Today's article focuses on what it will take for advisors to emerge as winners from the turmoil in which the industry currently finds itself.

My December column in Investment Executive starts with the premise that a new breed of empowered customers and aggressive competitors have changed the rules of the game for most manufacturers and retailers - and are in the process of doing the same for the investment industry.

The only way to ensure that you'll emerge a winner from this process is through an intense, single minded focus on providing compelling, outstanding value - today, providing tepid value means you're toast.

Many financial advisors recognize that the traditional business model is seriously challenged. What is less clear is what will replace it going forward.
In my view, there will not be one successful model going forward - rather there will be a variety of approaches.
The one thing they'll have in common is a clearer and higher standard of value than existed in the past.
As you think about where you're going to take your business in 2010and beyond, you need to answer two key questions.

Defining your value
First and foremost, what's your response if a prospective client says to you: "What's the unique value that you provide your clients?"
It's a cliché to say that not long ago investors paid for transactions and access to information and got advice for free. Today, more and more investors see transactions and information as commodities- the only thing left for advisors to charge for is superior advice that makes sense of the overwhelming volume of information and assimilates it into a sensible plan, as well as effective ongoing communication around that plan.
In some cases that plan focuses on investment or insurance advice alone, in other instances advisors also provide a broad range of advice on wealth issues such as tax and estate planning and charitable giving.
And in some cases, advisors focus on a subset of investors such as business owners, retirees or investors planning for retirement with a view to providing specialized expertise that "generalist" advisors can't match, other advisors take a more broadly based "all-comers" approach to the clients they serve.
It's important to note that the value doesn't normally reside in the plan itself - the value resides in what the plan and the communication around that plan achieve.
In some cases, that might be concrete tax savings.
In others, it will be value for money, with investors feeling their portfolio is in better shape by working with their advisor than it would be if they were elsewhere or doing this on their own.
In other instances, the value might be clients' peace of mind or the ability to avoid having to spend a great deal of time thinking about their investments, confident that their advisor is on top of things and is watching out for their interests.
And in still others, the value might be feeling good about the level of attention they are getting from their advisor and his or her team en route to achieving their goals.
Or it could be an intangible - something I've learned in my time in the industry is to never underestimate the importance of investors simply liking the advisor they deal with (bearing in mind that "likeability" was the hallmark of fraudsters like Bernie Madoff and Earl Jones.)
Whatever it is that drives value for you, the key first step is to be crystal clear about that - just remember that the value bar has gone up. What was perceived as exceptional value by clients yesterday won't necessarily be perceived as exceptional value tomorrow.

Delivering value
The second question relates to how you deliver that value - many of today's skeptical customers say "talk is cheap" and demand concrete evidence to back up your claims.
Begin by summarizing all the time and money you spent on your business this past year - and divide that time and money into three categories.
The first category are those expenditures that are the cost of doing business; customers aren't prepared to pay the cost of keeping the lights on, so you need to keep these to a minimum.
Everything else falls into two categories - "good expenditures" of time and money that translate into clear perceived value for clients and "bad expenditures" that don't. Your goal is to maximize the discretionary expenditures that drive value and to minimize those that don't.
Here's a simple example. One advisor I recently talked to laboured for many hours over his monthly newsletter, determined to get the words exactly right - this was a major investment of time on his part.
Earlier this year, he initiated a Client Advisory Board, inviting eight of his best clients to serve as an advisory group that he could consult with. When he brought up his newsletter, the universal response around the table was "Who cares?" Few of the clients around the table paid much attention to it and none would miss it.
In fact, rather than his own newsletter, almost all of his clients said they'd prefer to receive carefully chosen articles from credible, third party sources.
This is a classic example of a "bad cost" - he was spending a significant amount of time on something that represented marginal value to clients.
Dividing everything you do into those three categories can be an arduous process - but it can also be an illuminating one that will clarify how you can maximize the value you deliver clients.
For the full article in Investment Executive, including talking about timing to implement change, click below:
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=51639&cat=30&IdSection=30&PageMem=&nbNews=&IdPub=188