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Financial Services Business Plan: Size Up the Competition
Competition for your new financial services business is basically whatever other options your customers will have rather than use your services. To create a business plan, describing the main competition you face is an important section which proves to yourself and to investors that you recognize the challenges that you will face and have the information you need to create a winning competitive strategy.
What Are Customers Doing Now?
If you will try to work entirely with customers who do not currently use financial services (beyond basic checking and savings), your top competition is this status quo. It is up to you to convince these customers that doing something more with their money and thinking about retirement and college savings are better options for them than doing nothing.
Once customers are choosing to use your type of financial services, you will probably have to compete directly with the options their banks present them with. Many banks offer a full range of services, have customers who are already familiar with at least their brand and location, and may try to entice customers with relationship discounts. You face a difficult battle against all of these advantages. The advantage you can offer customers is probably the attention and specific expertise that a bank trying to be everything to everyone will fail at providing.
Another type of status quo you will be competing against is the world of free and basically free financial advice from websites to magazines to books. If you feel that your customer target market often turns to these sources for fear of paying an arm and a leg for advice, it is up to your firm to help remove this fear, by pointing out the superiority of your expertise and the customization you offer and, perhaps, the inferiority of these publications.
If you seek to manage assets of clients directly, you will have to contend with brokerage houses, many very large. These firms have the advantage of established names (Smith Barney, Merrill Lynch, Charles Schwab, etc), but the disadvantage of their extra focus on high net worth clients. Clients who feel they don't get the attention they need from large firms may become interested in the attention a smaller company can offer.
Want more tips? Here's a related article: Financial Advisor Business Plan.
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