There is probably no topic that makes an advisor’s eyes go wider and fingers clench tighter. The topic? When I suggest to the advisor that perhaps, maybe, she should consider choosing a niche. I may be imagining this since we are usually on the phone, and she is not in my line of sight. Nevertheless, the response often conjures up a mix of fears and myths. It usually goes something like, “I can’t choose a niche because . . .
. . . I can’t afford to say ‘no’ to clients!”
. . . I won’t have all the clients I want to grow my firm!”
. . . It’s going to be hard to find those specific clients!”
. . . I don’t want to fire my current clients!”
. . . I don’t want to be bored and unchallenged!”
All of these statements are fears and opinions; none of them are true and I have the statistics to prove it!
In a Horsesmouth survey of 2,100 advisors, those with a niche reported they enjoy:
- easier access to prospects
- better and wealthier clients
- increased referrals
- higher production
- enhanced reputation and status
https://www.horsesmouth.com/mktgpage/RNMG
And are those advisors bored and unchallenged? I’m sure they’re contemplating that as they tee off at the golf course, read their new book or spend more time with their family. Gone are the days of running themselves ragged as they hunt down yet another prospect.
The importance of perfecting your niche
In case you’re not persuaded by over two thousand of your peers, I can assure you I’ve seen the same results with my advisor clients, up close and personally. Many service business owners I’ve coached have had amazing results after taking a well-researched risk and niching their businesses. There are many real advantages for financial advisors who perfect their niche, but I’ll give you just five:
1. You will become known as the obvious choice and go-to expert for that niche. The benefits of this are numerous. It will be easier for prospects to find your firm online because your website will be directed to your niche. This will generate more awareness of your firm’s brand, which also brings prospects to you. Companies like Coca-Cola and Tide spend a lot of money on branding to generate trust and earn a no-brainer reputation with consumers. When people recognize a brand, they usually buy it—even if there is a lower-cost solution right next to it—because they are familiar with it. This saves their over-stressed brains from making additional decisions.
2. You save time and money on marketing. I once had a client, we’ll call him John, who secured a table at a conference within his niche. He had decided this was going to be his last conference because it seemed like attending these events was a waste of his time and money. Of course, under my tutelage, he had nailed his niche and determined his ideal client within his specific niche in preparation for the event.
When John called me after the event, he said, “I only got 50 cards. In the past, I’ve collected as many as 300 cards. It was so overwhelming to contact them all. Of course, many never called me back. Out of the hundreds I contacted, I got very few clients. But at this last event, I spoke with 50 people longer than usual because they were my ideals. We connected better, and I know that’s going to make a big difference.”
At the event, John initially began conversations with many more people. This time, he politely cut many of the conversations short when he realized that the person(s) in front of him were “tire kickers” and not his vision of an ideal client. This technique was also part of his training with me.
With a niche, you can select the proper type of marketing to purchase, whether it’s a table at a conference or an event sponsorship. Creating your marketing messages is easier with a niche because you know what’s important to the people whose attention you want to capture. You’ll be target marketing instead of spaghetti marketing! (Picture throwing a dart at a target versus a handful of spaghetti at a wall. Get it?) Target marketing is much more precise (and less messy) than spaghetti marketing. The efficiencies make it less costly all around.
In addition, you’ll be able to assemble a great marketing team, even if you outsource. Think of all the professionals you hire to develop your firm’s internal and external brand (logo, website, brochures, etc.). They will all know exactly how to write and design your materials to attract your future clients. All because you were smart enough to give them a persona or picture of your niche and ideal client.
3. With clients who have similar investment and planning requirements, you’ll be able to streamline your operations, deliver customized services, and provide a higher level of customer service. Nailing a niche lends many efficiencies to your firm. We already mentioned savings on marketing. Operationally, your firm will benefit in many ways. For example, onboarding clients with specific needs may require a custom questionnaire, but you only have to develop that once. Then you’ll consistently collect all the information you need to adequately serve your niche—not to mention going over and above!
When you’re free to develop specific services for your niche, you can spend more time helping your clients actually reach the goals they set. When you have time to consult and coach your clients, you prove your value and further distinguish your practice from your competitors. Your ability to add such value makes you less likely to lose clients over price, or any other reason.
Because you’re not trying to serve the needs of anyone who breathes, you’ll be able to forge deeper and longer-lasting relationships with your clients. This paves the way for lifelong, multigenerational clients and also happens to be a very fulfilling way to do business as well. Hmm. Doesn’t sound boring to me!
4. You’ll get better referrals. Your ideal clients tend to have circles of friends and associates that are just like them. Many times, you won’t even have to ask for referrals. After all, if your friend recommends a good movie, you’ll probably go see it without much more thought, right?
A consistent message is the key here. For example, when one of my clients is out networking, she says, “My ideal clients are women and the men who love them.” Her website shows photos depicting happy couples, and her office is decorated to appeal to her niche. People in her niche feel more comfortable contacting and referring her because her message sounds and looks consistent. After all, people don’t want to refer their friends to a bad experience, whether it’s a movie or a financial advisor!
Niche marketing even makes it easier for strangers to refer ideal clients to you. When people hear about who you help and what you do, they immediately understand who they could refer to you. They don’t even have to be in your niche themselves. They could say to their neighbor, “You know, Sue, there’s a financial guy in my building who specializes in advising veterans; it says so on his office door. You and Bob should check him out.”
5. You’ll make more money. An auto shop that services imports makes more money than one that takes any car on the planet. It can do even better if it services only Mercedes. Cardiologists earn more than general practitioners. The same is true for financial advisors.
“…a full 70% of top financial advisors – those earning at least $1 million annually – focus on a particular niche. In stark contrast, just 35.1% of financial advisors earning less than $150,000 a year have a niche focus.” – Jonathan Powell, Managing Director, CEG Worldwide Research.
You’ll make more money if you nail your niche. Here are a few ideas: pastors aged 40 to 55, business owners 15 years from retirement, executive parents with two or more teenagers at home, parents 10 years away from being empty nesters, divorced women over the age of 40. The possibilities are literally endless.
Choose a niche or not; it’s up to you. But don’t believe the myths or be afraid to try! The numbers and my experience this past 20 years as a life and business coach all confirm you’ll have a much more productive, profitable, and pleasurable business if you do.
About the author:
Maria Marsala guides advisors to transform their practices into more successful businesses. She helps independent advisors improve their people skills, your firm’s processes, and to profit in a more systematic way. The consultative-coaching and training we do with our clients takes a holistic approach that provides a high level of accountability, focus, and the tools to maximize your firm’s growth as you live better. To download a free video on niching, visit Elevating Your Business.
The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.