Choosing a Niche and Why It Matters
Picking a niche is important for anyone going into business, especially financial advisors. Niches make it easy to pick the best target markets for financial advisors. You’re not going to be able to serve everyone, so it’s important to find the group that you want to reach out to and focus your efforts on them. Here are the benefits of niches, how to pick them, and why it does indeed matter.
Benefits of Niche Marketing for Financial Advisors
When it comes to brand positioning, the big challenge is to define what differentiates you from everyone else. If you are competing against every other financial advisor in the marketplace, offering the same services and solutions, that task will be impossible. You need to establish a niche––an area of expertise––where you can build in-depth knowledge and create customized solutions for prospective clients.
Your niche should be the primary focus of your website and other marketing elements to develop your online presence and reach your targeted audience. From social media activities to the keywords and verbiage used in your content, every component of your marketing strategy should aim to establish your authority in your chosen niche. Some of the significant benefits of niche marketing for financial advisors are the opportunity to compete in a smaller market, create stronger relationships, and become the go-to advisor for a specific professional community.
Niche Markets for Financial Advisors Means More AUM
Not defining their target client or choosing a niche is a mistake we see many financial service professionals making. Many choose not to define their niche because they assume it will limit the scope of their services, which could potentially limit their assets under management (AUM). How can you grow your AUM if the supply of general financial services outweighs the demand? Without specialized offerings, there simply isn’t a large enough pool of prospects to sustain so many financial advisors. With a niche, you position your services to a smaller but more invested group of prospects.
When you don’t focus on a niche, your content will tend to be somewhat generic, and you’ll be spending resources on producing content across a broad range of subjects that may or may not speak to your audience. Creating a niche-focused approach will let you fine-tune your content and target very specific audiences with insightful solutions and services geared specifically to their needs.
If you’re networking with professional referral sources such as estate planning attorneys and CPAs, how will you stand out if you’re serving everyone? Once you develop a reputation for understanding the challenges and nuances of a particular profession or group and begin providing customized solutions, your niche will start taking on a life of its own. For example, if your niche is doctors, the longer you work with them, the more you learn about their specific challenges and needs. This in-depth knowledge allows you to fine-tune your financial solutions to provide more and more value, and makes it easy to refer to other doctors!
Choosing Productive Niches
Choosing the most productive niche markets for financial advisors requires research and time to evaluate your goals. The best niche is the one that supports your goals and gives you the greatest chance for growth. Knowing how big a target market is in a particular niche is one of the most vital pieces of information you’ll need to start defining your niche. A niche with a small pool of potential clients simply won’t get your firm where you want it to be. A niche focused on female physicians may not work because there aren’t enough of these professionals in your market, but a niche focused on female medical professionals may broaden the niche enough to make it a viable option.
Finding Niche Markets for Financial Advisors
Finding the right niche that aligns with your particular skills and your overall goals can be challenging. To get you started, we present three different niche groups featuring a large pool of prospects hungry for financial advice and guidance. These are strong-performing niches that continue to be valuable sources for growing financial advisors’ AUM.
Young Professionals
A large number of these prospects are also turning to robo-advisors for their asset management needs due to their low cost and self-sufficient nature. Though not necessarily high-earners now, millennials are prime candidates for long-range financial planning, providing one of the easiest ways to ensure sustainable growth for your business. As they progress through their career, you’ll see your ROI increase steadily year-over-year.
In the short term, one of the most pressing issues this audience faces is student debt. Because student debt can often seem overwhelming, millennials might not plan properly for retirement and could use the guidance of a trusted financial advisor to help get their financial lives on the right track. To appeal to this niche, you’ll need flexible fee structures and a variety of retirement solutions, and you’ll need to be tech-savvy to be able to leverage the platforms this group uses most.
Baby Boomers
Pre-retirees have been a typical example of financial advisor niche markets for years and are considered popular go-to markets for financial services. Many advisors are already actively targeting baby boomers, but few of them are marketing with a niche approach. If you’re confident that your knowledge and expertise match their needs, you should consider baby boomers as a niche audience worth tapping into. To best serve this group, you’ll need in-depth knowledge of Social Security, retirement planning, and death planning.
This niche responds best to content that is free of slang and too many abbreviations. While baby boomers are familiar with the digital marketing world, they typically prefer more traditional modes of communication like email as opposed to tweets. This generation can be found predominantly on Facebook, and they demand high-quality content that addresses their needs.
Small Business Owners and Freelancers
With the creation of online e-commerce platforms like eBay and Etsy and the increase in self-employment, more people are creating businesses than ever before. E-commerce has spawned a new age of entrepreneurship, and many of these new business owners will need help navigating the many rules and regulations associated with business ownership. Yet, only 40% of small business owners have turned to a financial advisor for guidance.
Very few business owners have a succession plan in place for when the time comes to retire, and few have a formal financial plan to manage income and expenses during retirement. Also, many need advice on tax planning specific to their small businesses. These are huge decisions that have the potential to affect their business and personal life for years to come. As a result, an experienced financial advisor has much to offer this niche. To tap into the growing small business sector, a financial advisor should be well-versed in cash flow management, cost controls, self-employment or small business taxes, and retirement solutions.
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