A few years back, two friends Ram and Shyam pursued CFP and started their career in financial advisory business. Looking at them today, we find that Ram is a more successful advisor than Shyam though both of them have similar qualifications and experience. The one significant difference between them is that Ram only deals with clients who are doctors and Shyam deals with a clientele from a diversified background – private sector employees, government employees, small businessmen, retired people, professionals of all kinds etc., etc. Instead of chasing everyone, Ram follows a niche approach whereas Shyam tends to be indiscriminate in his prospecting approach.
Niche prospecting strategy means focusing on a particular section or category of clients i.e. doctors as we saw in Ram’s case. Once an advisor has identified the category of clients to be targeted, he or she has to understand the needs and behaviour of the category completely. So Ram makes it a point to attend medical conferences and holds exhibitions in these conferences. By following a niche prospecting strategy, he understands the motives, likes and dislikes of the medical community much more in-depth compared to his friend Shyam.
Floating a niche prospecting strategy may be difficult but once you are established you will gain personal recommendations and referrals from your clientele base. A survey conducted by Horsesmouth shows that pursuing a niche prospecting strategy is the best way to grow your financial advisory business. Its survey involved more than 2100 advisors around the world. The survey found that those with niche strategy enjoy more success compared to their ‘generalist’ peers.
Tejal Gandhi of Money Matters, who deals with women and senior citizens, is satisfied with her niche approach. She said prospecting a niche clientele is more rewarding and has seen higher business growth by following a niche prospecting strategy. During her initial days in advisory business, Tejal observed that the attitude of women towards money is more sensible than men but their financial awareness is comparatively lower. This sowed a seed of adopting a niche strategy in Tejal’s advisory business. Now, Tejal provides wealth management solutions to women. She said “niche advisors are like family doctors who serve fewer people but with a more qualitative approach”.
Dr (Col) KK Goel, Executive Director of Delhi based advisory firm, feels that getting referrals is much easier in niche strategy as compared to generalist approach. Dr Goel only deals with army professionals and doctors. He said that he understands better the financial needs of army professionals and doctors as he himself is a doctor who has retired from the army. He too is convinced that a niche strategy could help advisors to better understand the needs of a particular client category. He said “the advisors should try to get the confidence of investors after examining their needs.”
Partha Iyengar, Managing Partner of Accretus Solutions India LLP focuses on select Affluent Clients on a fee-only model who are ready to sign up for an intensive financial life planning process that helps them achieve their personal and financial goals. He says that most of the successful financial planners across the world focus on niche clients and develop a unique approach or process to acquire and retain them.
Partha says, “Acquiring a client is easier but retaining them is not easy year after year. He believes that Advisors needs to focus on the ‘life events’ of clients to help understand them better.
Niche practices usually focuses on managing lesser number of clients and hence initially takes a lot of time to build but over a period of time helps develop deeper relationships with clients and hence retention rates and profitability tend to be higher in a niche practice.
