- Reasons for Finding and Developing Specific Niches
- Specific Niches: Not a One Size Fits All
- Niche Becoming a Necessity
- Advisors who Found their Specific Niches
- Specializing Driven by Marketing Challenges
Reasons for Finding and Developing Specific Niches
Finding and developing specific niches is a wise move for any advisor, who wants to establish himself and build a reputation as a highly qualified specialist. In order to achieve this, financial advisors should identify a niche, making it as specific as possible, and thus creating their unique offer to prospects.
Many advisors became aware of the importance of finding a niche, by talking to their clients and finding solutions for their particular problems.
Advisors recognize that once they have identified and solved problems faced by a specific set of people they are better able to establish solid relations with their clients.
Specific Niches: Not a One Size Fits All
On the other hand, some advisors think that trying to concentrate on a narrow slice of potential clients is not an efficient way of creating or strengthening financial planning business.
Those who are against the segmentation are not enthused about looking for a particular niche because they consider that they might lose a number of prospects while concentrating on a certain category.
Niche Becoming a Necessity
A research on the niche financial planning supports niche planning over the more common generalist model, more advisors emerging as examples of how and why wealth management is evolving into a universe of specialists.
“Niche is a necessity because the future of the advice business is a niche business,” said Michael Kitces, head of planning strategy at Buckingham Strategic Partners. “Look at virtually any profession and you’ll see that the generalists struggle, while the specialists are the ones with the most successful businesses.”
A report from Inside Information and Dialektic Consulting, entitled “New Frontiers in Wealth Management,” highlights niche planning as one of four main drivers pushing the wealth management industry to further success.
In an increasingly crowded and online marketplace, where ‘being local’ is no longer a differentiator, advisors who pick an exclusive target clientele and build the offering around needs, rather than asset level, have a distinct advantage.
By focusing in this way, they can offer a service that truly sets them apart from the client perspective, adds deep yet scalable value, and enables them to defend and increase fees.
Advisors who Found their Specific Niches
Advisors who found their specific niche and work with their particular clientele advise other planners to look for a group of clients to target. They suggest not to overgeneralize when creating a niche. Based on their experience, they found that even certain categories of clients, viewed primarily as a niche, could be overly general.
Thus, they recommend identifying a niche and then proceeding to narrow it down as much as possible. As they see it, potential niches are everywhere you look and the more specialized they are, the better the service the advisor will be able to provide.
For example, the Environmental Social Government (ESG) market having attracted interest from a large number of advisors, could be used to create a business niche if it is narrowed down even further.
A good niche reveals that the problems encountered are unique to particular clients. As a result, they are not addressed effectively as a whole by mainline financial planners. Specialization allows an advisor to be a better fiduciary, and for the client to get much-needed advice that they would not probably be able to get otherwise.
Also, a key element in developing a strong niche should be drawing hard lines for when the business starts drifting beyond the specialized focus. If something is outside of the advisors’ expertise and experience, they simply won’t address it.
Specializing Driven by Marketing Challenges
Specializing also comes with business development, marketing challenges and opportunities. It allows advisors to narrow their focus and makes a lot of things clearer.
In addition to the importance of developing a specific niche, the research in the report from Inside Information and Dialektic Consulting New Frontiers in Wealth Management, addresses achieving authenticity through pro-personal marketing, bringing in professional leadership and rebuilding your technology from the ground up.
The future of the advice business targeted at building lasting and trustworthy relationships with clients is that of finding and developing specific niches for each advisor making them a specialist, not a generalist.
