How Can an Advisor Truly Differentiate?

The Paradox of Differentiation is a Tremendous Trick of our Trade

Today I want to address one of the most important subjects facing advisors – the subject of differentiation. This topic has always been important for elite advisors, and in fact, is likely the way they came to be elite advisors, whether they were self-conscious about differentiation or not. Some are now considering the subject because they worry that artificial intelligence will punish those who fail to do it. Others have no idea why the topic is relevant to them, but the buzzword has been repeated to them so many times they just assume it must be important.

I recently read through a rather lengthy deck produced by Cerulli Associates on the wealth management industry. The same week I read this deck a reader of B2Bahnsen asked me to address how advisors can “differentiate” in this day and age. That question, and certain things illuminated in the Cerulli study, serve as the inspiration for today’s piece.

It is my opinion that differentiation is vital for advisor success. This is true for business development (what makes you stand out that attracts you to prospective clients), and to a lesser degree it is true for business retention (what enables you to keep clients for life). One potential counter to my thesis is that solid investment allocation, behavioral modification, and planning implementation are, themselves, so valuable, so perpetual, and so important, that doing them “differently” is not needed to be a good practitioner – just doing them “well” is. I do not entirely disagree, actually. But I am not referring to “differentiation,” necessarily, in those three categories (investing, behavioral management, and planning). By the end of this piece I want to argue for a different definition of differentiation, one that is available to all practitioners.

There are two things from the Cerulli study that stood out to me and are pertinent to this subject. First, the number of advisory firms presenting financial planning as a core service continues to go up (now 82%), and this is no surprise. The idea that planning ever wasn’t a core service is utterly bizarre to me, but the idea that it wouldn’t be, today, is incomprehensible. That said, “offering planning services” can hardly be called a differentiator, and with more and more firms joining the fray, the planning itself must be differentiated. Be it the quality, the deliverables, the process, the skill and acumen behind it, the ability to offer niche planning – the particulars of the planning differentiation are going to matter more than having it on the menu. (I hope this goes without saying). That 18% of RIA’s still offer “no planning services” means we all should be taking every one of their clients. Ready, set, go.

But the other thing from the study I want to mention is that when I began my research to leave Morgan Stanley in 2014 the percentage of wealth management assets attached to “fiduciary” accounts made up 40% of total industry assets ($6.6 trillion then out of $16.3 trillion, total). Today, 56% of assets are in “fiduciary” accounts ($17.7 trillion out of $31 trillion). So note the denominator growth: A LOT of wealth has been created in the last decade (industry AUM has doubled from $16tn to $32tn). But also note that being a fiduciary is becoming less of a differentiator. This is a 40% increase (from 40% to 56%) in one decade. The “fiduciary” label applies to far more (in some capacity or another) than it ever has, meaning those of us holding out that label are far less special than we used to be.

I am not convinced offering planning services or being a fiduciary was ever a real differentiator, but I am sure they could have passed as one in some sense. Much like saying one is “fee-based” there is just nothing that special about it any more. I do not recommend not doing any of these things (being planning-forward, being a fiduciary, having a fee-based compensation system) – but I would suggest they are mere table stakes for the advisory profession, a baseline just for admission.

So what does it mean to differentiate in the wealth advisory space? There are a lot of advisors competing for the same clients, utilizing the same capital markets as tools towards the end of financial goals, attempting to provide solutions to the same types of challenges (that is, the optimal accumulation, preservation, and transfer of wealth throughout the life cycle of a client). The irony in this dilemma is that the more one tries to solve it, the worse they risk making it for themselves (and their clients), and that the more one lets it unfold naturally, the more differentiated they are likely to be.

There are few things more annoying than one who has to manufacture sincerity, or someone who puts effort into effortlessness (spending hours to put off a vibe that you don’t care what you look like, for example). College students who go to great lengths to “not conform” by conforming, en masse, to the most trendy, pro-cultural movements of our day. These exhausting examples of disingenuity are a little more forgivable in young people than adult professionals, but all of it is exasperating. I would suggest there is a strong parallel in the discussion of differentiation. If one “differentiates” by taking a proper and necessary practice, and not doing it because others do it, they may be differentiating, but they are also an idiot. If, however, their own creative, organic, natural, authentic selves bring a differentiated angle, spark, perspective, or color to something, that strikes me as exciting and promising.

Let’s divide up “differentiation” for advisors into two categories:

1. Where you may stand out in terms of your business development efforts – how prospective clients may see you and your value proposition as different from others

2. Where you may stand out in terms of your client service delivery – how what you do and deliver for clients in delivering a value proposition may be different from others

Note that the value proposition is not the focus above. An awful lot of advisors may say that their value proposition is to “deliver solutions for the financial needs and objectives of their clients,” and if 300,000 advisors say something similar, that is an awful lot of non-differentiated sameness in value proposition. But the two things I am talking about above are standing out in how prospective clients see you, and then standing out in your own delivery of the value proposition. And on both of these fronts I know of no other better differentiation than:

Being your own authentic, differentiated self

I believe my firm has benefitted from being outspoken advocates of dividend growth investing. I believe in it with every ounce of breath in my body. I wrote a book on it. I am writing another book on it (coming: summer 2026). We manage an ETF of the strategy available to the world. I write about it every single week. And never in a million years did it occur to me to adopt dividend growth investing as a “differentiator.” The chicken or egg here is so vitally important. In my own studies of capital markets, of what investing really is, of what cash flow driven planning looks like, of where risk premia comes from in equity investing, I became convinced of the merits of dividend growth investing and sought to (a) Master my understanding of it, (b) Implement it to the best of my ability for the betterment of my clients, and (c) Become an evangelist for it. The differentiation was a result, not a cause.

Our business development differentiators all unfolded the same way: authentic, natural extensions of my own personality, interests, passions, and gifts. Content-as-a-service is not for everyone. And of course, the platforms for these things evolved and changed themselves over time. Your own unique approach to client attraction will be differentiated if you make it your own unique approach.

Likewise, delivery of a differentiated client experience does not mean brainstorming how to make your deliverable look different, or how to say something no one else is saying (“work with us, for we are the only advisor you will find that has truly found a way to short soybean futures inside a structured product while writing call options that give you levered upside”). Idiots can be real differentiated. Don’t do that. Unwise differentiation, forced differentiation, and counter-productive differentiation, all lead to bad outcomes.

Differentiation is the by-product of right-sized self-confidence, self-awareness, and inner-conviction. It also is the default reality of God’s creation. Meaning, you have to lean into conformity to avoid differentiation – because we are all unique and different, whether people fully grasp that or not. This is the base of the great mind-easing reality here: Differentiation will come naturally if you do not resist it. Lean into your own style, beliefs, ideas, and particulars. Avoid the temptation to adapt to the culture. Be counter-cultural in resisting that which hurts clients (performance-chasing, fad-investing, market-timing). And be entrepreneurial in considering what parts of your unique, differentiated self add to your value proposition.

A differentiation that comes naturally is the only kind of differentiation worthy of the name.