Improving the Investor Experience Will Set You Apart

Technology firms devote an incredible amount of resources to improving their users’ experience. Doing so isn’t just about competition; it is about profitability. Yes, on the surface spending time and money improving the user experience (especially when users aren’t asking for it) may seem like a money loser. But that isn’t the case. Apple is a great example. Apple prides itself on user experience, and is able to overcharge for their products because they deliver.

An Overlooked Benefit

I talk to a lot of financial advisors both through this blog and when I speak at industry conferences. One of the greatest struggles advisors face is how to differentiate themselves in a commoditized industry. I even deliver a presentation about how advisors can differentiate themselves. But let me share a little secret with you. Just about every advisor claims they want to differentiate themselves, but few are willing to do anything different. In other words, they want to appear different to their competition without taking a different approach. Sounds a bit like the definition of insanity.

Of all the advisor marketing I have seen, I have never seen a mission or branding statement as simple and explicit as improving the investor experience. I don’t know why that is the case. In fact, after over 1,000 advisors read this post, my guess is that fewer than 1% will do anything to change how they approach marketing their business – even if they agree with my comments. Doing things different is difficult, or everyone would do it. First off, a new thought or way of doing things can be uncomfortable (aversion to ambiguity). Secondly, changing currently habits/ways of doing things is hard (status quo bias). And finally, even if you give it a go, it can take more energy and the results can take longer than advisors are willing to wait (desire for instant results).

We can learn something from Apple. The investment industry, like technology, is an industry of margin compression. We have competitors that will do it all cheaper, and some tools even exist where things are free. Apple (and Nordstrom) have demonstrated over many years that people are willing to pay more because of the user/customer experience. If the value is in the product (plan or portfolio) then expect margin compression. But if your value is in the delivery and client experience, then you may have pricing power…if you do it right.