Journal of Financial Planning: December 2024
Kristine McManus is chief advisor growth officer at Commonwealth Financial Network, member FINRA/SIPC.
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As a next-gen adviser looking to build a practice and grow your client base, you have a wealth of options. And while that’s very appealing, it also means you have decisions to make, such as who you want to work with. While many advisers are willing to take on any client when starting out, that comes with a time and opportunity cost. After all, you only have so many hours in a day. So, who do you want to spend it with?
To attract prospects, some advisers take a wide-net approach to marketing. They offer their services to the largest number of people in the hope that they will attract a few ideal clients along the way. (Most veteran advisers likely took this approach at some point in their careers.) Some of these firms tout that they offer “comprehensive wealth management to individuals, families, and business owners.” This way, no one gets left out! And, like most marketing strategies, if you do something long enough and consistently enough, you’ll probably be successful now and again.
The problem is that when you market to everyone, you’re actually marketing to no one. People seldom take the time to read a generic message that doesn’t speak to something they care about. The wide-net approach can be inefficient, time-consuming, and costly. So, it’s not surprising that a 2023 Kitces.com study reported that advisers were largely dissatisfied with the results of their marketing efforts in terms of both generating new leads and the quality of the prospects they were able to attract (Lurtz 2023).
But this doesn’t have to be your approach. Instead, you can focus your marketing message, efforts, and time on a niche market and benefit across the board. Niche advisers are specialists with expertise in solving particular problems for a very select group of people with similar needs.
The Kitces research found:
- Advisers with niches had higher satisfaction levels in terms of the number of leads, the quality of leads, and the effectiveness of their lead generation strategy compared to non-niche firms.
- Firms with a client niche were successful in finding clients with higher income, net worth, and investable assets.
- In addition to having higher satisfaction levels, niche firms reported an average client growth rate of 58 percent, compared to non-niche firms with only 26 percent! That’s more than double the growth rate.
With that data as the background, let’s discuss how you can develop your niche.
- Identify a niche. Advisers need to be able to locate the people in their niche, effectively communicate with them, and truly understand their needs. We know advisers who have niches in the biotech and pharmaceutical industries, telephone company employees, carpenter and plumbers’ unions, educators, and high-tech corporate executives. We also have advisers who focus on ultra-high-net-worth clients, farmers, and business owners.
- Ensure that the niche will be profitable. It may sound obvious, but your niche needs to focus on people who can benefit from your services and are able to afford your fees. A little research on Google, Glassdoor, or Indeed can give you salary information for firms in your area, and you can find demographic data from a variety of firms that could help you get started.
- Leverage your natural strengths to help your niche. Most advisers develop a niche because they have a natural interest or expertise in the people or subject. One adviser who had been a social worker parlayed her strengths into working with nonprofits and foundations because she still wanted to support worthy organizations.
Specializing in a niche gives you a way to be strategic about the clients you wish to serve, and it is especially useful if you adopt a virtual mindset or want to take on remote clients. If you have expertise in something your niche really needs, people can find you and work with you—from anywhere.
Reference
Lurtz, Meghaan. 2023, July 25. “How Niches Improve Advisor Marketing Satisfaction and Efficiency.” Nerd’s Eye View [blog]. www.kitces.com/blog/niches-improve-advisor-marketing/.