Unquestionably the advisory landscape is undergoing a tremendous transformation that seems to be accelerating at the same pace as the movement of client assets. Independent financial advisors are competing within their own space as well as with a growing crop of large advisory firms for the attention of next generation clients who are about to inherit tens of trillions of dollars over the next few decades. The stakes have never been higher for independent advisors who hope to compete, let alone survive.
Clients are Demanding Excellence, Can You Deliver?
Leading the change are high-net-worth clients who are now demanding nothing less than excellence from their advisors, including personalized attention, communication-on-demand, greater participation in the process, conflict-free advice, all delivered through an authentic advisory relationship. Advisors not laser-focused on creating the infrastructure to deliver excellence will have a hard time competing for HNW assets.
The new playing field is tilting towards those advisors with the scale and specialization to project excellence at every stage of the client relationship. At the other end of the field are advisors who must be able to gain immediate access to scale and specialization or risk obsolescence in a rapidly transforming industry.
It’s not entirely an uphill battle for independent advisors operating solo practices. Technology has created a more even playing field. For the most part, solo advisors and smaller firms have access to much of the same technology utilized by bigger firms, creating back-office and client-facing efficiencies that weren’t there just a few years ago. But even with the right technologies in place, solo advisors are bound to hit a growth ceiling which, in the advisory business, is a step towards obsolescence.
The Biggest Challenge Confronting Solo Advisors
But the problem for solo advisors is not technology. Nor is it even an economies of scale problem. Theirs is a differentiation problem. In the cluttered and fiercely competitive advisory industry, there is very little to differentiate advisors from one another. It wasn’t long ago that offering comprehensive financial planning was a differentiator. Today that’s just table stakes to get in the game. It’s difficult to demonstrate excellence when you’re lost in a sea of average.
The biggest hurdle for advisors trying to differentiate themselves is being able to get their message out. They’re not about to out-market firms 20 or 100 times their size. You can have the greatest value proposition in the world, but it does you little good unless you can get it to the right people consistently. However, with the right marketing automation, communications, and content management technology it can be done. But that requires a significant investment with no immediate ROI.
Alternative #1 – Specialize and Go Niche
The alternative for solo advisors is to specialize and go niche. Many of the more successful financial advisors have discovered that developing a unique expertise and using it to burrow deeply into a niche, is a way to differentiate. It’s easier to market to a niche. You can focus your time, energy, and resources. You can streamline your processes to serve just one type of client. You’re not likely to come across many competitors, if any, in a niche. Most importantly, you can become highly referable in a niche.
The challenge for solo advisors, most of whom start out as generalists, is that it takes time to develop the relevant knowledge to be able to carve out a niche and make it productive enough to sustain them. You could get lucky and strike a highly productive vein early on, but you should expect it to take some time.
Alternative #2 – Partner Up
The other alternative for solo advisors is to create or join a team of advisors. Partnering with another advisor or multiple advisors allows you to maintain your independence while adding some scale. By pooling resources, your “firm” can add staff and invest in the right technologies. When you partner with advisors with different competencies in a collaborative environment, you can focus on your core competencies and the aspects of the business you’re passionate about.
It’s much easier for a firm than for an individual to develop an identity and a brand that can be marketed. There are more layers of experience, expertise, and competencies that can come together to form a powerful value proposition that differentiates itself and projects excellence.
As an advisor, you lose nothing when you work alongside other independent-minded advisors, except your “solo” status and burden of doing all the heavy lifting yourself. As a partner or member of team, you join your independent mind with others to create the conditions for growth and prosperity.
The Trivium Point Advantage
Our program is unique in that we have a model that is ready for advisors to jump into and excel at any time in their career. It can be especially beneficial for solo advisors looking to retire soon and unsure of their exit plan. If you’d like to learn more about partnering with the advisors at Trivium Point, we encourage you to reach out to us.