Generalist vs Specialist – some thoughts on which way to go
It doesn’t matter whether you are a doctor, lawyer, tax practitioner or a financial adviser – some professionals tend to specialise while others prefer to remain generalists. In this article, I’ll give my personal perspective on when it is better for financial advisers to specialize or to remain generalists.
The key thing to keep in mind is that you’ll never be successful if you build a business that works for you but not for your clients – and vice versa. Therefore, we need to look at the topic of generalist vs specialist from both advisers’ and clients’ perspectives to assess whether it is better for advisers to be specialists or generalists.
Let’s start with the clients’ perspective
There are clients who may have relatively simple financial needs, which means that the “one stop shop” provided by a generalist is exactly what they are looking for. However, there is a group of clients who have complex needs that requires specialist advice (as an example, consider building an investment plan for a client who owns businesses and investments in multiple countries). In many of these cases, the client may need a group of specialists – but more about that later.
In other words, it is likely to be better to be a generalist if you have clients with relatively simple needs and, correspondingly, it is likely to be better to be a specialist if you have clients with complex needs. Therefore, from the client perspective, you can only assess which is better to be a generalist or specialist if you know your target market.
Now let’s consider the advisers’ perspective
Professionals specialise for a variety of reasons. These include our ongoing quest for personal growth, focusing on things that we enjoy, moving to more attractive remuneration models (think trail fees on investments), or simply because the complexity of our jobs requires us to focus on fewer aspects.
Advisers tend to specialise around a specific product rather than around clients – for example we specialise in areas like short-term, investments, risk, employee benefits and medical schemes. The problem with this is that if you are specialising in short term because it interests you, but you are mainly working with clients with simple needs – you will be less convenient than a generalist who is able to advise the clients on all their needs. This would be equally true for people specialising in risk and investments, but less so for those specialising in employee benefits and medical schemes.
Therefore, whether you look at it from either the clients’ or advisers’ perspectives, your choice of target market will determine whether it is better to be a generalist or specialist.
But it’s not that simple
There are few things that you need to consider that apply equally to generalists and specialists:
- If you are going to build a successful business, you must create a great client experience. This covers everything from the first time that a prospective client hears about you, to the last time that you engage them. It obviously includes the actual advice rendered, but you need to think about all aspects from your punctuality to the coffee you serve and from the look and feel of your client communication to the parking around your office.
- Consider that many clients don’t actually like financial planning because it forces them to have adult conversations on topics such as death or choosing between going on holiday today and a comfortable retirement. What’s worse is that it can involve products that they don’t fully understand. Therefore, many clients are looking for someone who cares about them and makes financial planning as painless as possible.
- The COVID19 pandemic and the associated lockdowns have been overwhelmingly negative, although there are a few positive lessons that we can take away. Among these is that online meetings have become normal, and they are a very practical way to increase productivity because you can spend much less time travelling. For sure there are times when a face-to-face meeting is essential – but not all of them. Similarly, if your clients come to your office, they may prefer to have the meeting online so that they don’t need to travel.
A final point to consider is whether there is a hybrid between generalists and specialist that provides the convenience of a one stop shop, with the expertise of specialist advice – and I’m going to use a legal analogy to explain this. Let’s assume that you have used your local lawyer (a generalist) to advise you on all your legal matters. Now assume that a legal firm opens across the road, where there are partners specialising in different aspects of the law. For relatively simple legal matters, you’d probably be ok with your local lawyer. But it is likely that you’d be in safer hands if you had a complex commercial matter and went to the firm of specialists. And if those law partners work together, you can get the benefit of a one stop shop.
The point here is that a group of connected specialists may well outperform individual generalists. For this to be successful, it requires the specialists to think of the clients as “our clients” and not “my clients”.
Conclusion
You can only determine whether it is better to be a generalist or a specialist if you are clear on the needs of your target market. This is because a successful financial advisory business needs to work for both you and your clients. As your business grows, you also need to focus on all aspects of your client experience and consider other aspects of your business model.
Guy Holwill is the Chief Executive of Fairbairn Consult. He is a qualified Civil Engineer and Chartered Accountant and has worked in financial services for more than two decades. Guy is passionate about creating business models that thrive in the changing worlds of regulation and customer experience.
