The August "Efficient Practice" column entitled "Embracing Differentiation" apparently caught the imagination of many people, financial advisors and otherwise. The article focused on a concept developed in the book Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne (Harvard Business School Press, 2005). The concept here was that you can render competition irrelevant by creating uncontested market space. This powerful idea has raised interest among advisors who fear they might be "wallowing in a sea of sameness."

In this case, the sea is a red ocean. According to the book, in the red oceans, as the market space gets crowded, the prospects for profits and growth significantly decline over time. Products become commodities or niches, and cutthroat competition turns the
ocean bloody.

In the blue ocean, meanwhile, demand for services is created rather than fought over, thus the opportunity for rapid growth and expansion of market share is greater because there is no dilution in the market due to competition.

The question posed by advisors is: How do they create uncontested market space? They also want to know what truly creates differentiation in the financial services profession when products and services look, sound and feel similar. To answer these questions, advisors must address one of the key value curve questions posed in the book: "Which product/service offering should be created that the profession has never offered before?" Creating a product, of course, is difficult because of regulatory issues and the overabundance of items already on the market. In the case of service, however, there is much that can be done.

We can look at two areas of practice operations, for example, that would benefit from a Blue Ocean approach: 1) Web site and client deliverables; and 2) professional credentials and the 30-second elevator speech.

In the first area, many financial advisors use what could be called a brochure Web site. This is a fairly simple Internet presence that focuses on the financial advisor and lists the products and services offered by the firm. A site using Blue Ocean techniques, on the other hand, might take the focus off the business and its products and focus instead on the client and the lifestyle he seeks to achieve, results he could associate with the advisory firm. If the site were a simple brochure, it might say "Smith Financial Advisors, offering financial planning and asset management for over 20 years." In the Blue Ocean type site, by contrast, it might say "Explore, share, indulge, live ... it is your future! Let us help you afford it." This would be accompanied by photos of similar types of clients (retirees for instance) enjoying an active retirement lifestyle. The idea is to create a compelling brand statement that redefines the relationship and paints a picture of the life they want rather than a dry, uninteresting list of services.

Service offerings can also take on a new significance when examined through the lens of the Blue Ocean strategy. Two companies in particular are now offering ways to enhance clients' experience when they visit your Web site: Advisor Products Inc. and CRM Software.

Advisor Products, makers of Advisor Sites (a Web site hosting service), has introduced the Client Portal Platform (www.advisorsites.com), which offers a way for clients to view and/or download information on their accounts, accessible directly from the firm's Web site. The portals can be highly customized to push content relevant to individual clients. They can post calendars showing appointments, reminders, etc. They can host blogs. And they can capture client investment reporting and statements from a large variety of sources, information that can be made available to clients (and, more importantly, can be controlled by the advisor).

The portal can be customized to have the same look and feel of the rest of the firm's Web site.

CRM Software, meanwhile, offers the Web site service Junxure ClientView for those firms that use Junxure as their client relationship management program. ClientView (www.junxure.com) is a portal, accessible from most Web sites, that offers private Web pages enabling your clients to receive, store and share important documents such as account information, trusts, wills, tax information, etc. ClientView can generate electronic files and build batch performance reports from Schwab's Portfolio Center and dbCams along with custom Junxure reports such as net-worth statements, insurance summaries, etc.

Both Advisor Products' and CRM's services offer a secure client lockbox or vault-type technology that the advisor and the client can use to store and transfer information. Both offer useful collaboration features. And both can provide investment reports to clients through a Web site that they can easily and quickly access. Advisors can also permit clients access to real-time reports (though it appears that the Advisor Products portal is capable of interfacing with a larger number of custodians and providers). From a Blue Ocean strategy standpoint, this type of service is clearly in the category of differentiation.

The other avenue to differentiation is your credentials. Most would agree that the CFP designation is the most widely recognized and respected one in the profession. Despite the many reasons for obtaining it, with so many CFPs out there, it is difficult to imagine how simply having the mark could set you apart from the rest of the pack. Many advisors have chosen to add other professional credentials to solve this problem and extend their capabilities. One Blue Ocean approach comes from the Financial Engineering Institute (www.thefei.com). While not well known, the institute offers a unique way to describe what you do. Designed to appeal to the affluent and to business owner clients, its program offers new private-labeled financial tools and advanced case design support. The institute also offers planning, marketing and technical skills training. The institute's OpenOption Dream Architecture and Engineering Dreams into Life branding and positioning concepts provide unique and compelling messages for clients. Strategies like these can help create differentiation and uncontested market space.

Consider the so-called "30-second elevator speech." When someone asks you what you do for a living, what do you say in 30 seconds that creates a compelling reason for someone to want to know more? If your answer is "I am a financial advisor," there is little reason for someone to ask for details. If your answer is, "I am a financial engineer," most people would be unfamiliar with that title and be compelled to ask what that is. Another example could be in how you describe what you do, rather than your credentials. When asked what you do, you might respond, "I help people accumulate and then spend piles of money." This type of answer draws a picture in someone's mind and raises their curiosity about how you can do this. The concept is to create awareness and build an overwhelming reason for someone to want to learn more about what you do and how they could benefit from it. In the world of the Blue Ocean, this is a very efficient way to create uncontested market space.

There are many more examples of Blue Ocean thinking in the financial services profession. We invite you to share your thoughts and stories on this topic by e-mailing [email protected]. Who knows? You may find yourself in the next installment of this article series.

David L. Lawrence is a practice efficiency consultant and is president of David Lawrence and Associates (DLA), a practice-consulting firm based in Tampa, Fla. DLA publishes a monthly subscription newsletter, The Efficient Practice, which focuses on operational efficiency (www.efficientpractice.com). David is a much-sought-after public speaker on a variety of leadership, financial and technical topics. For details, visit www.davidlawrencespeaks.com.