Consumers have a wide range of options when it comes to choosing a provider of financial advice, from larger wirehouses and asset managers to smaller Registered Investment Advisers (RIAs). Given that larger firms tend to have more substantial marketing budgets to attract clients, smaller firms and their advisors have had to look for alternative ways to differentiate themselves from the competition. Which led many firms to market all the ways they were 'better' than other sources of financial advice by highlighting their status as fiduciaries, fee-only advisors, or by offering (more) comprehensive financial planning services beyond investment management, as just a few examples.
However, while these attributes remain valuable for clients (and are worth highlighting), their value to smaller advisory firms as differentiators has eroded over time as what may have once been unique characteristics for these firms are now either increasingly common or have become harder to parse for consumers. For instance, even though RIAs are bound by a more stringent fiduciary standard, consumers might be unaware of the nuanced differences between that obligation and the seemingly similar requirements of broker-dealers under Regulation Best Interest. Similarly, consumers may struggle to understand the difference between a “financial plan” and a “more comprehensive financial plan” if they’ve never been through the financial planning process in the first place.
In this environment, another option for smaller firms to compete is to focus on how they are different, instead of marketing how they might be better than their competitors. And by using their website and other marketing materials to position themselves as different, smaller firms can demonstrate to their ideal target clients why they are the right choice for their financial planning needs.
Because the largest firms typically cast a very wide net when it comes to attracting prospective clients (whether in terms of age, profession, planning needs, or other factors), serving a client base with a narrower set of characteristics can help a firm stand out. Which means that if an advisor can demonstrate that they recognize (and can help solve) their ideal client's unique pain points, such prospects are likely to feel a stronger connection to the smaller, more targeted firm, and to believe that that small firm will be better understood by their advisor compared to a more generalist large firm with a bigger marketing budget.
Another way advisors can demonstrate how they are different is by explaining how, exactly, they do financial planning, and what specific services they provide for their ideal clients as a way to communicate their value. Because when a firm has an ideal client type, they often are able to go deeper into their clients' specific needs, and can communicate exactly how the process works to address those needs. This lets prospective clients know what to expect (and helps them understand the value they will be receiving in exchange for their fees!). This service specificity can be a differentiator for firms with ideal client types, as a firm that works with a broader client base will likely need to be more generic in its marketing, given that the planning needs of its clients will be significantly broader.
Ultimately, the key point is that while it has gotten more difficult for financial planning firms to show how they are better based on traditional characteristics such as being a fiduciary or providing comprehensive planning services, firms can shift their focus to emphasize how they are different and can meet the specific needs of their ideal target client as a way to adjust their marketing efforts. Which helps these firms attract more clients, and continue to thrive amidst competition from larger counterparts!
