Specialization vs "jack-of-all-trades"

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Nov 13, 2006 11:36 am

There has been some discussion on here about the advantages/disadvantages of being a specialist (in say insurance, or VA's, or managed money) versus being a "one stop shop" for all our clients financial needs.


Just curious what people think.  Looking at my business now, I definately would be considered a "one stop shop" in that I have VA's, individual fixed income and equities, mutual funds, reits's, and 2 qual plans on the books.


However, I can ABSOLUTELY see the benefits of being a specialist, from an information standpoint (not having to know everything about everything) to a simplification standpoint (inumerable sets of paperwork depending on the product/structure).


Nov 13, 2006 11:38 am

Also, I forgot to mention about ten life insurance policies and 1 LTC.


reits's - reits

Nov 13, 2006 11:58 am

I think that although generalists have greater opportunity, people prefer to work with a specialist.  The danger is that you leave money on the table that they'll take to another advisor.  The best scenario would probably be to form strategic alliances with other specialists who you can refer clients to and who will refer cases to you.


Try and find both ethical and trustworthy people.  Good luck!

Nov 13, 2006 1:14 pm

I'm making much better money now that I specialize...plus my stress load has dropped exponentially.  It goes against my basic nature (I really like the broad based planning approach) to specialize but I'm liking it.

Nov 13, 2006 1:22 pm

I prefer, and I don't think I'm alone here, to be a jack of many (but not all) trades.  I don't like the idea of my clients having to go elsewhere to fill a need that I could have easily filled myself with a little effort.  As Freedom referenced, sending them to another advisor to fill a need that you don't specialize in gets someone else's foot in the door and if that person does everything you do, plus a couple of things you don't, you may very well lose the client.


My rule of thumb is, if it's important to at least 5% of my clients (or to one of my top five clients) and other investment advisors in my market can offer it, I do my best to cover it.  Yes, that means doing life insurance, which is far from my favorite thing, but it beats sending clients to the local insurance agent who also happens to manage investments.  I do, however, refuse to do any new tax returns.  It's a low margin business and I'm in an office where I can send them down the hall to another CPA who is not in this business.  I do a few tax returns for old clients and am looking for a way to, in time, gracefully pass them along to my CPA friend.


I'm going to mildly disagree with Freedom on this point...I think most people prefer one trusted advisor to ten product specialists for convenience, if nothing else.  The only exception that I've come across is the $20 million client who wants to spread it between 2-3 trusted advisors to "diversify".  If it's important to your clients and done by your competitors, you'd better find a way to do it also or risk losing clients.

Nov 13, 2006 1:29 pm
Indyone:

I'm going to mildly disagree with Freedom on this point...I think most people prefer one trusted advisor to ten product specialists for convenience, if nothing else.  The only exception that I've come across is the $20 million client who wants to spread it between 2-3 trusted advisors to "diversify".  If it's important to your clients and done by your competitors, you'd better find a way to do it also or risk losing clients.



That's definitely a good point.  If you make it too inconvenient for the client they're more likely to go somewhere else.

Nov 13, 2006 1:49 pm
Indyone:

I prefer, and I don't think I'm alone here, to be a jack of many (but not all) trades.  I don't like the idea of my clients having to go elsewhere to fill a need that I could have easily filled myself with a little effort.  As Freedom referenced, sending them to another advisor to fill a need that you don't specialize in gets someone else's foot in the door and if that person does everything you do, plus a couple of things you don't, you may very well lose the client.


My rule of thumb is, if it's important to at least 5% of my clients (or to one of my top five clients) and other investment advisors in my market can offer it, I do my best to cover it.  Yes, that means doing life insurance, which is far from my favorite thing, but it beats sending clients to the local insurance agent who also happens to manage investments.  I do, however, refuse to do any new tax returns.  It's a low margin business and I'm in an office where I can send them down the hall to another CPA who is not in this business.  I do a few tax returns for old clients and am looking for a way to, in time, gracefully pass them along to my CPA friend.


I'm going to mildly disagree with Freedom on this point...I think most people prefer one trusted advisor to ten product specialists for convenience, if nothing else.  The only exception that I've come across is the $20 million client who wants to spread it between 2-3 trusted advisors to "diversify".  If it's important to your clients and done by your competitors, you'd better find a way to do it also or risk losing clients.



