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The Third Secret

Avoid the commodization trap: Learn to sell your clients on your “intellectual capital,” not your products and service.

By Dan Sullivan

The secret to a happy life is to discover what you love doing and develop a way of getting paid for it. A greater secret is to do what you love, get paid for it and make a great contribution to other people. And the greatest secret of all—what I call “the third secret”—is to do what you love, make a great contribution and get extraordinarily well paid for it. Financial advisors who are achieving the third secret all have five of these characteristics:

  • Continually increasing confidence: Every year, they are able to transform their daily experiences into a greater sense of purpose, motivation and capability. Their lives are exciting.
  • Increased ownership of personal future: Every year, they have a sense that they have increased control over the factors that contribute to their permanent progress and success. Their lives are certain.
  • Increased value creation: Every year, they increase their ability to help more and more individuals in matters of importance. Their lives are significant.
  • Increased focus on unique ability: Every year, they spend more time doing only those things where they have superior skill, and in which they derive the greatest energy. Their lives are enjoyable.
  • Increased quality of life: Every year, they have an increased sense of balance and integration in all the things that mean most to them. Their lives are rewarding.
In the not too distant future, the very first thing that you sell, before you sell any kind of commoditized product or service, will be your packaged wisdom.

The commoditization trap
I have become increasingly aware of a growing number of obstacles that prevent thousands of advisors from achieving this third secret. There are hundreds of obstacles both big and small, but I use a single name for them all: the commoditization trap.

The best recent description of this trap comes from a book published in 1999 called The Lexus and the Olive Tree by Thomas L. Friedman. A commodity is any good, service or process that can be produced by any number of firms, and the only distinguishing feature among these firms is who can do it the most cheaply.

Having your product or service turned into a commodity is no fun because it means your profit margins will become razor thin, you will have dozens of competitors, and all you can do is make that product or service cheaper and sell more of it than the next guy. Individuals caught in the downward pull of the commoditization trap increasingly lose their ability to love their life as financial advisors. You may know some of these advisors. You may be one of them yourself.

All financial advisors are striving, successfully or not, to get out of the commoditization trap. But for most, two fundamental limitations in their thinking prevent them from making any progress: the specialization trap and the industry trap.

Shift 1: Overcoming the specialization trap
If I asked you what you were, you would describe yourself with your specialization job title—the one that is printed on your business card. You wouldn’t say you were an entrepreneur. This identification with your specialization keeps you in the commoditization trap. You don’t see yourself in this purely entrepreneurial role and activity. Because of that, you have not been acquiring crucial entrepreneurial tools, freedoms and advantages that are necessary to escape from commoditization.

You’re going to make a new statement about yourself, about who you are in the marketplace.

As soon as you make this statement, your thinking about your role and activities will begin to shift. All sorts of new opportunities, advantages, resources and capabilities will start to emerge from your new thinking. Now instead of saying your specialty first, I ask you to say this: “I am an entrepreneur with a specialty in _________,” filling in the blank with your specialization title.

What you just said creates the possibility of something dramatically new in your life and career. This is going to make a difference. You will no longer identify with your specialty in the financial services industry. Instead, you are now an entrepreneur with a specialty in financial services.

Shift 2: Overcoming the industry trap
You are in a vast, incredibly complex global system called the financial services industry. In addition, you are inside other complex systems called insurance companies, broker dealerships and producer groups. Because you are inside of these systems, it’s impossible for you to see them subjectively. This is what I call the industry trap.

Because you have spent so many years inside the different systems of the financial services industry, you are severely limited in your ability to see and take advantage of extraordinary opportunities outside of the industry. This is a serious handicap because all of your prospects and clients are always outside of the industry. The industry trap makes it impossible for you to see their issues and concerns as they see them. As a result, your prospects and clients respond by seeing you only as a seller of commodities—like thousands of others. Your industry blinders make it impossible for your clients to appreciate how you are uniquely different from all of your commoditized competitors.

You’re going to make a new statement about yourself, about who you are in the marketplace.

Packaging your intellectual capital
To move through these shifts, you need to convert your intellectual property into intellectual capital. The reason why your best clients stay with you and recommend you is because of the unique wisdom and value that is locked away in your intellectual property. But that’s not what you sell them. The thing that you have that’s most valuable—your intellectual property—is what you give away for free. The things that you have that are most commoditized—your financial products and services—are the only things they can actually purchase.

But, everyone has great amounts of intellectual property; very few have any intellectual capital. The difference between these two assets lies in this: intellectual property consists of all the value creation, problem-solving and competitive wisdom that you have gained throughout your career to become a successful advisor. Intellectual capital, on the other hand, represents your ability to make all your career wisdom available—in a uniquely packaged form—to your clients, staff, other financial advisors and the world.

In the not too distant future, the very first thing that you sell, before you sell any kind of commoditized product or service, will be your packaged wisdom. Insurance and investments will still bring in a great deal of revenue—in fact, significantly more than you are achieving right now. But the first thing that clients will buy is your intellectual capital, and they will love doing it because it is your unique wisdom that means the most to them.

During the next 10 years, many financial advisors will successfully make both shifts. They will become highly successful entrepreneurs, and then they will become highly successful intellectual capital companies. When you choose to do this for yourself, I can predict you will achieve the third secret in your financial services career. You will discover what you love doing most. You will make a great contribution to increased numbers of individuals. And, you will get paid extraordinarily well for doing this—both for your intellectual capital and for your products and services.

Used with permission from MDRT. All rights reserved.

This is an excerpt of a much longer speech given at the 2004 Million Dollar Round Table annual meeting. For more information, contact MDRT at www.mdrt.org.

Dan Sullivan is the founder and president of The Strategic Coach Inc. He has more than 25 years of experience as a highly regarded speaker, consultant, strategic planner and coach to entrepreneurial individuals and groups. Contact him through his website at www.strategiccoach.com.

 


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