Generalist or Specialist?

"An expert is a man who has made all the mistakes, which can be made, in a very narrow field"...Niels Bohr

Over the most recent 5-10 years, the financial services industry has emphasized the generalist financial planner/asset gatherer philosophy...as the path most likely to lead an advisor to become a top producer. The rationale for this approach is:

• Good client service requires a comprehensive view of the client's total financial situation,
• The generalist planner is well-positioned to capture high "wallet share" and gather more assets,
• In the long run, the name of the game is asset gathering,
• Narrow product expertise can always be "rented" from specialists.

However, in a recent study by CEG Worldwide, it appears that advisors who have a "wealth management" practice are much more likely to have higher income levels than those who are "investment generalists."

Of the 1000 advisors surveyed by CEG, 90.2% were generalists, and the remaining 9.8% wealth managers. In 2004, 2.1% of the generalists in this sample earned net incomes in excess of $500,000, while 26.3% of the wealth managers bested the $500,000 mark.

Looking ahead, as the baby boom generation ages and advisors deal with more new retirees and pre-retirees, the breadth of needs will expand still further. Moreover, if the focus shifts from investing to other issues, interpersonal skills and the ability to inspire, motivate and lead clients will become valued skills.

In the view of the Prospecting Professor, a focus on "wealth management" is not the only path that will lead the advisor to the realm of the Top Producer. Other avenues include:

• Focus on a "micro-market" or niche,
• Super Networking,
• Focus on very specific "applications",
• or Leverage, via use of sales assistants, cold-callers, or functional specialists.

Either way, at some point in the advisor's career life cycle, they will need to become more selective...and seek the training and education in areas that bolster their emerging specialization.

In the words of  Napoleon, "As the twig is bent, the tree is inclined."

Comments

[Jim Blankenship]

Chris -

Great comments (as always). One thing I'd like to point out with regard to the statistics quoted from the CEG survey: if you dig in to the numbers a bit more, you'll notice that breakdown of the advisors making in excess of $500k per year is not really a surprise. 26.3% of 9.8% is (roughly) 2.5% of the 1000 advisors surveyed, while 2.1% of 90.2% is (roughly) 1.9% of the advisors surveyed. So, approximately 44 of the 1000 advisors are in the $500k plus category, and a little more than half (~56%) classify themselves as wealth managers.

Just another way to look at the numbers. Bear in mind, I'm not arguing against your message, I believe it is quite valid. The statistics don't necessarily hold up your point, however. As Disraeli said "There are lies, damned lies, and statistics".

Keep up the great work! I truly enjoy your insights...

jb

[al]

hiring a cold caller is what worked best for us.... really brought us to the next level...

[Prospecting Professor]

Jim:

Thanks for the input on the CEG survey. I had not seen the sample of 1000 advisors that they had surveyed and, therefore, it isn't terribly surprising that the results would be skewed. You are also right about "lies, damn lies, and statistics." I do this all the time myself.

"Wealth management" is a specialization that places advisors in front of affluent investors. It is one of a number of specializations that does this and, as I tried to point out in my article, these types of specializations are likely to grow in number in the future. It behooves advisors to latch on to a specialization, be it elegant or simple, and make it their own.

Thanks for reading...and thanks for your comments!