You’ve heard the old statistic that 90% of drivers think they are better than the average driver.
Within a few percentage points this mildly amusing, yet clearly impossible, data point has been demonstrated time and again. There’s a name for this form of cognitive bias and it’s called ‘illusory superiority’. Illusory superiority is the likelihood that people will overestimate their own qualities and abilities relative to others. My guess is that 90% of people think this doesn’t apply to them.
It turns out that a form of this bias applies in our industry, reflected in how we perceive the strengths of our businesses relative to others. However, if this applies to you, the behavior is a little more dangerous than an over-blown sense of your driving skills. It may be putting a wall up between you and your prospective clients.
What Differentiates You?
Recently, the Financial Planning Association polled over 700 advisors, focusing attention on how they define and describe their value. The natural starting point was to pinpoint what advisors felt set them apart from other advisors.
It turns out that three quarters of advisors feel they are differentiated on the basis of their ability to understand the needs of clients and their client service. Hmmmm.
You can link to this report here, however the whitepaper on value is only available to members.
This highlights a couple of interesting points.
- It’s a mathematical impossibility that three quarters of clients are differentiated from everyone on else on the same two things.
- It highlights what we think is most important to our clients. Why? If we believe something sets us apart it’s because we’ve invested significant time in getting very good at it. And, if we’ve invested significant time in getting very good at something, it’s likely because we think it’s critical to our clients. Ipso facto, we believe that understanding needs and client service are most important.
But what if you’re wrong?
What if the things that you think differentiate you, don’t. Does it matter?
Is Differentiation that Important Anyway?
Is it possible that differentiating yourself from other advisors isn’t as important as you think? As a prospective client, I’d argue that communicating what sets you apart from other advisors in considerably less important than communicating if you are exactly the right advisor for me.
If, for example, I arrive at your website, do I see myself? Does it reflect what is important to me? Or, do I have to wade through language that sounds eerily like the language used on other sites and try to decipher if you are the right advisor for me?
According to the advisors surveyed in the FPA study, most don’t think prospects, who visit their websites, will get a good feel for the business, beyond the products and services provided.
If you accept that your website is like a welcome mat for your business, then this is a problem. I want to know if I’m in exactly the right place. I want to know that you understand my needs and I want to know if you work with clients like me.
What Is the Real Problem?
We could assume that the culprit here is poor website design but I would suggest that isn’t the case. I think we’re faced with this dilemma because we haven’t defined our ideal client in the first place.
In the FPA whitepaper, there is a suggested action plan, which includes the following:
- Define your ideal client
- Interview several clients who reflect your ideal to understand what they value the most about working with you.
- Articulate the value you deliver to your ideal clients
- Audit your business to ensure that value is reflected on your site and in all communications
You’ll find a summary in this article from Investment News as well.
I’m not arguing against the need to stand out in the crowd. I’m simply saying that differentiation doesn’t always require that you are different from every other advisor. It means that your offer is differentiated because it is tailored to the needs of a defined group of clients. Differentiation, in that case, is more a reflection of the needs of the client.
Thanks for stopping by,