Welcome to Hidden Value, the column where Joe Elsasser, CFP, addresses common financial planning issues with insights advisors and their clients may not have considered.
One of the easiest ways to make your financial planning practice stand out in this crowded industry is by niching your practice. In fact, the most successful advisors around the country have already decided to niche their practices — with good reason. In a recent survey by TD Ameritrade, niched advisor practices showed 35% higher client growth, 25% higher revenue growth and 17% higher profit margins than non-niched financial planning practices.
The advisors who will thrive in this increasingly competitive field are the ones who choose a niche and actively focus their practices across the entire client experience. The advisors who start with a core set of services they deliver, that are carefully chosen to be the specific services their clients need, all the way through marketing those services and delivering them predictably to every client who walks through the doors with the set of needs that you have equipped yourself to solve will see enormous success.
How to Get Started
The best way to define your niche is by thinking about the demographics of your current clients. Identify who your favorite clients are. What are their behavior patterns, motivations and goals? The more detailed you can be, the better. What kind of client do you want to be better at serving than anybody else in your market?
Steps for Niching Your Practice
- Choose your market.
- Tailor your services to be the best for that particular market.
- Choose the tools that best address the specific issues your clients face.
- Market to your target audience.
- Commit to finding referral partners and referring clients outside of your niche to those partners.
Why Niche Your Practice?
You can think of the evolution of niche practices as a game of musical chairs. The advisors who choose a niche and tailor their practices to serve their niche are claiming a chair. Ultimately, fewer and fewer chairs will be available, making it much more difficult for the generalist advisor to make an impact.