Slowly, advisors are realizing the importance of having a niche client base.
Unlike in developed markets where advisors are known to cater to a niche set of clients like doctors, lawyers, athletes, celebrities, etc. advisors in India generally cater to a mixed clientele. One of the obvious reasons for this is that the advisory profession is still in its infancy.
In this article we explore whether having a niche clientele is practical in India, what goes into deciding your niche and the challenges involved in transitioning to a niche market.
Challenges
Advisors say that transitioning from a heterogeneous client base to a niche is not a cakewalk. Rohit Shah of Getting You Rich cautions, “It takes time to build a strong client base around a particular segment. Advisors need to be patient when they venture into a niche market.”
One of the problems faced by advisors is deciding the target niche and making inroads in that group.
While financial advisors recognize the importance of segmenting their clients, naysayers say that it is hard for advisors to turn down prospects in a market like India. Rajesh Chheda of Finance Factory says “Advisors should develop the art of saying no. There may be times when it may be tempting to accept a client who may not be in sync with your business plan. However, the advisor should direct such clients to other advisors”.
Getting started
Before venturing in a niche market, you should study your prospects well. But before doing that, Rajesh says that advisors need to know their area of strength and decide their niche accordingly. “You need to decide your business model first. Secondly, you need to be aware of your own expertise and accordingly prepare a business plan” says Karthik Jhaveri of Transcend Consulting.
“One simple way to decide a niche is to start with your existing connections and acquaintances,” says Lovaii Navlakhi, Founder & CEO, International Money Matters.
Narrowing down on a niche market can be an upheaval task both for established and aspiring advisors. If you are an aspiring advisor you may find it difficult to find your niche from day one. To begin with you can work with a heterogeneous set of clientele to understand the psyche of different clients. Over a period of time, you’ll surely find your calling.
Catering to niche
Once you have identified your niche, you have to understand the needs and behaviour of the category very well. Once you start to understand the psyche of your prospects it becomes easier to match their wavelength. For instance, if your niche is doctors, you should find out where they socialize, what are their aspirations and make a presentation to the local association of doctors.
Over a period of time your expertise in a particular niche will help you develop deeper relationships with clients. “Advisors with niche client base perform extremely well than advisors with a general client base”, points out Suresh Sadagopan of Ladder 7 Financial Advisories.
“Creating a niche client base definitely works in India. It not only helps advisors gain expertise but also helps in improving the quality of service,” adds Rohit.
“I like to focus on SME businesspersons because they have full discretion in making fast decisions. In fact, they have flexibility of time compared to employees and most of the meetings are conducted during office hours and weekdays, compared to weekends and night time for the employee market. But the main challenge is breaking the trust barrier. Plus, they have vast exposure in dealing with financial practitioners and they know the market. So, I have to be equipped with good knowledge and skill in dealing with them,” said Gavin Teoh, winner of FPA PlanPlus Global Financial Planning Awards 2013 in an earlier interview with Cafemutual.
Is niche model practical in India?
Currently the way advisors define their niche is ambiguous. For instance, some advisors only onboard clients who bring a ticket size of say Rs. 50 lakh and above, irrespective of the background of the client.
However, this is not a niche in itself. “Niche prospecting is not completely followed in India. Advisors following niche model keep their avenues open for general prospects as well. A major chunk of revenue can be derived from niche clients and some part of the revenue can come from other clients. It is not practical in India to depend entirely on one set of client base. Advisors need to diversify their sources of revenue,” said Vinod Jain of Jain Investments.
Lovaii Navlakhi, Founder & CEO, International Money Matters adds, “It is always advisable to have a varied client base so that any change in market conditions/regulations of one segment doesn’t impact the advisor. This way advisors can spread their risks.”
Is having a niche model practical in India? Do share your experience…
