When starting your career as a financial advisor, your natural tendency is to take on any client who is willing to work with you. But if you eventually work in a niche, you will be able to use your time and skills more effectively to serve a unique set of clients while differentiating yourself in a competitive market.
Also, by serving a narrow market, you can be more selective in choosing clients and establish credibility with a specific group of clients.
Although finding a niche is important, becoming established in an area of specialization can take years so this shouldn’t be your primary goal when you first set out in the advisory business.
To find your niche, start by looking at the circle of relationships you have had in the past, such as your former classmates or colleagues, that is, people you can relate to.
Or you can look at your circle of friends, or at areas in which you have been an influencer or have some form of connection. For example, members of a sports team, club or volunteer organization.
Once you’ve selected a niche, strive to learn everything about it. You must understand the lifestyle and the challenges faced by those in your niche and know how you’re going to help them. Your interests must be aligned with their interests.
You should also acquire in-depth knowledge and stay abreast of developments in your chosen niche. You must be able to carry on a sensible conversation with your clients about what they do. For example, if you develop a niche in the farming community, you must be able to talk about agriculture and tractors. Clients are more comfortable working with advisors who understand their business.
One caveat to selecting a niche is to make sure it is not too narrow and do not have sufficient room to grow.
Typically, many young advisors view working in a niche as potentially limiting as they believe they will be limiting the number of clients they have access to.
But although you may have access to a larger pool of clients in the broader market, you will not necessarily attract more clients, especially considering the competitive nature of the financial advisory industry. In fact, you stand a greater chance of attracting clients in a niche than in the broader market. Alternatively, you risk losing the opportunity to attract clients to those advisors who have a niche.
Once you’ve identified your niche create a personal brand and market yourself. Try to find ways to stand out in the crowd. Promote your business using marketing methods that are effective in your niche and based on your knowledge of the clients’ unique attributes, likes and dislikes.
You should treat everyone in your niche like your No. 1 client, and strive to over-service them. Providing this level of service can lead to an increasing number of referrals.
You can use several methods to expand your influence within your selected niche, such as: make centres of influence aware of your niche; speak at community events; write articles for local newspapers; join associations with which your niche is associated; and sit on relevant boards and committees.