According to Investopedia a “Boutique” is a small financial firm that provides specialized services for a particular segment of a market. These companies often define their services by industry, client asset size, banking transaction type or by other factors to meet the needs of a business sector not well addressed by larger firms.[i] Keeping that in mind, is the boutique business model just a trend?
Before answering, we need to look at other vocations where boutique models have been successful. These businesses employ purposeful staffing along with unique presentation style which cater to personalized services. This approach enables the customer experience to remain consistent each time for every client.[ii] The boutique client is always the focus. The instant they walk in they become the center of attention throughout the office. Customers are always met with professionalism, warmth and attentiveness. Successful boutiques are staffed with people who have a profound commitment to personalized attention for their customers each time for every client.[iii]
The boutique service model for business is not a new concept. It is becoming more of a trend as it is embraced and revisited in today’s marketplace. For instance, an emphasis on very specific techniques for physical conditioning has given rise to the boutique fitness studio. These studios are built around one or two methods to reach fitness goals (i.e. kickboxing, spin classes, or cross-fitness training). Since consumers are more informed about health today, the physical conditioning boutique combines the customer’s desire for convenience and their need to connect with others who are deeply committed to the way they approach wellness. iii
Other examples include boutique hotels. Accommodations that cater to the individual with a unique appeal, format or culture reinvent an ordinary hotel stay into a memorable experience while still supplying a good night’s sleep.[iv]
Focusing on niche product and exercising superior customer service are the primary marks of any boutique. Another example would include public relations firms practicing the trend. These companies can offer specialized services at a fraction of the cost of their large conglomerate competitors. With more talented and experienced professionals working from their home, they can offer the same quality while reducing the overhead that adds to the bottom line.[v]
The rise in prominence of the smaller player is only a part of a wider trend sweeping the investment industry. The word “boutique” no longer solely applies to start-up firms concentrating on a couple of core products, but has become synonymous with all that is currently considered good in asset management. Firms of all sizes now describe themselves in terms of being a boutique in some way or another.iii Staff numbers, advances in technology, and dependency on automation often lead larger companies down the path of impersonal service. They allow the pursuit of technology paired with the gain in efficiency to supersede the customer experience. This becomes the primary contrast between the bigger players and their smaller/start-up counterparts in the industry.
Larger organizations are taking notice and adopting new policies. While considering this thought, we must realize that there are some large companies that have been offering this kind of support through their networks from the very beginning. The FMO or IMO (Financial Marketing Organization or Insurance Marketing Organization) offers solutions to optimize product accessibility, suitability and customization. The consumer should be aware that some are better than others. The individual or firm seeking the support of an FMO should look at the history of that company, its ethical standards and its long-term partnerships. The majority of practicing advisors are drawn into the industry out of a desire to assist others. Researching and presenting products for each customer combined with sustaining a business is challenging. Establishing trust and building a strong book of business, where clients have peace of mind, requires planning. Proper planning takes time.
An FMO or IMO with a specialized staff and strong ethics can create efficiencies that independent practices often lack. Alongside their ability and effectiveness in reducing bureaucracy, can these large firms offer specialized and personalized services? The answer can be “yes” if the business is ultimately client focused.
The Department of Labor has just passed the Fiduciary Rule. It’s implications about producer compensation, product portfolios and compliance will reshape the industry. It ensures that clients’ best interests are served and that advisors resolve any conflicts of interest when delegating financial advice.[vi] Companies, large or small, specializing in a variety of investment strategies stand to gain if they combine their knowledge, superior product and quality customer service in providing the best interest to their clients. An FMO can help a practice sort through the language of the law, highlighting the do’s and don’ts, to free up more time for advisors to provide increased attention to their clients.
Financial Independence Group, Inc. (FIG) is a great example of a long practicing boutique FMO. The company is celebrating 40 years of industry service throughout 2016. FIG prides itself on quality customer service and to connecting all calls to a live person.
FIG has always focused on education and building partnerships, to provide the strongest tools and ethical standards to their advisors. This is so that each affiliation works for the client and toward their best interests. Products and programs may be similar from company to company. How those offerings are tailored is what makes the difference in how they qualify. A comparison would be like a business person buying a suit. Tailoring the suit for the individual allows a custom fit. The FMO working with its carriers and their products, while listening to advisors concerns for their clients, help tailor products and services. That enhances customer experiences for everyone along the supply chain. This cooperation ultimately serves the clients’ best interest.
FIG’s philosophy to build long-term, successful relationships while working with financial institutions, carriers, advisors and clients to achieve the personalized goals of the consumer has set FIG apart. Over their forty years of industry service, FIG has been practicing the boutique model. They have been able to focus on personalized service and maintain technological advancements for their partners, agents and all of the customers these partnerships serve nationwide.