Narrow the focus on your advisor business.
Robo-advice, fee transparency and the growing volume of online information are all working to disrupt the traditional client-advisor relationship. It’s a competitive landscape for advisors, but thinking differently and creatively about client relationships can help your business evolve and grow.
Research from Absolute Engagement1 shows that 81 per cent of clients are loyal to their advisor, and 80 per cent of clients are satisfied with their advisor. At first glance these statistics seem positive, but what they really mean is that most people with advisors have no reason to leave for someone new. They also mean that most advisors are part of a very large pack. To have the competitive edge, clients need to feel extremely satisfied with the advisor service they receive. And this high level of satisfaction can pay off in spades in the form of referrals to friends and family.
Creating a niche practice is a way to stand above the crowd by being unique. A focused business approach gives your clients meaningful service that addresses their main issues, and also allows you to differentiate your offering from the competitive advisor pool. Traditionally, advisors have focused on the financial aspect of their clients’ lives. But what’s truly important to your clients are their challenges, concerns, dreams, wishes and values. Knowing who your clients are and what matters to them will help you determine what actions, services and products are right for them and for your business.
It is very difficult to be all things to everyone – your practice won’t be meaningful to your clients if it’s designed for every type of person. Business owners have different challenges and needs than retirees do. Divorced women in transition have different needs from dentists. Instead of trying to appeal to the broadest market possible, develop a niche segment and become an expert in dealing with clients within that segment. Decide whom you want as clients and design a practice that is specific to what they value and need.
Finding out what your niche is
Your ideal niche segment should reflect the type of client you enjoy working with the most and the subject matter you’re most passionate about.
When you consider the clients you get the most satisfaction from working with, what are the commonalities? It could be geography, occupation, a particular industry, a life stage, or their attitudes and values.
Here are some examples of niche client segments and what clients in these segments are interested in.
How serving a niche market leads to business success
Becoming an expert in a niche market segment gives you a competitive advantage over other advisors because of the expertise and advice you can offer. And knowing the needs and values of your client segment lets you focus on delivering an exceptional client experience. Clients feel confident knowing their advisor “gets” what they want and anticipates their needs. Clients who feel more invested in the relationship are able to readily articulate the value you provide and share it with their network.
When clients are this happy with their advisor, they talk about their advisor to friends, colleagues and family. They become advocates for their advisor.
According to research by the Oechsli Institute, 86 per cent of affluent clients discovered their financial advisor through an introduction, referral or by word-of-mouth.2
Specializing in a specific niche segment benefits both you and your clients. Marketing efforts will be more effective, especially through word-of-mouth contacts, and clients will benefit from your ability to address their particular financial interests and challenges.