For clients, it’s difficult to tell one financial advisor from another. They look like ketchup on the grocery store shelf – bottles with a red substance and a white cap.
“When I go to conferences, I find financial advisors look the same and have the same stuff inside.” said Michael Fox, founder of the Mullingar Group, a branding expert who used the ketchup analogy.
Mike Fox, Founder, The Mullingar Group
Financial advisors need to make themselves more relevant, Fox told SHOOKtalks, “and making it hard for us to understand the differences.”
“You have the same investment advice, the same investment instruments and the same things to invest in. The data is all the same and so is the way you have managed portfolios,” he said.
Along with Fox, Carter Sims discussed branding with top-RIA Debra Brede, founder of D.K. Brede Investment Management Co. Sims is head of global distribution at Thornburg Investment Management, a $42 billion privately held active manager.
The crowded financial advice business remains a fragmented industry. Some 300,000 professionals work in different types of firms offering financial advice and in different channels.
Traditionally, consumers hire advisors based on whether they like the person. Advisors sell themselves, not the product or services they offer. That focus is starting to change, however, as the industry consolidates and the larger firms see a need to differentiate themselves.
“I grew up on the advisor side of the world. My dad was an independent advisor. His brand was himself and his team,” Sims said.
Debra Brede, Top RIA, D.K. Brede Investment Mgmt Company
Brede is a traditionalist who views herself as her own brand. She is consistently ranked among the top 250 Forbes-Shook women wealth advisors.
“I am a mother to my clients. I take care of people,” she said, noting that it works. “If you take care of your clients they will send you referrals.”
“I am very up front, sometimes even blunt. I think people respect that,” Brede said. She recalled a situation where a wealthy physician’s wife wanted to buy a third house in Nantucket. “I told her ‘you can buy this house, but you are going to have to sell one of your other homes.’ She didn’t like it, but she needed to hear it. Her husband called me later and thanked me.”
Fox walked participants through how to build a simple system that prioritizes all their messages with clients. He said advisors need to keep their pitch simple and not overwhelm potential clients with too much information.
Carter Sims, Head of Global Distribution & Managing Director, Thornburg
Many brands have differentiated themselves by focusing their entire message around the process, Fox said.
Ritz Carlton is different. “If it ran advertising touting the process, ads would say “square beds, white sheets for pillows, and nobody would pay $500 a night for that.” Instead, Ritz Carlton focuses on the experience. Customers pay more because they expect something different, he said.
The frontal cortex part of the brain deals with logic and reasoning, Fox said. People often think they are basing decisions on facts, but they forget that many decisions are influenced by emotion.
“Think back on the big purchasing decisions you have made in your life,” he said. Fox said when his daughter was picking colleges, he put together a spreadsheet analyzing the different prospects. “My daughter turned to me and said dad ‘I feel very at home here on this campus,’ I didn’t have that on my spreadsheet. The decision was very emotional.”
How does this pertain to the financial advice business?
“You might be throwing a ton of rational information at the consumer and that’s not going to stick,” Fox said. “We need to make sure we’re leading with emotions because after all, emotions are at the heart of how these prospects are going to make decisions.”
