5 Best Niches For Financial Advisors
NOTE: If you’re a new financial advisor, make sure you check out Your First Year As A Financial Advisor, where I reveal several things every new financial advisor ought to know.
The riches are in the niches.
Ignore this advice at your own peril. Top financial advisors are finding riches every day by targeting certain niche markets. If you are an advisor who tries to please everyone, you’ll end up pleasing no one.
Think about it this way – if you were having heart trouble, would you feel more comfortable visiting a general practitioner or a cardiologist? Many years ago, clients might have had someone to handle everything from investing to planning and insurance, but those days are long gone.
You can niche down into almost any category, but I’ve tried my best to list the ones that make the most sense to me. If you think of any more, feel free to share them, especially if you’ve been successful. Here are some of the best target markets and underserved financial planning niches for financial advisors.
1. Occupation Niche
This is my personal favorite, and it also seems to be the category that meshes the best with my private clients. Some financial advisors are career-changers; they enter the financial services arena after many years in another career. Most of the time it’s a no-brainer to pursue people within the former career. After all, as a career-changer, you have two distinct advantages:
If you’re not a career-changer, you can still niche down to a particular occupational group. Here are a few questions to help you brainstorm
2. Specific Companies
Who are the largest employers in your area? When you find this out, you have a clear idea of the largest markets in your area. In Delaware, some of the largest employers are the University of Delaware, Christiana Health Care System, and Dover Air Force Base.
If I was someone who specialized in working with UD faculty and you were a generalist, I would crush you in that market. Here is how I would do it:
University of Delaware has over 3,500 employees. Even if I only converted 3% of the people there, that’s still 105 clients – nothing to sneeze at. If you’re in Atlanta, you can do the same with Coca-Cola. If you’re in Orlando, go after Disney.
Figure out the largest employers in your area and carve out your niche. You can make a name for yourself by offering to do free workshops for them and networking where their employees network. Once you get the ball rolling, you can deliver great value to your clients and get co-worker referrals.
ALSO READ: 4 LinkedIn Tips for Financial Advisors
3. Specific Products
If you are a cardiologist, you’re not going to have people coming to you for eye surgery. But that’s just fine, because you’re an expert on the heart. Whenever anyone needs something heart-related, you’re the go-to person.
This same idea applies to financial services. You can create a niche out of almost any financial or insurance product you can think of – annuities, life insurance, long-term care, mutual funds, you name it! If you can marry your name to a particular financial product, you will have a tremendous position in the marketplace, which allows you to deepen the public’s perception of you as an authority on that product. Once you do that, doors will start opening for you.
4. Life Transitions
Major life transitions often require financial advice. Financial advisors stand to benefit from focusing on clients getting married, divorced, widowed, having a child, and many other life events.
I’ve seen several advisors become very successful this way, especially within the divorce niche. Divorces can get messy, and they bring a lot of distress into peoples’ lives. If you can be the person with tons of resources to make the process as smooth as possible, you will be a godsend to your clients. Your number-one goal should be to secure a healthy financial outcome for your client, but you can also provide books and other literature to help find peace in an otherwise stressful situation.
Due to the nature of divorce, you will likely know about every bank account, brokerage account, insurance policy, and piece of real estate. The natural choice for the client is to move assets under your management post-divorce.
5. "Money In Motion"
Financial advisors stand to benefit whenever there is “money in motion”. This could be retirement, inheritance, changing jobs, or selling a business. In The Ultimate Financial Advisor’s Guide to Getting More Clients, I spell out exactly how to find business owners who’ve just sold their businesses. This has allowed several advisors to find people right after this majority liquidity event.
It has never been easier to find money in motion. I can literally hop on the internet and skim a dozen industry newsletters in an hour. I can find names of people who are getting recognized in their field and send “congratulations” letters their way. I can hop on LinkedIn and find out who is changing jobs and/or getting ready to retire. I can also canvass real estate records for sales within the last week or so. Most states have a statewide database that you can access from your home computer. You can easily generate a few extra leads each week, but one “money in motion” client is generally well worth the effort.
This definitely isn’t a comprehensive list of niche markets for financial advisors, but it should be enough to get the juices flowing. Have you had any success with a particular niche or target market? Reach out to me and share your story.
BONUS: 7 Reasons Why Financial Advisors Need a Niche
“Cast a wide net – the more people you prospect, the more business you’ll get.”
This oft-repeated advice has circulated among financial advisors for years. Advisors fear that if they pick a particular target market they won’t get as many clients. Their fears keep them from committing to a specific target market and getting more business.
According to CEG Worldwide research, 70% of top financial advisors (those earning $1M or more annually) focus on a particular niche.
Why does focusing on a target market improve an advisor’s chances of success? Here are some reasons:
1. You'll Actually Get More Clients.
At first glance, casting a wider net to get more business seems like a good idea. You think that if you just double the number of people you speak to, you will double your income. While that may be true, you will also be working twice as much. Is that really the goal?
Choosing a particular niche allows you to convert a higher percentage of the people you prospect, because you will have a stronger connection with them. If your prospect is a doctor and has to choose between a generalist (who works with everybody) and you (who only works with doctors), it’s an easy choice.
Having a clear focus on a certain target market will ensure that once you get in front of people in your niche, the fit will be so obviously perfect that the likelihood of converting is much higher. The whole point of having a niche is to be so clearly differentiated in the marketplace that working with you is the only right decision.
2. You'll Work Smarter, Not Harder.
When you focus your business on a particular niche, you soon discover that people within your chosen group are very similar. Since people in a particular niche share the same hopes, fears, and financial concerns, you will soon know every objection, problem, and concern that your target prospects have. Eventually you can design systems, including prepackaged solutions, to help deliver your services more efficiently, further increasing your income.
One of my consulting clients was having great difficulty in finding the time to prospect for new business. When I told him he should spend at least two (preferably four) hours per day prospecting, I thought he was going to have a panic attack. Trying to calm him down, I asked what he did all day. Do you know what he told me?
He said he did research all day. He dug himself into a hole and was desperate to get out. All of his clients had different circumstances and problems, so he was constantly spinning on a hamster wheel, trying to keep on top of their changing needs.
Wouldn’t it be so much easier if the bulk of your clients were in the same industry, with the same goals, the same concerns, the same investment products, and the same service needs? When you do this, you save precious time that you can use to scale your business. If you're a financial advisor with the dream of working less and earning more, you need a well-defined target market.
3. Prospecting Becomes Easier.
80% of a typical salesperson’s time is wasted talking to poorly qualified or unqualified prospects. When you target a particular group, you can spend most of your time talking with highly qualified prospects who have clear potential to become clients. After all, you will be positioned as the go-to person for that particular industry.
If you only work with educators and your put that on your business card, your website, and all of your marketing materials, you will attract educators. This is the “client attraction” type systems that advisors dream about.
When you become clear on your goals, the path to achieve them usually becomes clearer as well. Rather than trying to get leads from anywhere and everywhere, if you only focus on a particular group, you will instantly make your list that much more qualified. Is this person a doctor or not? Is this person a corporate executive or not? And because your conversion rate will probably be higher (tip #1), your prospecting time will become much more productive.
4. You'll Get More Referrals.
When you specialize, word of mouth spreads a little faster. People within your target market will feel special that they’re working with you because of your reputation in the industry, and they will start to share it. And guess who they’re going to share with? Other people just like them!
If you work with physicians, guess who physicians spend time with? Other physicians – they go to trade shows, hang out at the same country clubs, and even work in the same building. Plus, asking for referrals becomes way easier. Your client won’t have to do any mental gymnastics to refer you because he/she will quickly qualify friends/family based on your target market.
5. You'll Have Less Competition.
Once you have a niche, you become known as the go-to expert in that area. I told you that word of mouth spreads a little faster to get you more referrals, but this also builds your reputation as the trusted resource. Your competitors simply won’t be able to compete once you’ve positioned yourself so well.
Simply by narrowing your focus, you will reduce your competition because there will be fewer people offering the same thing. There are tons of generalist financial advisors. They work with anybody with a pulse. On the other hand, there might only be a dozen advisors in your state who work with your niche. I’d rather compete in the smaller space because it allows me to have fewer overall competitors and keep a close eye on the competitors that I do have.
6. You Can Integrate Case Studies In Your Marketing.
Case studies create the most powerful marketing stories, especially during a presentation. In 37 Sales Tips for Financial Advisors, I talk about how to make your prospects feel like they’ve already shopped around. Service industries don’t usually have a “try before you buy”, which causes a lot of uncertainty and resistance. Case studies are the best way to give potential clients the sense of having taken a test drive.
The best way for people to understand how you can help them is to hear a story about someone just like them. Once you have a niche, crafting this story becomes much easier. You can tell your prospects a story about how you helped someone in their niche. If they like what you did for the person in your story, they’ll ask if you can do the same for them. A case study makes it easier for prospects to do business with you.
7. You'll Have More Fun.
Your business should serve you, not the other way around. Ideally, your niche should arise from your interests and passions. When this happens, you will be doing more of what you love. Your goal should be to build your business by design. Picking a niche is a big step in that direction.
Whether your business serves only your niche or a niche among others in your book of business, the idea is the same. You want to find a small pond in which you can become a big fish. If you pick an area to focus on, you can concentrate your efforts and stand out in your market.
P.S. If you're a financial advisor who wants to get more clients from LinkedIn, make sure you check out How to Get Clients With LinkedIn: How Financial Advisors Can Set Appointments and Convert Prospects With LinkedIn