investing advisor niche

A niche in time

Independent financial advisors are feeling the pressure to redefine what they do for clients and to find a specialty in marketing their services. In his book “Practice Made More Perfect, Mark Tibergien calls it a “Strategic Differentiator.” It can be defined as a specific area of expertise, a targeted clientele, a specialized investment strategy or a unique delivery system that sets a firm apart from others in the same business or one which offers similar services.

Offering general financial planning or highlighting the fact that you are a fiduciary are not diversifiers. Even the addition of numerous certifications is becoming the norm rather than the exception. By last count, there are 71,984 advisors with a CFP designation and although that is only 20 percent of all financial advisors, more than 70 percent of all team practices have at least one CFP®. The CFP® is only one of the many credentials advisors can earn so having a CFP®, although a signifier of financial planning knowledge and competence, is not enough on its own to now be classified as a game changing differentiator.

So what is a viable niche? A niche in financial services can be classified in four ways. This is by no means an exhaustive list but is a starting point for those considering the need for a niche in their practices. The first type of niche can be categorized under the heading specific area of expertise. A CPA with extensive knowledge of personal tax strategies who is also an advisor would fall into this category. Yet another example includes an advisor with specialized knowledge of federal government pensions or a specific company’s 401K plans. The examples are as far reaching as there are areas which need special training and knowledge.

The second niche category involves targeting a specific demographic of the population. Numerous advisors have built businesses serving, for example, teachers, entrepreneurs, divorcees, or clients with particular common interests such as bass fishing or mountain climbing. Each of these targeted clientele require specialized knowledge of their issues and problems and advisors serving these groups need solutions for helping their clientele reach their individual financial goals.

Having a specialized investment strategy is the third category of niche. Advisors with in-depth knowledge and skill in real estate investments would fall under this category. Other examples include a unique system for stock option trading or an expertise in investing in oil and gas companies and their analysis. With the trend towards index and passive investing a specialty in an alternative way of investing could create a profitable niche.

The final category is a unique delivery system. Examples of this would be offering educational workshops for a fee such as money advice programs for newly married couples or providing interactive online financial planning. Robo investing falls into this category. Clients wanting a non-traditional relationship with their advisors look for ease of access to information and advice.

It may now be evident that although there are a variety of niche types, there are also overlapping potential benefits among them. Employing a specialized investment strategy requires a specific area of expertise which may also target a particular clientele and be provided using a unique delivery system. The emphasis remains on the need to differentiate your firm from all of your competitors. Discovering and creating a niche for your practice will cut a path through the crowd to attract your ideal clients who are looking for exactly what you have to offer. Narrowing the focus of your practice will deliver more prospects and lessen attrition because you are now meeting the specific needs of a well-defined group of clients.
A note of importance: A firm which tries to develop multiple niche areas does a disservice to all of its clients. The lack of specialized knowledge or the disbursing of shallow or general knowledge can lead to clients walking away with inaccurate and sometimes harmful information. Choosing a niche requires a deliberate process and intense research. The “niche de jour” or an impulsive choice can truly create problems for clients and advisors.

For more information on creating a niche, join us for an introductory webinar Tuesday June 16th at 2:05 PM EDT titled “Five Mistakes to Avoid When Creating a Financial Advisory Niche!” To register click here go to our Facebook event’s page or send us an email to: