We can’t be all things to all people. Advisors can make a good living as generalists, but specialization—finding your market niche—can be the key to higher commissions.
You make more money as an advisor if you have a market niche. It’s pretty simple. The income gap in financial services is not at the scale of lawyers and doctors, but the principle is the same. Being a specialist infers experience and expertise, and the money follows.
The first step to specialization is to look at yourself and your business. What do you do well? What is the client-profile of your book?
Leverage your current client base to gather insights. Conduct surveys or interviews to better understand current client needs and preferences. They might unknowingly point you towards an area you hadn’t considered.
Segment your client groups, then analyze your data: What is the commonality your clients have? You may have a niche already and not even know it. This can be as simple as sorting your client data in a spreadsheet and segmenting clients into groups. You might find that you serve an unusually high number of, say, military veterans. Or engineers. Or millennials.
When looking outside your current book, look at who the major employers are where you live (or wherever you are licensed)? What might be the issues facing people—particularly those nearing retirement?
With all that information you will be able to hone your marketing to demonstrate how you excel in helping people in those areas. Use testimonials, tell stories, and employ specific messaging on your web site, social media, and literature. You might not be the only advisor looking to hit a specific market—but you can be the one who does a great job of communicating your experience and success.
In addition to client-oriented research, finding a specific target area can come from what you do. Are you a particular expert in estate planning or rolling over IRAs into annuities? Look at how that expertise may be the solution to the problems of the groups you target, so you can market your services even more specifically.
Advisors will need to demonstrate comprehensive knowledge. Some markets may have unique regulatory or compliance requirements. Ensure you have a solid understanding of these, as they can impact your ability to serve clients in that niche. Additional relevant training and relevant certifications will enhance your skills and how potential clients perceive you. For example, if you are focusing on the needs of divorced individuals, consider a CDFA course.
We have this idea that business is where you find it. This is true, but finding your niche is not about limiting your potential market—you can still write business with people outside of it. Specialization is about focusing your energy and expertise so you can make better commissions while achieving that virtuous circle of deep experience, a glowing reputation, and enthusiastic referrals.