Positioning Your Independent Broker Dealer Practice

Positioning is not a new concept. It was discussed in great detail by Al Ries and Jack Trout in their widely acclaimed book, Positioning. According to these two ad execs, the only way to make yourself stand out is by being selective, concentrating on narrow target markets, and practicing segmentation--in a word, positioning yourself.

The ultimate goal of positioning is to attain one of the top spots in consumers’ minds whenever they think about a product or service. Ask most people to name a rental car company, and they'll say, “Avis” or “Hertz.” Ask them to name a computer manufacturer, and chances are they'll say, “Dell” or "IBM." Your objective is to be in that number-one or number-two spot for a specific group of investors when they think about investments, financial planning, or money management.

Reaching that goal is a three-step process.

Step One: Understand and Define Yourself and Your Organization.

Every financial advisor, planner, or independent broker dealer office is composed of a blend of experiences, environment, skills, education, interests, beliefs, preferences, and relationships. Until you really understand who you are, it will be difficult to understand your preferred niche marketplace.

If you were raised in the inner city, for example, it is unlikely that you can empathize with the financial concerns of a farmer. If you are in your mid-20s, your ability to deal effectively with retirees may be limited. On the other hand, if you own your own business, you can capitalize on that experience by dealing with entrepreneurs whose problems are similar to yours.

By working with a compatible clientele, you’ll be able to provide better service because you’ll gain familiarity with your client’s problems and how to solve them. In addition, your practice will become more profitable as you develop economies of scale and internal efficiencies in dealing with your target market.

To define your target market, ask yourself some serious questions: What have you done before? What special experiences have you had? What excites you? What bores you? What kinds of people do you enjoy? Not enjoy? What activities do you like? What are your social, political, and religious beliefs?

The answers to these questions will help you discover the people you will deal with most effectively. By truly understanding yourself and attracting clients to your practice who resemble you, you will attain a unique position in the marketplace.

Step Two: Introduce Yourself to Your Market

Here are some ways to raise your profile among your target group.

1. Cultivate key players or centers of influence (such as attorneys or CPAs) whose opinion is valued by others within the target group.

2. Provide service to that group through educational seminars or written information.

3. Sponsor and contribute to events important to this group, such as charitable or professional activities.

4. Attend all functions where members of your target group are present.

5. If you have current clients within your target market, ask them for referrals.

6. Be on hand to provide general financial advice when needed. For example, you may agree to write an article for a newsletter aimed at your target market. When a potential client has an investment or financial planning need, you want your name to be the first one that comes to mind.

Step Three: Create the Right Perception

You want your clients to view you as a financial advisor or planner. In What They Don't Teach You in Harvard Business School, author Mark McCormick writes, "One of life's biggest frustrations is that people don't do what you want them to do. But if you can control their impressions of you, you can make them 'want' to do what you want them to do. How people relate to you in business is based on the conscious and unconscious statements you make about yourself."

Most of you already know that prospects and clients prefer paying a fee as opposed to a commission because it relieves them of feeling obligated to invest in a particular product. They are comfortable with fees because doctors, lawyers, and accountants charge fees. Setting up a fee-based practice is one way to signal that you’re a professional advisor, not a salesperson.

You may be in the process of changing from a transaction-oriented business to a fee-oriented one. Tell your prospects about your plans. Then ask for their "serious" money in the context of retirement planning, business succession, charitable giving, privately managed accounts, and the like.

Ask yourself whether your customers perceive you as a salesperson whose primary purpose is to generate commissions or as a trusted financial advisor whose purpose is to help them meet their financial goals. Creating the right perception takes planning, practice, and the cooperation of everyone in your office, but it can be done.

Positioning is an art. But if you do it properly, you’ll be rewarded with stronger client relationships and more assets under management.