The end result has been a scramble among all financial services providers -- from the huge national and multinational institutions to the single, independent practitioners with one or two areas of career expertise -- to position themselves as credible, competitive providers of a much larger range of products and services. The stakes are high for all involved, since a widespread acceptance of this one-stop-shopping proposition among consumers creates the risk of a significant loss of clientele and market share among those providers who fail to position themselves favorably in this new marketplace.

For consumers, this new dynamic presents equally daunting risks and challenges, as they consider abandoning relationships with a large number of specialist sources for their financial planning, investing, insurance, borrowing, accounting and related needs. Consumers will also be making these decisions while under increasing bombardment from aggressive advertising, marketing and internet-based campaigns vying for their attention and their business.

What's causing the trend?
Among the main influences of this collective trend are the following factors:

• Consolidation, through mergers and acquisitions, of many previously separate and specialized financial service providers, from mid-sized to enormous.
• Changes in the regulatory and legislative environments allowing previously specialized entities to broaden their product lines -- such as the recent relaxing of commission rules for CPAs and last year's passage of the Gramm-Leach-Bliley Act, superceding the Glass-Steagall Act of 1933. This removal of legislative barriers to banks, insurers, accountants, asset managers and financial planners increases competition for each other's businesses.
• The explosion of e-commerce-based initiatives that similarly consolidate financial services within a virtual supermarket. This holds particular appeal for the important younger demographic, whose members are often making long-term choices of financial services providers for the first time.

The combination of these influences has provoked strong concern from many smaller specialists -- particularly individual CPAs, independent financial planners, insurance agents and other financial services providers -- about the ability to retain clients in the face of huge marketing campaigns from massive conglomerates offering one-stop-shopping under the umbrella of a familiar and trusted brand. In fact, of a recently polled audience at a Financial Planning Association (FPA) conference, the vast majority replied yes when asked if they felt threatened by extinction as a result of this new, more competitive dynamic in their markets.

Will independent firms benefit?
Despite these perceptions, there still exists a number of CPAs and independent advisers that have a much more optimistic view of their prospects in this environment. The reason that small, independent players in the industry have thrived for so long is the undeniable desire of many consumers to receive the type of personal attention and tailored solutions that are hard to duplicate within a huge, often bureaucratic financial institution.

How many consumers will be eager to trade in a long-term relationship with someone they've trusted for years -- someone who knows their children's names and has helped set up their college funds -- for the maddening maze of all too common voicemail menus found at larger, impersonal institutions? The answer is probably not too many, especially if those consumers can be offered the same, all-inclusive package of financial products and services from their local, trusted adviser.

The reality is that many professionals at small operations -- regardless of whether they specialize in insurance, tax planning, investment planning or some variation thereof -- often advise and refer clients beyond the range of their primary expertise in order to find and choose the appropriate products. Such counsel and referrals often represent added value within that relationship, with little or no remuneration for the efforts of the small business owner or professional.

The ideal scenario for such small- to mid-sized financial firms within the changing marketplace would look something like this:

• Independent firms would have the ability to offer the same, wider range of investment, lending and insurance products and services as their larger competitors; they would avoid losing clients seeking such convenience; and they would have the potential to earn incremental revenue previously lost via referrals.
• Firms would be able to do all of this with an added degree of credibility, as they would presumably be free to recommend from a range of competitive products in each category, rather than being held hostage to the "in-house" brand at a larger institution, regardless of price or performance.
• Firms would capitalize on the Internet and other digitally-based tools to remove many or all of the administrative burdens and costs typically associated with broadening product lines.

In short, independent firms would then have a best-of-both-worlds proposition to offer existing customers and potentially to attract new relationships they were previously unable to pursue. What is the best of both worlds? Firms could offer clients the same, single source for most or all of their financial needs, the independence to recommend the best products and the same personalized service and attention that many consumers value above all other considerations.

The best news is that this is not a far-fetched, futuristic scenario. Opportunities and resources are already available to independent firms, and with no extra material costs or administrative burdens. In an upcoming article, look for a recently recognized opportunity for such independent firms to instantly offer their customers a range of lending, as well as investment products -- specifically home mortgage, commercial, small business, and home equity financing, equipment leasing and other options, as well as specialized, updated content to help independent agents, advisers and practitioners become even more knowledgeable and competitive.

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