Should you develop a new marketing niche?

Posted by Mike Lover, Vice President, Key Accounts, E*TRADE Advisor Services on August 6, 2018

When job hunting, sending resumes in a scattershot fashion is considered an ineffective strategy because it lacks focus. “Spray and pray” isn’t any more desirable for financial advisors. Taking a targeted, niche approach can be much more useful for landing high-value clients. That’s because niche advisors build specialized expertise in working with specific types of clients and target their marketing efforts to them. Unfortunately, many advisors miss out on this opportunity and choose to focus on a broad target market.

According to research conducted by CEG Worldwide, seven out of 10 top financial advisors earning at least $1 million dollars per year are considered niche advisors.1

Wait, but won’t utilizing a niche strategy reduce the overall size of my prospect universe? It might, but it can also improve your bottom line. This is because many niche clients want to work with an advisor who specializes in helping them meet the unique financial challenges they face.

Top advisors focus on niches

Becoming a niche advisor could enable you to run your firm more efficiently by streamlining your services and developing a product and service mix tailored to your niche audience. This, in turn, could help you better manage your revenue while generating higher profits.

Clearly, there are potential benefits to taking a niche approach when operating and marketing your firm. But how exactly do you become a niche advisor and connect with your niche market?

Here are four common ways advisors are carving out niches:

  1. Occupations: Many advisors create profitable niches by focusing on professionals in certain occupations. For example, a niche advisor may choose to focus their practice on  physicians, dentists, attorneys, CEOs, self-employed professionals, government employees, or airline pilots. Since these segments may have higher incomes than other professions, they also may have more complex financial situations that require a specific skillset from advisors (e.g., trust and estate planning, weath management)
  2. Demographics: Some financial advisors choose demographic niches, like female investors, or former members of the military. Financial advisors can also focus their niche on causes that are important to their clients, like socially responsible investing.
  3. Employers and industries: Another way to create a niche is to focus on employees who work for a certain (usually large) employer or in a certain industry. For example, suppose there’s a large health care system in your community with thousands of employees. You could become knowledgeable in the employer’s health care plans, retirement packages, and other employee benefits. Then you could market yourself as the preferred independent financial advisor for employees of that health care system. Or if, for example, your community is home to several large technology companies, you could focus on providing focused service to companies in the tech sector.
  4. Life changes: Another common niche carved out by some advisors is individuals who are going through a significant life change. Common examples are those who are divorced or widowed; recent retirees; sellers of closely held businesses; and recipients of large inheritances. Each of these usually represents a major life transition that can bring about significant financial change and upheaval. Becoming the go-to advisor that helps clients easily navigate these major life changes can help set you apart from generalist advisors who don’t have this specialized knowledge and experience.

Connecting with your niche

Once you choose a niche, the next step is to devise a strategy for marketing your firm to these prospects to let them know about your specialized expertise. Start by acquiring and/or building a targeted list of prospects within your niche. Then you can connect with them via a range of marketing vehicles, including print and electronic newsletters, direct mail, and ads in niche publications and websites.

Another idea is to write articles for these publications that demonstrate your expertise in your niche. For example, if your niche is physicians, you could write an article about how young doctors can pay off large student loan balances, or how established doctors can better manage their personal cash flow. Or if your niche is employees of a large corporation, you could write articles for the company newsletter or website about how to plan for retirement.

Also, consider joining professional organizations within your niche and attend their events regularly to get to know the members. Almost every industry has an affiliated trade group or association, so find out the most popular one for your niche and become an active member. Consider sponsoring some of the events as well—for example, sponsor a hole at the association’s annual golf tournament. This can be a great way to get your name in front of dozens of qualified prospects.

Similarly, social or community groups offer a good chance of meeting niche prospects. For example, if your niche is women who are recently divorced or widowed, you could join local organizations that support them. There’s a good chance they could use your guidance as they adjust to their new financial situation; whether it be buying a home, saving for retirement, or paying for their children’s education. You could also hold educational meetings or conduct a free seminar for these women, further demonstrating your expertise in this niche.

As you develop your expertise in your niche, you can host niche-specific educational seminars or workshops. You can develop an informative presentation on a niche topic, such as socially responsible investing, and then advertise the seminar in your local media and develop a mailer to send to your target audience.

With niches, less equals more

The idea of becoming a niche advisor might sound counterintuitive at first. Why would you want to shrink your universe of prospects?

However, this can become a case where less equals more. Narrowing your operational focus and marketing efforts to prospects with specific financial needs you’re uniquely qualified to help them with can be the key to growing your firm exponentially.

1. CEG Worldwide, Pick Your Niche: Focus on the Right Investors For You, 2017

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