Don’t lose to robo advisors: Here’s how to beat back cheap competition

Trump SandersPresidential candidates Donald Trump and Bernie Sanders are unknowingly teaching us a good lesson about how to be a successful financial advisor and beat back competition from Robo Advisors.

In one corner, you have The Donald, an unfiltered, highly opinionated, speak what’s on his mind billionaire. In the other corner, you have a relatively poor populist who wants to tax Wall Street, breakup the banks, and make college free for everyone.

Your “You” Advantage

You can’t go to a financial industry conference these days without being inundated with sessions on robo advisors and how to change your business to overcome the threat from automated technology. And the recent TD Ameritrade national conference in Orlando, FL was no exception.

Yet, TD Ameritrade did something really smart and went beyond the requisite technology sessions. They brought the “human” back into finance.

As I sat through numerous sessions I began to see an important thread that connected them. It’s not about having the coolest technology or the most highly scaled business. It’s not about being an alpha-generating money manager.

Instead, it’s about being more of the one thing clients will always pay dearly for—you.

The keynote speaker who drove this point home was bestselling author and branding expert Sally Hogshead. She made one comment that crystalized the idea that no technology can ever “out you, you.” Having modern technology is table stakes, but by doubling down on your “you” advantage, you can build a moat that will protect your business from the onslaught of cheaper competitors.

Ms. Hogshead’s comment was, “You don’t have to change who you are, you have to become more of who you are.”

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Think about how that applies to Donald Trump. He has the biggest personality and leverages that by being fully transparent in his speaking and actions. He says what he thinks and believes without concern about how it will “play in Peoria.” By contrast, two of his competitors, Marco Rubio and Ted Cruz, are tightly scripted, always on point messengers who are fixated on coming across “just right.”

In fact, one of the Republican presidential candidates (presumably Mr. Cruz) was so frustratingly sticking to his script earlier this year during interviews with another conference keynote speaker and political pundit Tucker Carlson, that Mr. Carlson finally asked him, “What’s your favorite color?” just to try to get a reaction from him. Unfortunately, the candidate did not veer from his talking points.

Mr. Carlson went on to say if you asked Mr. Trump what he had for lunch, he’d tell you a McDonald’s Big Mac, large fries and a coke and he’d be proud of it. He wouldn’t feel the need to avoid the question or try to frame it in a way that favored farmers or some other constituency that might be instrumental to the candidate’s campaign.

Mr. Sanders is the polar opposite of Mr. Trump yet he is highly popular with his “tribe.” One reason for the popularity of both of these candidates is they are being true to what they believe and they present their message in a candid, almost off the cuff way. They’re transparent and the public eats it up.

What Clients Want

Business will get more difficult in the future as competition from technology solutions and untraditional firms entering the industry wreak havoc on the unsuspecting advisor. But there is a way forward.

Here are five insights inspired from the current political scene and the TD Ameritrade national conference that get to the heart of what clients want from you.

1. Be more of who you really are.

Thank Sally Hogshead for this one. Part of Mr. Trump’s popularity stems from the fact that he makes no apologies for who he is. You either love him or loathe him. And those people who love him—really love him.

As an advisor, let your personality shine. Accentuate what makes you, you. Stop trying to please everybody. You only need about 100 solid clients per advisor at your firm so don’t water down your message. Deliver a strong message and you’ll attract the right kind of clients who connect deeply with who you are.

To get a better sense for who the real “you” is, take Ms. Hogshead’s Fascination Advantage assessment. Go to www.howtofascinate.com/you and enter the code TDAMERITRADE. I took it and the assessment said I’m a “Maestro” and my two fascination advantages are “power” and “prestige.” Supposedly, by more fully expressing these advantages, I’ll connect deeper with people and make a bigger impact.

2. Create a community around your tribe.

Along with being more of who you are, “Use technology to create a tribe within your universe of clients, a community of clients that want to be with you and understand what you stand for,” said Joe Duran to a standing room only crowd at the TD Ameritrade conference (See my earlier podcast interview with Joe). Mr. Duran, the founder of United Capital, said in the old days it was about trying to make everybody happy, but today it’s about creating tribes.

As an advisor, are you creating ample opportunities for your clients to come together and socialize? Do you stand for something that they can believe in, feel good about, and feel a part of? Is there a common thread among your clients or are they a disparate group of people whose only commonality is you? Building a tribe is not about excluding people. It’s about going deeper with the people you can best serve and help the most.

3. Be transparent in the price of your services.

Voters are fed up with politicians because they lie. They twist the truth and leave out important facts hoping voters won’t notice. Fortunately, you have the liberal and conservative press calling out the opposite party so politicians can’t completely hoodwink the public.

As an advisor, publish your fee schedule on your website and be darn proud of it because you’re worth it. I find it very frustrating when I hear advisors talk about the importance of “transparency” yet when I go to their website, I see nothing but fluffy pictures and canned commentary and not a fee schedule anywhere in sight.

4. Connect with stories.

Dave Isay, the founder of StoryCorps, stood in front of the TD Ameritrade crowd and showed videos of short stories told by Americans that brought the crowd to tears. From the heartfelt love story that ended in death to the mother who forgave the man who murdered her son, these stories touched the audience in a way that no algorithm ever can.

As an advisor, what’s your story? Why did you get in this business? Wealth advisor Bill Keen, a client of mine, recently published a podcast where he shared the story about how his experience as a 10-year old, sitting in an apartment with his dad waiting for the unemployment check to hit the mailbox, has shaped his career as an advisor.

And don’t just share your story, be genuinely interested in getting your clients’ stories, too. Not sure how? Start by asking your clients this question, “Tell me about a time when_________,” and fill in the blank with whatever you’d like to know about your client. Once you know your clients’ stories, they’ll feel heard and now you can do a better job coming up with a personalized plan that meets their exact needs and desires.

5. Co-create plans with your clients.

In the old days, advisors had all the knowledge. With no internet and no CNBC, advisors were the gatekeeper to investment information and clients had to pay dearly for it. Today, information is free and clients no longer want to blindly trust that their advisor is omniscient.

As an advisor, your role has evolved from the dispenser of wisdom to the co-creator of plans. This is one area where technology really shines. You now have the ability to co-create financial plans with your clients in real-time where you can show them the consequences—good and bad—of the choices they make. Your value lies in helping them make smart decisions about their money and their life, not in trying to add 50 bps of alpha.

Technology in Perspective

I love technology just as much as the next person, but it has its limits. The message I took away from the TD Ameritrade conference is this: don’t automate the humanness out of your business.

We can all try to one up each other with the latest gee whiz technology but ultimately, what clients care about is being happy and financially secure. Never lose sight of that. Use technology to enhance the client experience and use your humanness to make a profound impact.

{An earlier version of this article first appeared on InvestmentNews.com}

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Steve Sanduski, CFP® is a FinTech entrepreneur, New York Times bestselling author, podcast host, and international speaker.
By | 2016-04-07T17:15:18+00:00 February 29th, 2016|

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