The 10 best ways to compete with the big end of town

It is true, the big end of town has advantages – and yet third-party advisers, typically running small businesses, have done very well over the years and have a strong offer to the market.

Tuesday, January 23rd 2018, 12:08PM 1 Comment

by Russell Hutchinson

As new compliance requirements are likely to come, increased investment required could see the advantages enjoyed by larger advice businesses grow. Here are ten things you can do about that.

1. Provide more choice

Most big advice businesses do not provide wide choice in providers, being mainly ‘advice on our range’. You can nearly always access a far broader range of product providers, options, and features. Highlight the range. Even where there are limits to the scope of competence that you can maintain, you can have strong referral relationships with others.

2. Provide more advice

Most of the vertically integrated businesses do have advice teams – but they are actually small relative to the total number of sales. Overwhelmingly, their sales tend to be ‘no advice’ – whether it is KiwiSaver, home loans, or insurance. Their advice tends to be limited to ‘how much’ and ‘which options’, whereas yours can extend to a wider planning context: whether you need the cover, what types, which companies, reviewing existing cover, and connecting the cover to trusts and other estate planning mechanisms.

3. Providing pure advice

Such as advice on adjacencies – e.g. travel, financial planning, motor, and so on. Although you may not place the business yourself, you may want to develop the necessary competency to provide some good basic guidelines for your customers. Most of them annually face a decision about car insurance and travel insurance, so you have an engagement opportunity when you can help on those things too.

4. Highlight your experience

You can highlight your advice credentials and experience in providing advice. Most of you have been giving advice for 20 years, and have already achieved extensive qualifications, memberships, endorsements from clients, and so on. The typical adviser in a big business has much less time up, often with a very limited range and time as an adviser.

5. Emphasise your commitment

Again, typically you have been advising for ages, their advisers will come and go. If you have made a big bet to stay advising – declining management roles, for example – then you should highlight that. It is usually obvious who is committed to their career, think about their engagement with their professional associations, or providing pro-bono advice in their community, or mentoring other advisers.

6. Show that you take responsibility

When the chips are down, it will be you that has to front, taking personal responsibility and having your name attached to your advice outcomes means customers should feel more comfortable that you will work to avoid advice failures because the buck stops with you.

7. Own your turf

Be a big brand in a small market: brand your stuff, buy billboards, have a street sign, sponsor the school fair, do leaflet drops, and volunteer: within a one kilometre radius of your office, there are probably as many clients as you will ever need. In that zone, you could have a stronger brand than any national or international business. But the zone could also be virtual – a domain of specialisation.

8. Create backup

Get good professional indemnity cover, promote your membership of the disputes schemes, and so on. This helps balance the big businesses’ deeper pockets – interpreted by consumers as the financial ability to put mistakes right. Ensure you have some locum cover or a staff big enough to enable continuous service through holidays and illness. Create depth like the big business.

9. Keep costs down

You don’t want there to be a big discrepancy between your cost and theirs – they do enjoy economies of scale, but they love big margins; often the accountants and central office costs can wreck their proposition. If you operate efficiently, consumers will like it, and you can pick up margin on more pure advice products.

10. Get some national and international credibility

Negate some of the advantages of national and international credibility by bringing your own national and international standards to the business: qualifications like CFP, membership of national adviser organisations, awards, and testimonials from other clients can demonstrate a depth of experience and make your offer more credible.

I am sure you can think of more.

Tags: CFP compliance financial advisers professional indemnity qualifications Russell Hutchinson