Nearly all successful entrepreneurs and CEOs have made it big by focusing on a distinct segment of the market. Research shows that 42% of startups fail because they ignored focusing on a desirable niche. Clearly, the popular catchphrase ‘go big or go home’ is not a strategy you want to apply to your business. The same goes for your financial advisory practice.
In the last decade, the financial advisory industry has become completely oversaturated with competitors making it very difficult for advisors to stand out from the crowd. Rather than casting the net too wide and catering to all clients, advisors that are segmenting are finding more success by giving themselves a clear competitive differentiation, increasing profits and delivering high-quality offerings to clients. In fact, according to CEG Worldwide research, 70% of top financial advisors who earn $1 million or more annually focus on a particular niche proving the success of this business approach.
To help position your advisory business for success, I have compiled six articles that discuss how advisors can select the right niche, how to build and implement a segmented marketing strategy and examples of different company niches to inspire you. My hope is by reading these articles, you will be able to pivot your practice in the direction of a more focused business model that can survive this highly-competitive marketplace with shrinking profit margins.
In this podcast conversation, Hilary Hendershott shares with Michael Kitces how her advisory business scaled when she owned her niche. What is special about Hilary though, is she is not just embracing a niche that serving, but rather her specialization is focused around what she is most passionate about - empowering women. Through this segmentation, she has developed not only just traditional advisory offerings but a successful coaching program and podcast that empowers women to take control of their finances.
By Benjamin Yin
Over 200,000 financial advisors in the United States are attempting to win the same group of clients, making it extremely difficult to stand out from the crowd. With this amount of competition, advisors cannot afford to be generalists anymore. In this piece, Benjamin Yin discusses how carving out your niche will differentiate you from the others, give your offerings more focus and provides highly-quality value to clients. Owning a niche is one of your biggest competitive advantages that will boost referrals, increase profits and help you survive this oversaturated market.
High-net-worth (HNWI) and ultra-high-net-worth (UHNW) individuals represent 1% of the world’s population and are a highly attractive group that many advisors want to attract. Rumble Romagnoli shows readers in this read, that traditional marketing tactics to attract the attention of this lucrative population will not work. Rather, advisors focusing on this niche segmentation need to first fully understand the values and behaviours of this group and use this information to craft a highly-customized marketing strategy. If you want to focus on HNW and UHNW populations, I highly recommend getting to know some of their behavioural characteristics by reading this marketing guide.
Advisor Darren Coleman who after five short years of deciding to focus on a niche grew his assets under management by 5x in size. Darren discusses how by focusing on a distinct segment he was able to develop a competitive differentiation that is clear which led to better targetting and higher-quality prospects. To begin to figure out what niche to target, he recommends you look at your current client list and see if any of them stick out that you really enjoy working with. From there, you can figure out the identifiers that make these clients different from the rest by doing detailed market research and then build a customized strategy. Read on to find out more.
The wealth and income of women around the world continues to grow rapidly, representing a huge opportunity for the wealth management industry. However, many women feel that the industry is male-orientated and does not take female life experiences into consideration. Why then do advisors view gender segmentation as being of little importance? In this report, find out exactly why it is necessary for advisors who may want to focus on the female population to take a highly customized approach. This report also serves as a case study for all advisors as like segment of women, focusing on a niche market requires you understand this population inside and out so you can craft a strategy that truly serves their needs.
If done effectively, embracing a niche is proven to help advisors answer the question of how to deal with commoditization and differentiation within the investment industry. However, despite efforts by advisors to provide niche services over the past few years, there are still markets that remain untapped. Find out how in this increasingly specialist marketplace which underserved market present the biggest opportunities for business growth in this article.