I agree with what you are saying.  It would be just about impossible for me to see an opportunity, say a 401K rollover, and pass on it because I have decided to focus on insurance.

Nov 13, 2006 2:09 pm
dude:

I'm making much better money now that I specialize...plus my stress load has dropped exponentially.  It goes against my basic nature (I really like the broad based planning approach) to specialize but I'm liking it.


Just curious...what is your area of expertise?

Nov 13, 2006 2:13 pm
BankFC:
Indyone:

I prefer, and I don't think I'm alone here, to be a jack of many (but not all) trades.  I don't like the idea of my clients having to go elsewhere to fill a need that I could have easily filled myself with a little effort.  As Freedom referenced, sending them to another advisor to fill a need that you don't specialize in gets someone else's foot in the door and if that person does everything you do, plus a couple of things you don't, you may very well lose the client.


My rule of thumb is, if it's important to at least 5% of my clients (or to one of my top five clients) and other investment advisors in my market can offer it, I do my best to cover it.  Yes, that means doing life insurance, which is far from my favorite thing, but it beats sending clients to the local insurance agent who also happens to manage investments.  I do, however, refuse to do any new tax returns.  It's a low margin business and I'm in an office where I can send them down the hall to another CPA who is not in this business.  I do a few tax returns for old clients and am looking for a way to, in time, gracefully pass them along to my CPA friend.


I'm going to mildly disagree with Freedom on this point...I think most people prefer one trusted advisor to ten product specialists for convenience, if nothing else.  The only exception that I've come across is the $20 million client who wants to spread it between 2-3 trusted advisors to "diversify".  If it's important to your clients and done by your competitors, you'd better find a way to do it also or risk losing clients.



I agree with what you are saying.  It would be just about impossible for me to see an opportunity, say a 401K rollover, and pass on it because I have decided to focus on insurance.



It takes guts to draw a line in the sand. You don't have the guts. Nothing wrong with that. It just happens to be your truth.

Nov 13, 2006 3:00 pm
My Inner Child:
dude:

I'm making much better money now that I specialize...plus my stress load has dropped exponentially.  It goes against my basic nature (I really like the broad based planning approach) to specialize but I'm liking it.


Just curious...what is your area of expertise?



Fixed Annuities (including EIA's).

Nov 13, 2006 3:07 pm

There are advantages and disadvantages to both. Specialists do leave money on the table. I prefer having 50 clients that I've cross-sold the heck out of than 100 clients with only one or two products. I'm all about building relationships and keeping clients for the long run. The more they are vested in me, the less likely they will give another guy a shot at earning their business.



Nov 13, 2006 3:18 pm
dude:
My Inner Child:
dude:

I'm making much better money now that I specialize...plus my stress load has dropped exponentially.  It goes against my basic nature (I really like the broad based planning approach) to specialize but I'm liking it.


Just curious...what is your area of expertise?



Fixed Annuities (including EIA's).



Cool. Isn't it nice to NEVER have to worry about losing your client's money?

Nov 13, 2006 3:20 pm
insurproducer:

There are advantages and disadvantages to both. Specialists do leave money on the table. I prefer having 50 clients that I've cross-sold the heck out of than 100 clients with only one or two products. I'm all about building relationships and keeping clients for the long run. The more they are vested in me, the less likely they will give another guy a shot at earning their business.






I wouldn't be assuming that I leave a lot of money on the table.

Nov 13, 2006 3:25 pm
My Inner Child:
BankFC:

I agree with what you are saying.  It would be just about impossible for me to see an opportunity, say a 401K rollover, and pass on it because I have decided to focus on insurance.

It takes guts to draw a line in the sand. You don't have the guts. Nothing wrong with that. It just happens to be your truth.


You can say it's brave to specialize in on product and I could say that it's lazy.  Neither of us is necessarily right.  You've chosen the "get it all right now" path and I've chosen to defer a significant part of my income into future years.  There may come a day when your pipeline slows significantly or even dries up...either through demographics or legislation.  I prefer to have an ongoing stream of income from current clients when that day comes, rather than scratch from zero each month.  Chacun à son goût.

Nov 13, 2006 3:26 pm

Here's something that's worked well for me: try specializing, but rather

than specializing in a product, specialize in a type of client. That is, find

whatever group of people you have an easy in with, and become the go-

to person in that group. (Apprentice and JTR seem to follow this approach

also).

