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Why Wealth Management Firms Should Copy Others

Written by Mike Langford | Nov 5, 2018

I spend a lot of time helping wealth management firms and their advisors develop strategies for standing out from the crowd. Now more than ever, it is crucial that a firm be able to articulate their value proposition in such a way that it resonates as unique in the minds of their prospects, clients, and referral partners.

It’s not enough to simply proclaim “We help high-net-worth individuals and families management finances.” In today’s crowded market with Google and social media just a screen tap away, wealth managers and advisors need to get very specific about which type of high-net-worth clients you serve, what their problems are, and how you are uniquely qualified to solve those problems. Now and in the future.

You need to answer the question “Why is this the right wealth manager or advisor for me?” in a few seconds or your prospects will see you as just another generic firm with the same stocks, bonds, mutual funds, and insurance products as the hundreds of other choices they have in their local area.

While everything above is true, and you should absolutely give it some thought if you haven’t already, in this post I want to urge you to do something different.

Copy Other Wealth Management Firms

I know, it sounds odd. How can the guy who has been standing on a soapbox for years preaching to the masses that they should be unique be the same guy who is telling me to copy others?

It’s okay, I still want you to focus on your unique value proposition in your marketing and communications. However, when it comes to your business practices, investment process, structure, and operations I want you to copy the firms that are setting the pace.

In short, take a moment to survey the landscape of the market that you and your firm are participating in today. Invest some time in understanding where things are headed. Then dig in to see what you should emulate and what needs to be changed in your own business.

Exploring Industry Comps for Financial Advisors and Wealth Management Firms

One of the most powerful things about the Truelytics platform is that it automatically and continuously compares your business to other firms of the same size. The comparables, or comps, number in the dozens and cover everything from basic profit & loss line items to the use of technology as well as stability metrics.

What we are seeing from the firms and individual advisors that are using Truelytics most aggressively is they are digging in to discover what comps, if improved, will increase the value of their business most significantly. In most cases, these users are finding new ways to streamline their business to make it more efficient today and improve its viability for acquisition in the future.

The Future Is Structured And Standardized

When we look out to the future of the wealth management industry one thing is becoming increasingly clear. Businesses are embracing common structures, operations, and standards. The increased use of model portfolios is just one example of how the industry is quickly embracing simple and repeatable investment processes. Similar trends are happening with technology solutions for client management, financial planning, and marketing.

Equally important is how firms are being managed. There is a growing recognition that firms need to improve their long-term stability by solidifying the business relationship they have with their advisors. The stability of a financial firm is only as strong as its relationships with its advisors. If the advisors leave, so do the clients and their assets.

If we fast forward 10 years into the future we will see the majority of the businesses that are thriving will have fully adopted common structures and standards that make it easy for growth, employee onboarding and management, and of course much easier to transition to an acquisition partner.

Your business does not need to be a special snowflake to be valuable. In fact, the energy and proprietary knowledge it takes to run a special snowflake business makes it inherently less valuable in today’s market. Common structures and standardization actually increase the value of your business because you waste less energy running the business and spend your time serving your client and growing the firm.

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