Every financial planner likes to think that they are different from competitors. Yet what, exactly, sets you apart?

When we speak to financial firms about their differentiation strategy, they often say the same sorts of things:

“We put the client first.”

“We provide a holistic service, not just a transactional one.”

“We offer an excellent team with considerable experience.”

“We will always tell the client the truth; not just what will make us a short-term profit.”

Whilst these are admirable qualities, when you hear them repeatedly said by 100s of financial planners across the country, you start to wonder if they are really differentiators!

Here, some important questions start to emerge. How can a financial planning business differentiate from others, effectively? Is it even possible? Here at CreativeAdviser, we believe it is possible – although this is not to say it is easy.

Below, we explain what differentiation is, how it relates to “sustainable competitive advantage” and offer some ideas on how to differentiate your business. We hope this is useful to you. Get in touch if you’d like to arrange a free, no-commitment consultation with us to discuss your own branding and marketing strategy.


What is market differentiation for financial planners?

Differentiation is the strategy your financial firm uses to make itself recognisable and memorable in a sea of other financial firms. It also quickly, clearly and easily sets compelling reasons in the prospect’s mind about why they should choose you over competitors.

Some financial planners are fortunate in that their competitive landscape is not very fierce. Perhaps they are the sole financial planning firm in a particular local area (or, one of just a small number). Prospective clients, they reason, consequently do not have much choice when choosing a financial planner. This is perhaps one of the reasons why some financial planners neglect their differentiation strategy.

However, this is a dangerous road to take. First of all, just because the competition currently seems low, does not mean it will always be this way. Other firms could move into your area. If they have a better differentiation strategy, moreover, then you might find that your market share starts to shrink.

Secondly, competition is no longer strictly local. The COVID-19 pandemic has spurred more people to look for financial services online, after months of remote working (and communicating) from home. This means that it is more important than ever to have a compelling presence on the internet – particularly in local search results, such as Google’s.


Differentiation and sustainable competitive advantage

A financial planner needs to take into account at least two crucial considerations when designing a differentiation strategy.

First of all, your brand needs to be recognisable for positive reasons. Although there is some truth the old saying: “All press is good press”, this only goes so far for financial planners. Your business model is built on trusting, long-term relationships with clients.

Getting the word out about your business – and why it is different – cannot come at any cost, therefore.

Secondly, your differentiation strategy needs to have longevity. Here, you should ask yourself: “Is the thing that makes me different likely to last over the years ahead?” If not, then it isn’t a sustainable competitive advantage – just a temporary one.

As an example, a few years ago we witnessed some financial planning firms trying to differentiate by positioning themselves as “ethical financial planners”. Here, their brand communications stressed how they would only build client portfolios based on ESG principles.

This strategy worked quite well for a time. Yet now, in 2022, ESG investing has become so mainstream that investors, by and large, now expect portfolios to have at least some ESG principles integrated. Those financial planners which positioned themselves as “ESG” or “ethical” options, therefore, are largely now having to re-think their differentiation strategy.


4 differentiation ideas for financial planners

With all this said, what kinds of differentiation strategies can work for financial planners?

Here, it is important not to assume that differentiation rests on one thing about your brand. Rather, it could be that a handful of factors can come together to help distinguish you effectively from alternatives.

For instance, the “restricted” versus “independent” nature of the financial planning world is important. If your business offers a “whole of market” service for clients looking to build an investment portfolio, then it is important that you say so.

Many investors will want to know whether you just offer products from a partner/umbrella business, or can help them weigh a wider range of options. This could already help set you apart from certain rivals in your local area.

Another differentiator might be your business structure. For example, are you a one-person business largely offering financial advice on pensions? Or, are you a larger team with offices in multiple locations – perhaps offering an in-house investment management service, probate and accountancy solutions?

Depending on the prospect, your business set-up might matter deeply to them. Perhaps they just want to be part of something small and not too “holistic”. Or, maybe they want a “one-stop-shop” for the majority of their wealth management needs.

Another differentiator to consider is areas of competence. In short, are there things you can do which your competitors cannot, and which would be hard for them to emulate?

A good example we like to use is expat financial planning. This is quite a niche aspect of financial planning involving in-depth knowledge of other countries’ tax/residency rules and some of the specific intricates involved with managing assets overseas.

Finally, consider whether any differentiation can be found amongst your target clients. For instance, are you a female-led financial planning business which specialises in financial planning for women after divorce? Maybe you focus on helping immigrant families set up an effective financial plan. Consider whether any sustainable competitive advantage can be found here.



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