Why You Need to Find a Niche Market and How to Identify One
The saying ‘you can’t please all the people all of the time’ is never truer than in this business. As a financial advisor you’re ill-advised to work with all and sundry – you’re far more likely to succeed if you can identify a profitable niche and become the ‘go to’ advisor in that area. Once you’re established in your target market potential clients will naturally head your way, keeping your sales funnel full.
You could base your selected niche on people you’ve enjoyed working with or those who share a similar background or interests. You could also decide to concentrate on working with people in a sector that is underserved. Here are three such niche markets you could consider.
For whatever reason, or reasons, it’s still the case that women live longer than men. It’s also often the case that women leave the running of their finances to their male partners. Consequently, a significant proportion of widows are left not just emotionally bereft but financially adrift on their husband’s demise.
In many cases they’ve never met or even had any direct communication with the family’s financial advisor. It’s unsurprising then, that many of these advisors get fired within a short period of time.
If you want to work with people in this demographic, you’ll need to be capable of sensitivity. In a first meeting with these prospects they won’t be looking to you for information about the markets, neither will they be interested in numbers or charts. They will be considering whether you are someone they can trust. They will be asking themselves if you can take care of their finances and do the right thing by them.
Make the conversation about goals and inclinations. Show your empathy and stress that you are the type of advisor that cares more about your clients than their money.
Women look set to hold the majority of financial assets in the near future and this has put ‘women’ on the radar as a lucrative target market. However, ‘women’ shouldn’t be seen as a homogeneous group to target – you need to narrow your niche down to your ideal female client – by any number of traits, be it personality, profession, or stage in life.
For example, you could focus on approaching ‘breadwinners’, divorcees, or business owners. There are various ways to meet these types of niche market prospects – from networking via women’s groups and professional organizations to holding seminars and workshops on topics of interest.
Millennials are the largest living generation in the US today, however few of them have a financial advisor or even invest money. According to Investopedia close to 80% of the 18 to 34 age group have no investment plans, a figure that’s even higher for women. This could present you with a good potential market, especially considering this demographic could be on track to inherit the greatest wealth transfer in history.
Millennials can represent a challenge however since people in this age group often feel disconnected from the financial services industry. Many see it as complex and dull. . If you are to overcome these stereotypes, you need to address people on their own level by leaving out the financial jargon.
Again, it makes sense to narrow the market. Rather than addressing ‘Millennials’ as a group aim to target the type of Millennial you would work with best. For example, you could select career-focused people in their mid-20s to 30s, who are married with young children.
When you meet with these prospects, steer the discussion around how they’re planning to fund their children’s college education. Bring reality closer to home by talking in terms of the small number of paychecks they have left before the kids are of college age – and remind them what the future could look like if they don’t have sufficient money saved.
Many advisors worry that by refining their target market they will be limiting their potential for new business. In fact, quite the opposite will happen. By developing expertise in a certain area, you will win more powerful connections and increase your word-of-mouth referral value. You will also be able to deliver a superior client experience and retain clients for the long term.