If you’re establishing or growing your practice as a financial advisor, you’ve likely heard that gearing your services toward a specific client base can accelerate your growth. Indeed, niches can offer several significant benefits, like helping you build connections and trust with clients.
Niches for financial advisors are virtually unlimited. They can include clients in certain professions or those with certain hobbies or specific financial problems, among countless other categories. For example, target clients may be high-income orthodontists, avid wine connoisseurs or single mothers making a career change.
It’s vital to understand the advantages of financial advisor niches, how to find an ideal niche for you and how to leverage your niche.
What Are Niches for Financial Advisors?
When you establish a niche, you focus on serving a specific type of client with unique needs instead of the general population. Financial advisors often have broad areas of focus, such as retirement planning, tax planning, estate planning or wealth management.
But when you have a niche, you target a much smaller population with specific needs. By narrowing the definition of your ideal client, you’re “niching down” to a smaller group to provide specialized services.
Financial advisor niches may be clients in the same industry, such as car dealers, or those who share the same interests, such as mountain bikers. As a result of their profession or lifestyles, these potential clients have similar financial challenges, values and goals, and they would need similar financial planning solutions.
Benefits of Niches
Having a focus for your firm offers many advantages. First, it can help you stand out among other financial advisors as a specialist. Then, as a leader among your audience, you build more trust with clients.
Many people want to know that their financial advisor relates to them and truly understands their situation. With niches for financial advisors, you can get more specific about the nuances of their problems. The benefit to the client is that they have more confidence that you truly understand their situation and what they want to accomplish.
When you serve a specific demographic, you can offer potential ideas and solutions based on your experience serving your other clients in similar situations. You can build greater connectivity when a client sees that you serve people who share their values. As you build trust and credibility with prospective clients, they will be more likely to become your official client, and ideally for the long term.
The key to creating a successful niche is to deeply understand your ideal clients’ situations, challenges and goals.
How to Find a Niche
You might be inclined to pick financial advisor niches based on what might generate the most revenue, such as clients with high net worth. But you can build a great business serving any niche of clients, and targeting a category like high net worth could be too competitive. A successful niche will depend in large part on who you most enjoy serving and who has problems and challenges that you feel excited to help solve.
To select a niche, start by reflecting on your own interests, hobbies and professional history. If you have passion for a particular topic, you are much more likely to be engaging – and remain engaging – with clients. Take advantage of your expertise in any area, including from any experience you may have had in other professions. For example, if you were previously an engineer, you may want to serve engineers because you understand their career path and planning situations.
You could also focus on clients of specific ages, genders or other demographics. For example, you may want to serve Black business owners or widows. Generally, the more narrow your niche, the more your business can stand out as a specialist. So, you can niche down to “Black business owners in the tech space” or “widows who have not yet reached retirement.”
As you develop your focus, keep in mind that you don’t need to limit yourself to one type of client. You can experiment with serving two or three niches at once and see which ones are a good fit. You don’t need to feel anchored to one particular niche. Instead, keep an open mind to adding new types of clients to your business as you encounter people you enjoy working with.
Another way to find your niche is to look at your own clients. Categorize them by known interests, demographics, profession, etc. As you examine the overlap, you’ll likely see a niche start to emerge. Keep in mind that client referrals are generally the most popular way financial advisors bring in new clients, so you’ll naturally grow into that particular niche.
How to Leverage a Niche
You can use a niche to your advantage in several ways. First, you can build an online community around your area of interest through social media. Or you might host an event that allows your clients with shared interests to socialize and make connections with each other. In this way, you build trust, and your clients will be more likely to tell others about your business.
You can also attend different events where your key demographic is convening, such as professional, social or charity events. If you’re targeting thoracic surgeons, then attend their industry conferences and sponsor a booth at their events. Interact and engage with the attendees. The more you learn about a specific demographic, the more you can improve the quality of your services to that group.
You can even seek out professional designations that apply to your specific niche, like becoming a Chartered Advisor in Philanthropy® (CAP®) or a Retirement Income Certified Professional® (RICP®).
Example of a Niche for Financial Advisors
To illustrate how niches for financial advisors work, let’s explore a hypothetical example. Say you are just getting your financial advisor business started after you’ve made a transition from a career as a real estate agent. In your personal life, you are raising three children with your ex-spouse, who shares custody.
Initially, you may want to focus your business on retirement planning or estate planning services. However, you stand out by adjusting to what makes you unique.
You could begin by catering to real estate agents, who may have unique financial needs such as filing income taxes as self-employed workers. Also, real estate agents often need a financial plan that can help them weather the housing market’s ups and downs. Take advantage of your expertise and apply it to your career as a financial advisor.
Meanwhile, you can experiment with other financial advisor niches at the same time. You can leverage the experiences in your personal life of navigating both a career change and a divorce while raising a family. So, you may want to also target niches like “estate planning for single parents” or “wealth planning after a career change.”
Experiment with two or three niches at a time. As you see how they work for you, you can adjust.
The Bottom Line
Establishing a niche can help you build credibility and foster better connections with clients. Remember, once you choose a niche, you don’t have to feel locked into it. You can always change your key client base according to your interests and passions or take on opportunities outside of your specialty.
If you are just starting out as a financial advisor, it can be helpful to connect with a mentor or enroll in a coaching program. To learn more about building a niche, sign up for Carson Coaching’s Emerging Advisor Growth Accelerator program, an intensive 10-week group coaching program, which I lead alongside a fellow Executive Business Coach.
You can also work directly with a coach who will help you establish a clear path forward for your firm.