Top Four Reasons Branding Can Pay Off For Financial Advisors
Branding is one of those terms that gets thrown around a lot in the corporate world (and the advertising world too). Leading consumer products like Coca-Cola, Apple, and GE can put a very large dollar value on their brands. When things go terribly wrong—as happened with BP as a result of the Gulf of Mexico oil spill, and Arthur Anderson after Enron—brands can lose their value and this directly affects the bottom line. So the CEOs of Coca-Cola, or GE or BP, take their brands very seriously, and invest time and money to develop and nurture them.
So should financial advisors.
Even if your logo is not plastered on billboards nationwide, and your website is visited mostly by current clients and prospects (not thousands of strangers), as the managing director or principal of a financial advisory firm you serve a sophisticated clientele. You serve them with expertise and a lot of personal attention.
You might think that development of a brand strategy (and the execution of it) will cost a lot of money that could otherwise go directly to profit. You may also believe it will take time and energy that you think is better spent working for your clients.
In the mid to long term, branding pays off for financial advisors in ways that create both more time and more profitability.
These are good points, but they miss the larger point, which is that in the mid to long term, branding pays off for financial advisors in ways that create both more time and more profitability.
Financial advisors deliver a complex set of services to clients with a host of complex needs. And yet, the details of both the firms’ services and the clients’ needs are too often hard to see. Many firms look fairly similar on the surface – “over 25 years of expertise serving UHNW families, proprietary analytical tools!” – and many clients look equally promising – “over $10 million in liquid assets, multi-generational wealth!”
Firms waste time pursuing clients who are not the right fit, and clients can’t differentiate between firms, so they make choices based on relatively less important factors.
Firms waste time pursuing clients who are actually not the right fit, and clients can’t differentiate between firms, so they make choices based on other factors, such as price, rather than more important factors, such as the genuine value and expertise you bring to their particular situation.
Branding can pay off for financial advisors by offering a strategic solution to these and other common business development and retention issues. Specifically, here are the top four problems that branding can solve:
1. Problem: When you (or your current or potential clients) compare your firm to competitors’ firms, you (and they) can’t clearly understand the differences. A well-articulated brand clarifies your position in relation to your competitors. It enables you to connect more powerfully with those potential clients who most likely want what you uniquely offer. It also enables you to establish deeper bonds with current clients, making it less likely for them to replace you (what is unique is irreplaceable).
2. Problem: Referrals are a critical source of new business for your firm. A strong brand is easy for your referral sources to explain. If your clients (or their influencers and trusted advisors, such as attorneys) can’t easily articulate how your firm is better and different from your competitors, their efforts to refer you are far more difficult and less effective.
3. Problem: You are competing on price. A strong brand moves you away from being a commodity and enables you to charge a premium that reflects your actual value to your clients.
4. Problem: Each person responsible for business development in your firm gives a slightly different answer when asked to describe your firm, and say how it is better than and/or different from competitor firms. This may seem harmless, but if you and your team aren’t on the same page about how you are better and different, then your business development efforts will be less efficient and less effective. When everyone is working from the same brand understanding, you can identify the most promising potential clients and craft the most effective pitch based on the true vale your firm offers.
So, it turns out that its not just Coke and Apple who can put a value on branding—financial advisors can too.
Are you communicating the content and quality of your services in comparison to those of your competitors?
Over time you can track the following metrics:
• Increase in referrals from clients
• Increase in referrals from influencers
• Higher conversion rate of prospects to clients
• Higher client retention rates
• Increase in the fees you can charge
Clearly, the content and quality of the services you deliver will directly impact all of the above. The question is, are you adequately and effectively communicating the content and quality of your services in comparison to those of your competitors? If not, investing your time and money in the development of a brand strategy could pay off for you.