How Specialist Advisors Earn Twice as Much

7/28/2019 How Specialist Advisors Earn Twice as Much

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How Specialist Advisors Earn Twice as MuchBy Dan RichardsJune 11, 2013

Advisor Perspectives welcomes guest contributions. The views presented here do notnecessarily represent those of Advisor Perspectives.

In any profession medicine, dentistry, law, accounting theaverage income for specialists is more than double that ofgeneralists with the same years of experience. My experience withsuccessful financial advisors whove built a niche practice confirms

this, but first they had to overcome three common myths aboutdeveloping a niche positioning.

I was reminded of this by a call from an advisor whod heard mespeak about focusing on a niche market. Im ready to make thechange,he said. Ive bought into the need to be a specialist ratherthan a generalist. My question now is where to start to make that happen.

Im far from alone in talking about benefits of being the go-to advisor for an attractive clientgroup in your community. Focusing on a defined niche with common needs means youdevelop unique expertise, tailor your practice to the groups needs and do a better job for

them as a result. As you develop a critical mass of satisfied clients in a group, you becomethe safe choice which lets you price your services at a premium and to attracting clientsvia word-of-mouth.

The challenge for most advisors is that theyve built practices as generalists and arentsure how to make the transition to become specialists. There are three basic steps tobecoming a go-to resource for a defined client group in your community:

Selecting the right niche Ensuring you have the right skills and capabilities

Building a reputation within your target group

Todays article will focus on the first two of those steps; I will tackle building reputationwithin your target community in a future article.

- 1 - Copyright 2013, Advisor Perspectives, Inc. All rights reserved.


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Three myths about a niche focus

Before getting into the specifics on selecting the right niche and developing skills, letsquickly address three myths that get in advisors way when it comes to focusing on a nichecommunity:

You have to abandon existing clients or refuse referrals from anyone except clientswithin your group.

You will have to work with an entirely different group of clients than you currentlyserve.

Focusing on a niche group entails a complete departure from the way you currentlyconduct your business.

These are all false. Advisors who specialize in a narrow group still work with legacy clientsand accept new clients from outside their niche. Most advisors who go the niche routeselect a group that already exists within their client base. And while the ultimate outcomemay be to that your practice looks different, in the early stages the biggest shift isallocating marketing resources and time away from a broad-based focus to a much moreconcentrated and ultimately more efficient approach.

Targeting the right group

The foundation of an effective niche marketing campaign begins with selecting the right

group. The most effective target groups have clearly defined needs in common sopeople who own Ferraris or enjoy gardening may share interests but not necessarilyneeds. The same applies to people who went to the same university or belong to thesame golf club. A simple way to determine if a group has common needs is to completethis sentence: I specialize in the unique needs of NAME OF GROUP. As a result I havedeveloped particular expertise in ..

Effective niches tend to fall into three categories:

Life stage (retirees, people planning for retirement) Occupation (business owners; self-employed professionals; senior corporate

executives) Unique circumstances (women emerging from long marriages; affluent families

concerned about wealth transition to the next generation; families with children orgrandchildren with special needs)

Within each of these categories you can choose to focus broadly (for example all retirees)or more narrowly, so your target could be retirees:



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In the early stage of retirement

For whom travel is a priority Who winter in warmer climates in the southern United States or Mexico

Who face health issues

Who are asset rich but struggle in terms of cash flow

Who need more income but are concerned about the risk of owning stocks

You can break every broad group into similar sub-groups. Advisors working in smallercommunities will of necessity focus more broadly. In larger centers, if you narrow yourfocus, you improve your chances of resonating with prospects as someone who has trulyunique capability to address their issues.

Often the best groups are already represented in your client base. Start by looking at yourtop 20 clients and brainstorm potential groups with a team member, colleague, supervisoror, failing all of those, your spouse. Come up with a broad range of potential groups themore possible candidates the better.

Selecting potential target groups

Once youve got a long list of groups, narrow down the list of possibilities. A simple way todo this is to rank each group from 1 to 5 on eight criteria:

How large is the group? Do members typically have the financial means to be clients around which you can

build a profitable niche? Does the group have clearly defined common problems?

To what extent do you currently have or can you readily develop the skills andcapabilities to solve those problems?

Are there vehicles such as associations, publications or regular meetings that makeit easy to reach this group or is a list of group members readily available?

To what extent is there unmet opportunity in this group, or are there several otheradvisors who have already acquired a go-to expert positioning within thatcommunity?

Do you currently work with one or more clients in this group?

Do you enjoy dealing with members of this group?

Of course, not all of these factors are equally important, but the key is not to sweat thedetails. At this stage, make a broad first cut at identifying possible niches around whichyou can focus your business.



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Fact-finding

Once you identify two to four possible groups for your short list, the next step is to gathermore information. In the next 30 days, plan to meet with three or more people within eachof the groups that you are considering, with the goal of getting answers to the questionsabove

These meetings can be with clients or acquaintances who are members of the group, butthey can also be with suppliers of services to that niche or professionals who focus on thisgroup. A good starting point is to approach a client or someone you know in that group,explaining that youre interested in learning more about the challenges faced by them andtheir friends. Another source of information is the executive director of an association to

which members of the group youre considering belong.

One advisor I know went about this differently. About this time last year, he hired an MBAstudent looking for work between first and second year at a local business school. Usinghis network, the advisor set up initial meetings for this student with members of severalpotential groups. At the end of each meeting, the MBA student asked who else he mightbe able to talk to who could provide insight on the group that the person he was talking tobelonged. As a result, the student conducted numerous interviews over a six-week periodand came back with detailed answers to each of the questions above.

Go narrow to build the right capabilities

To become the go-to advisor for a defined target group, this has to be more than just amarketing ploy; you truly do need to have unique skills and expertise that meets thatgroups needs. Thats why narrowing down the focus of your group is important the morefocused your group, the easier it is to develop capabilities that precisely solve its problemsand let you credibly position yourself as an expert resource.

Over the past year, several advisors who initially targeted broader groups told me theyrefined their focus over time, achieving go-to positioning as a result.

One female advisor initially targeted affluent women, but over time began focusing on

widows and divorcees coming out of long marriages. A second advisor located in theMidwest at first broadly targeted retirees, but has shifted his practice to serve snowbirdswho winter in the southern U.S. A third advisor started out concentrating on businessowners but found numerous other advisors going after the same niche; it was only whenhe noticed the special problems of a client who owned a car dealership that he beganreaching out to other owners of automobile dealerships and has built a dominant positionin that group in his community as a result.



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In each case, the advisors started out with marketing to a broader group but only saw real

success as they narrowed their focus. Clearly, shifting the orientation of your business toconcentrate on a defined target group is not something you should do lightly. If this issomething youve been considering, use the next 90 days to research and explore theprocess of shifting the direction that you take your business. And if you decide to goahead, think about September as the starting point for this initiative.

In the meantime, here are two recent articles, one from an advisor who carved out a nicheand attracted 100 clients in 18 months and the other from a leading authority on strategy,explaining why only businesses that are truly different can outperform.

Harvards top strategy guru: The key decision to make your business excel

How to find your perfect niche

Dan Richards conducts programs to help advisors gain and retain clients and is an awardwinning faculty member in the MBA program at the University of Toronto. To see more ofhis written and video commentaries, go to www.clientinsights.ca. Use A555A for the repand dealer code to register for website access.

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How Specialist Advisors Earn Twice as Much

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