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10 Competitors Fighting for Your Clients

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Practice Management > Building Your Business > Prospect Clients

10 Competitors Fighting for Your Clients

By Bryce Sanders

Slideshow June 20, 2023 at 01:31 PM Share & Print

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Years ago, stocks were sold by stockbrokers. Insurance agents sold insurance and bankers took deposits and made loans. That all changed in the 1980s.

Now, everyone sells everything.

Today, the term “financial advisor” is used by people in diverse segments of the financial services industry. When you call on a prospect or reconnect with a client, who else is competing for their business?

Maybe you are a financial advisor with one of the wirehouses or a brokerage firm. Perhaps you are an RIA who has hung out your own shingle. You might work for a local bank, operating out of a branch office.

Everyone wants to manage the prospect’s money — everyone wants to manage your client’s money. It is important to realize who your competitors are and what advantages you (or they) bring to the table.

Check out the slideshow for 10 categories you’re competing with for your clients and prospects.

Bryce Sanders

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10 Competitors Fighting for Your Clients

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1. Traditional Wirehouse Firms
Today, every firm brands themselves as a “financial services firm,” but these are the firms associated with stocks and bonds. You are licensed to trade in individual stocks and many other product areas. Most of these firms are either owned by a major bank or own their own bank under the firm’s umbrella.

Advantages: There are many. They often have a world-class, in-house research department. They have branches across the country, as well as a long history and access to product specialists stationed in the local markets.

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2. DIY Online Traders
At the other extreme, you have the self-directed investor. They do not see the need to pay someone a fee when they can trade online themselves. They can run into problems because they might confuse investing with gambling. They might lose interest.

Advantages: They deal direct, without paying someone for advice, but they are often investing without the benefit of advice.

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3. Regional Firms
The traditional firms might have offices in all 50 states. There are also regional firms very similar to wirehouse firms that differ in the scope of their geographic footprint. Their financial advisors also trade stocks and can offer services similar to the wirehouse firms.

Advantages: Many are still independent, meaning they are not owned by banks. They often have their own research departments. These firms are often highly regarded in the local market.

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4. Multistate Banks
Everyone might want to get into the lucrative financial services business, but there aren’t enough wirehouse firms to buy up. Major banks create their own divisions, hiring financial advisors and placing them in branches or financial services centers.

Advantages: Their clients often started as banking clients. The bank name usually delivers the message of stability.

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5. Private Bankers
Technically speaking, they are owned or affiliated with a national or regional bank. They offer services similar to the wirehouse firms with an additional specialization in banking services. They have very high minimums and are focused on the ultra-high-net-worth market. (Many financial advisors secretly want to be private bankers.)

Advantages: The client is often already comfortable with the organization because they were a banking client until they sold their business and transitioned to private banking. Private banks offer almost every service imaginable.

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6. RIAs
These are independent advisors who might operate under the umbrella of a firm providing their back-office services to many similar firms across the country. The advisors might have worked for a traditional firm and gone out on their own. They are paying rent on the office space and other overhead expenses themselves.

Advantages: They highlight the fiduciary relationship. When an advisor gets their paycheck from a parent company, there is the question in the background, “Is the advisor recommending products the firm wants to sell or the best product for the client?” This is not the case with RIAs.

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7. Community Banks
There are regional brokerage firms and there are also banks with a good reputation in the region they service. These banks are often much better at becoming part of the fabric of the local community than multistate banks.

Advantages: They have great local brand recognition. They focus their loans on the local market and the people making the lending decisions are local, too. This helps promote the financial services arm of the business.

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8. Financial Planners
These are professionals who provide a service that can often be portable. The plan can be implemented anywhere the client chooses. The products are not proprietary. The plan is provided for a fee.

Advantages: The planner and the client often develop a strong bond. The client might prefer the planner to manage their money, too. The planner’s business is often licensed to provide this service.

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9. Insurance Agents
It is difficult to go through life without needing to buy insurance. If you own a car or a house, you need insurance. If you own a business, you need insurance. If you’re alive, you need health insurance. You need life insurance to protect your family. Because other firms are entering into the insurance space as competitors, the insurance companies provide wealth management, too.

Advantages: There may already be a relationship in place between the agent and the prospect. The agent seeks to build on this trust to expand the relationship.

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10. CPAs & Lawyers
Both are fiduciaries. Both bill for services based on the time involved. Both professions are known for trust and confidentiality. It’s natural some would get the licenses to manage money too.

Advantages: There is a fiduciary relationship in place. The relationship might go back to the previous generation. There is trust involved.

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