
From here a business is able to discern a “rich picture” of data that identifies the recurring needs, problems and goals that are apparent in each segment of data.
In this data there will be areas where the company and adviser are able to easily match existing services and offerings to those client’s needs.
Alternatively there may be areas recognised where the business does not meet the needs for specific and profitable segments of the client data.
In either scenario the business is able to understand and forecast each segment’s attributes and desires and pinpoint the segments that offer the greatest potential and then make strategic decisions about a professional development strategy that specifically serve the customers within those segments.
Examples of outcomes in regard to segmentation have resulted in adviser specialisation for millennial clients and appropriate debt management strategies, the introduction of advanced estate planning qualifications and cross border qualifications that have allowed advisers to specialise in planning for client segments of specific nationalities.
The catch-all approach to advisory is clearly outdated.
While each company’s approach will be unique to their particular business and client’s needs it is clear that an advisory business that is able to offer their target market a specialised service will offer superior value over competitors that generalise in the same field.
It’s much more rare that a specialised business in a thriving industry fails than a general business in a stagnant one.
As the author Mike Walsh in his book The Algorithmic Leader writes: “The greatest threat we face is not robots replacing us but the reluctance to reinvent ourselves.”
This article was written for International Adviser by Gregory Smith, managing partner of Taylor Brunswick Group, which was recognised in International Adviser’s Best Practice Adviser Awards 2018 for Excellence in Professional Development in the Hong Kong region.
The awards are run in partnership with Old Mutual International.