The goal is to a) become well known in that circle of people and b)gain

the efficiencies of specialization (you'll be dealing with multiple products

of course, but if your clients are similar enough, you'll become very

efficient at helping these types of people).

Just a different way of approaching the issue, for what it's worth.

Nov 13, 2006 3:27 pm
My Inner Child:
insurproducer:

There are advantages and disadvantages to both. Specialists do leave money on the table. I prefer having 50 clients that I've cross-sold the heck out of than 100 clients with only one or two products. I'm all about building relationships and keeping clients for the long run. The more they are vested in me, the less likely they will give another guy a shot at earning their business.






I wouldn't be assuming that I leave a lot of money on the table.




You may not be leaving "a lot" of money on the table, but I bet I could find something or someway to earn one of your client's relationships.


Have any of you read THE WEDGE by Randy Schwantz? It's targeted mainly at the P&C industry, but it is very good for anyone in financial services. 

Nov 13, 2006 3:45 pm
insurproducer:
My Inner Child:
insurproducer:

There are advantages and disadvantages to both. Specialists do leave money on the table. I prefer having 50 clients that I've cross-sold the heck out of than 100 clients with only one or two products. I'm all about building relationships and keeping clients for the long run. The more they are vested in me, the less likely they will give another guy a shot at earning their business.






I wouldn't be assuming that I leave a lot of money on the table.




You may not be leaving "a lot" of money on the table, but I bet I could find something or someway to earn one of your client's relationships.


Have any of you read THE WEDGE by Randy Schwantz? It's targeted mainly at the P&C industry, but it is very good for anyone in financial services. 



I'm very familiar with the wedge. I also have a copy of "the wedge for financial advisors" that he wrote, but never published.  Anyone who wants to churn one of my clients out of their VA can be my guest. I've already made my money. I don't mind getting paid and letting you do the work.

Nov 13, 2006 4:06 pm
Indyone:
My Inner Child:
BankFC:

I agree with what you are saying.  It would be just about impossible for me to see an opportunity, say a 401K rollover, and pass on it because I have decided to focus on insurance.

It takes guts to draw a line in the sand. You don't have the guts. Nothing wrong with that. It just happens to be your truth.


You can say it's brave to specialize in on product and I could say that it's lazy.  Neither of us is necessarily right.  You've chosen the "get it all right now" path and I've chosen to defer a significant part of my income into future years.  There may come a day when your pipeline slows significantly or even dries up...either through demographics or legislation.  I prefer to have an ongoing stream of income from current clients when that day comes, rather than scratch from zero each month.  Chacun à son goût.



I know that there are more and more insurance carriers offering a smaller up-front and perpetual trails on their fixed and indexed annuities now, Indy.  An insurance agent could definitely build themself a recurring revenue practice these days.

Nov 13, 2006 4:17 pm
My Inner Child:
insurproducer:
My Inner Child:
insurproducer:

There are advantages and disadvantages to both. Specialists do leave money on the table. I prefer having 50 clients that I've cross-sold the heck out of than 100 clients with only one or two products. I'm all about building relationships and keeping clients for the long run. The more they are vested in me, the less likely they will give another guy a shot at earning their business.






I wouldn't be assuming that I leave a lot of money on the table.




You may not be leaving "a lot" of money on the table, but I bet I could find something or someway to earn one of your client's relationships.


Have any of you read THE WEDGE by Randy Schwantz? It's targeted mainly at the P&C industry, but it is very good for anyone in financial services. 



I'm very familiar with the wedge. I also have a copy of "the wedge for financial advisors" that he wrote, but never published.  Anyone who wants to churn one of my clients out of their VA can be my guest. I've already made my money. I don't mind getting paid and letting you do the work.




I could care less about your client's $100,000 VA you made $4,000 commission on a year ago. I'm talking about small to middle market business owners, employee benefits and retirement plans, commercial insurance, and their own personal insurance and investments. That's where I flourish. Most of these prospects are spread out over a 4 or 5 different agents or advisors. I come in and help them consolidate everything with me. Win-Win situation. After that, all I have to worry about are policy renewals and birthday/christmas cards.

Nov 13, 2006 4:39 pm

Good