Financial advisors pride themselves on gathering information about their clients to develop deep relationships. But gathering intelligence about your competition is also critically important, says Larry Distillio, director of financial advisor business management at Mackenzie Financial Corp. in Toronto.

Knowing who your competitions is and what strategies they are using to potentially take your clients and your assets could be key to your survival.

Here are three steps to gaining more information about your competition:

1. Identify your competitors
You have three types of competitors. Your direct competitors consists of those advisors who offer similar products and services to yours and serve the same market as you do.

The second category consists of advisors who run a business similar to yours but may not have all of the same features that you have. Do not eliminate these advisors just because you think you’re ahead of the game.

“Maybe those competitors are growing a specific part of their business,” Distillio says. “Or maybe they’re starting to move forward and attracting the niche market that you’re already working with.”

Your third category encompasses the indirect competitors that are not advisors. This type of competition is any factor that could take your client’s money away from an opportunity to invest with you. It can take the form of a client’s debt, a real estate transaction or a client’s plans to renovate their home.

Another indirect yet strong competitor is the mainstream media, Distillio says. Think of those television shows that provide advice to the general public on choosing equities, or that convince every homeowner that he or she can undergo a home makeover.

2. Learn the factors that set competitors apart
When thinking of direct competitors, try to understand their strengths and weaknesses as well as what these advisors’ clients think about them.

You should also work to obtain information on how these advisors run their businesses. What does their marketing look like? Who is their target market and is it growing? What centres of influence work closely with these advisors?

Finally, determine if they are short-term or long-term competition. In other words, are they growing their business or do they plan on selling it in the near future?

3. Know how to apply this data
“You use that information,” Distillio says, “to re-organize the business to attract and service clients in your market.”

This step requires taking a critical look at your business. If you’ve learned that a competitor offers a feature that clients are raving about, ask yourself if you have the resources to provide a similar service. It is also important to understand whether it would be natural for you to even try to compete with someone else in this area.

For example, you’ve learned that some prospects are impressed with a competitor’s willingness to make house calls. However, commuting between homes seems inefficient to you. If making house calls is going to frustrate you (and that will probably become obvious to clients and prospects), you’re best continuing your appointments at your office. Why not put some extra effort into ensuring a comfortable environment for your clients who have made the trip?

This is the first instalment in a two-part series on finding out about your competition.

Next: How to get the information you need.