While there isn’t quite the degree of mud-slinging among financial services firms as there is among politicians during an election year, business executives do sometimes feel the urge to tear down the competition. And some of them have been known to act on those urges.
It might feel gratifying to publicly air the weaknesses of your opponent, but here are some tips to consider before you do.
1. Investors or clients may view harsh criticism – warranted or not – as petty, and react by taking their money elsewhere, in the same way voters often gravitate away from political candidates consumed by their opponents’ dirty laundry. It’s almost always more effective to stand on your own merits and discuss your strengths rather than focus on the flaws of your competition.
2. Hurling criticisms at your competition opens you up to the same tactic. If you point out the flaws of your enemies, be prepared for them to do the same. Unless you or your organisation is doing especially well in terms of moral standing and historical faux pas, being the first to throw the stone is rarely a good idea. Many players in many industries have been accused of transgressions of various kinds, for example, but the fossil fuels industry stand apart in this sense. And instead of addressing the legitimate criticisms, they went on to do a lot of greenwashing and a number of PR agencies have gladly helped them.
3. While delivering direct and open criticism can be damaging, that doesn’t mean you shouldn’t examine and address the vulnerabilities of your competition. Itemize your competitors’ weaknesses and strengths and compare them to your own, extracting from that the brilliance of your differentiators. If your competitor, for instance, has launched an alternative mutual fund run by managers completely unfamiliar with the 40 Act space, broadcast the superior expertise and experience behind your new alt fund. Or, if your innovative financial technology is the first of its kind to fully penetrate a new market, focus on the “void in the marketplace” left by your competition that your company is able to fill.
4. If you do decide to openly criticize a competitor, frame it in the context of how your grievance benefits clients. It’s not uncommon nowadays, for example, for wirehouses to lose their best soldiers to firms for independent financial advisors. If you’re one of those soldiers, it might be beneficial to acknowledge that growing attitude or trend in the context of how leaving the comfort of your wirehouse brings more transparency and higher-quality service to your clients. In the financial world, it’s generally considered a low blow to wail on a former employer. In the case of wirehouses, however, it’s become more common. But the message should be delivered in a thoughtful, articulate way that carefully spells out the differences between the two firms, and why your departure should matter to clients.