In 1998 I lost an opportunity to help a company manage their 401k plan because the fees on the American Funds platform (only offered A-shares at the time), were way more expensive than the free (hidden) fees offered by the other advisor competing for the business (or so the investment committee was led to believe).
“Price is only an issue in the absence of value.” I’ve heard that quote many times before and it wasn’t until I got the call in 1998 telling me I did not win the business that I realized what that quote actually meant to me.
Maybe the reason it seems that price is all your customers care about is… that you haven’t given them anything else to care about.”~ Seth Godin
If you want to stop competing on fees (and funds and fiduciary status), you must be able to identify the value you actually bring to the table and clearly articulate in a way that helps plan sponsors understand why they’d want to hire you (as opposed to a product or vendor you might be able to represent).
One: Specialize and advertise.
If you’ve been working in the qualified plan space for any length of time you understand how complex ERISA and 401k plan management compliance can get. Specialization is important to your ability to service your plans properly but is also a great way to differentiate yourself and show prospects that you are better equipped to help them than the advisor with no specialized training.
In a survey I conducted (Financial Service Standards) a few years ago, 95% of plan sponsors said it was important that the advisor they work with have specialized retirement training. Get educated. Get a retirement-specific designation. Download a free guide that lists 24 different retirement credentials and pick which one you will start with, then advertise it. Let plan sponsors know you’re qualified to help them manage their plan and explain the importance of specialization in this complex area of the market.
Two: Be very specific about who you serve.
If you are the owner of a chiropractic office in Pittsburgh and the doctors in your practice want a self-directed option in their 401k plan, and I told you that “I specialize in offering self-directed options for small medical practices in Pittsburgh”, I would be exactly who you’d want to work with over the advisor that says “I work with companies whose plan size is between 2 and 10 million in assets.”
Think about it. Specialists make more than generalists and you bring true value when you can narrow your customer base to serve, exceptionally well, a specific demographic.
Identify specifically who you will serve and you’ll win a much higher percentage of cases when you start focusing on a specific client type rather than trying to accommodate anyone that might need help with their 401k plan.
Three: Be clear on how you’re different.
In the book “How to Get Your Competition Fired,” Randy Schwantz describes the three ways you can have a competitive advantage through differentiation.
- First, you can provide a service that is unique, that no one else provides.
- Second, you can provide a service that others provide, but you have a better process for it that gets better results.
- Or third, you can describe the service you offer in such a clear and compelling way that prospects are motivated to buy from you rather than from your competition.
Identify what your competitive advantage is and articulate it a way that shows your prospects why and how it benefits them.
Four: Make sure your unique value differentiator is front and center on your homepage.
I can’t tell you how many advisors have spent tons of money on their websites, and nowhere on their home page can a client actually learn the who, what and why of the firm (Who is this page about, what’s in it for me, and why would I want to do business with this firm). Go to your website right now and put yourself in the shoes of your prospect and ask those three questions. Chances are you can tweak your homepage so your potential clients know they’re right
Go to your website right now and put yourself in the shoes of your prospect and ask those three questions. Chances are you can tweak your homepage so your potential clients know they’re in the right place and they’ve found a solution to their unique situation if you’ve done a good job in identifying your target marketing and crafting your unique value proposition.
Five: Use LinkedIn to attract your ideal client.
LinkedIn can be so much more than a plain, boring business card if you use the features LinkedIn offers its members to your advantage.
- Make sure your summary explains your who, what and why (just like your home page).
- Give a clear call to action, such as “download your free 10-point checklist on how to avoid the common 401k mistakes from my homepage at this link”.
- Use the new publishing option to write about things your prospects and clients should pay attention to (while raising your visibility and credibility).
There are many ways that you can compete more effectively in the 401k market but they all begin with understanding the landscape and deciding on a focus for your business.