Almost 60 years ago, an article appeared in the Harvard Business Review (HBR) that posed the most important question for any business – and a question that is essential for financial advisors to address today.

The article, “Marketing Myopia” by Harvard Business School economist and professor Theodore Levitt, dug into the reasons that once dominant industries such as railways, movie theatres and corner grocery stores had fallen on hard times.

“Marketing Myopia,” published in 1960, became one of the most reprinted articles ever published by HBR. In the article, Levitt raised the fundamental question that advisors need to ask themselves today: “What business are you really in?”

When Levitt looked at historically successful industries that had experienced sharp decline, he concluded that the key problem was an internal, operational focus rather than an external, customer-driven mindset.

Companies in failed industries concentrated on achieving incremental improvement in the things they were already doing. So, in the case of railways, that meant reducing delays due to mechanical malfunction, making ticket-taking more efficient or generating cost savings by consolidating the companies that manufactured locomotives.

Although those changes made train travel more pleasant for customers, the key impetus for these initiatives was to improve profitability while continuing to operate within the industry’s comfort zone. In operating within an overall “business as usual” mindset, these changes failed to address the broader issue of what customers wanted.

“The railroads did not stop growing because the need for passenger and freight transportation declined,”Levitt wrote. “The railroads allowed [competitors] to take business away from them because they assumed themselves to be in the railroad business rather than the transportation business. The reason that they defined their business incorrectly was that they were railroad-oriented rather than transportation-oriented; they were product-oriented rather than customer-oriented.”

When you look at the topics that have preoccupied advisors over the past several years, you see some parallels with railways in the early 1900s. High on the list of issues for many advisors have been things such as positioning businesses for succession planning and adjusting to a higher level of regulatory scrutiny while maintaining practice profitability.

Or consider the shift from a transaction-driven business to a fee-based model. For many advisors, this trend also has been driven by the prospect of creating more stable income streams and increasing overall profits.

Although these are important issues, they’re much more relevant to advisors than to clients.

There’s nothing wrong with advisors organizing their businesses to operate in a more profitable fashion. But when the bulk of your energy is spent on internal operational issues, you risk missing the broader issues that really matter to clients.

There are two central issues in defining the business you’re in: what you do and for whom you do it.

In previous columns, I have made the case for narrowing your client base to focus on a subset of clients that you can serve exceptionally well so that you become a safe choice and a go-to advisor.

Once you decide who you will work with, the next question is what you will do for them.

There are three broad ways to position yourself:

– Investment advisor. In the traditional positioning as an “investment advisor,” client conversations are focused on client statements, the market outlook and the outlook for interest rates.

Given those conversations, you then talk about opportunities in various asset classes and how to position portfolios and manage risk.

The best advisors expand the definition of their businesses beyond recommending investments. These advisors include behavioural coaching – helping clients avoid the trap of allowing their emotions to get too high when things are going well and too low when they’re going badly.

Research by Pennsylvania-based Vanguard Group suggests that half of the 3% in net value that advisors can add to client returns comes from behavioural coaching.

– Financial advisor. The broader positioning as a financial advisor is a role that has become more and more prevalent. As a financial advisor, you take a broader wealth-management approach that is rooted in your client’s financial plan.

Although you talk about investments, your conversation touches on all aspects of your client’s financial life, including estate planning. When you conduct annual reviews, you’ll talk about portfolio returns, but in the context of your client’s long-term objectives.

Some advisors who call themselves “financial advisors” in fact operate as investment advisors. A simple test is to look at the content of your newsletters and the articles you share with your clients. If 80% or more of the content relates to topics such as the valuation of U.S. stocks or economists’ views on bitcoin, you might call yourself a financial advisor but in truth you’re operating more as an investment advisor.

As with investment advisors, financial advisors will define their businesses more broadly or narrowly, depending on their mindset and comfort level. For example, some financial advisors define their mandate to include helping affluent clients initiate conversations about their finances with adult children. For others, this goes beyond their roles.

– Trusted advisor. The third and broadest position is “trusted advisor,” in which you talk to your clients about the issues that are most important to them, far beyond narrow financial issues.

As a trusted advisor, you help your clients talk through their “hot button” concerns – while being careful about the limit of your expertise – and point to resources that may be helpful even if they don’t relate to clients’ finances.

For many affluent clients in their 60s, the biggest worries fall into three major categories: their kids, their parents and their health. You may be more comfortable focusing on financial issues, but if you want to be viewed as a trusted advisor, you must make these concerns part of your conversations with your clients. In some cases, these topics should be the most important part.

That doesn’t mean that you’ll be an expert on Alzheimer’s disease, but it does mean that you’ll be knowledgeable about new research on this disease and be able to share resources with clients who have a parent or spouse who’s been diagnosed with Alzheimer’s. And perhaps for your next client event, you’ll invite a researcher from a local university to talk about what’s happening in this area.

Taking a broader approach to the advice you offer doesn’t mean that you’ll be an authority on how to deal with unmotivated kids in their 20s and 30s living in the basement, either. You will, however, be able to talk knowledgeably about this phenomenon and be able to share a video in which a psychologist talks about what to do in this situation.

Perhaps you’ll be able to refer clients who are grappling with children drifting through life to a counsellor in your community who can help the family work through this problem.

Much of being a trusted advisor relates to your mindset. One advisor gives clients inexpensive, upbeat books to mark key life events for them – on turning 50, 60 or 70; or when clients’ children get married, buy their first home or are expecting their first child.

Enjoying a successful retirement is another obvious hot button for clients. Advisors who define their businesses broadly will be conversant with the growing body of research on the things that lead to a happy, satisfying retirement. Those advisors also share articles, books and videos with clients on this topic.

There’s an overabundance of information about retirement. Depending on what you read, there are one, three, seven or nine keys to a happy retirement. One way you can add value is by sifting through the overwhelming volume of information to highlight what’s most relevant for your clients.

When defining the business you’re in, there’s no right or wrong answer. Although being a trusted advisor will be the high ground for many clients, you can be successful as an excellent investment advisor or an outstanding financial advisor.

The key is to be explicit in thinking through your choice of the business you’re in, then to be consistent in following through on that decision by how you structure your practice, how you communicate and what you offer your clients.

Dan Richards is CEO of Clientinsights in Toronto (www.clientinsights.ca). For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.