Go to any seminar on marketing and one of the top suggestions on becoming an elite adviser is to develop a niche. Doctors, airline pilots, teachers, golf nuts, tech employees – the niche possibilities are endless. Having a niche can create efficiency, simplify marketing and make you an expert in the eyes of a well-defined cohort. But is a niche based on what people do – and not who they are – really a wise choice?

Carolyn McClanahan, director of financial planning at Life Planning Partners.
Carolyn McClanahan, director of financial planning at Life Planning Partners.

Financial advisers who transition from other professions may gravitate toward a natural niche. I would know: Switching to planning from a career in medicine, physicians seemed an obvious choice for me. I understand the occupational concerns, lifestyle and benefits, and easily use the same vernacular. But there was a slight problem I had with the physician niche – too many have the personality of a screaming jackal (sorry, former colleagues). A bonus of changing careers was leaving those jackals behind. How would I attract just the physicians who would be delightful to work with?

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Being a member of NAPFA, I also received various clients through its referral system.

Besides being a physician, I also happen to be a runner and live in a top running community. My running partner regularly got an earful of my life as a doctor, then listened to me drone on about my financial planning education, and helped me grapple with the decision to make a career change and open my own firm. As a business owner, she was a great sounding board. And despite knowing how green I was, she also wanted to be my first client.

GOING ASTRAY
As I worked to build my firm the first few years, I accumulated mostly two types of clients: physicians and runners. Being a member of NAPFA, I also received various clients through its referral system. Potential clients had specifically searched for fee-only planners; they were great additions because they understood the value of what we delivered as a retainer-based firm. But the mish-mash of people with differing needs was so far away from the efficiencies of a niche recommended by marketing experts in order to be a top-notch firm. Plus, I managed to accumulate a few screaming jackals.

In 2007, my business coach shared with me the idea of engagement standards. By spelling out what you deliver to clients and what you need from them to do your job well, you can decrease the inefficiencies of working with people who don’t fit your model. One component she stressed is the importance of clarifying the qualities of the people you want to work with. In my view, this was brilliant.

I looked carefully at the characteristics of our client base. I adored the clients who returned paperwork and phone calls, asked thoughtful questions, were engaged in their planning process and appreciated our laid-back manner.

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Since we are fee-only fiduciaries, many clients who searched us out were do-it-yourselfers looking for someone they could trust.

The clients who felt like dirt in my eye were the ones who were abrasive, disrespectful of my co-workers, unresponsive or unreliable. Thankfully, I had only a few clients with these characteristics.

THE RIGHT FIT
Since we are fee-only fiduciaries, many clients who searched us out were do-it-yourselfers looking for someone they could trust. They realized their financial lives had become too complicated to do their own planning and manage investments well on their own anymore, and wanted to delegate the task. Many planners avoid clients like these, but I love working with them. After clarifying the personality types we enjoy working with in our engagement standards, our niche developed gradually.

The end result – we have smart clients who ask a lot of questions up front, understand our holistic planning and investment management process, and don’t call crying when the market is down or their portfolio hasn’t gone up as much as their neighbor’s. Our physicians, business owners, widows, young high earners and corporate executives may have very different planning needs, but they fit with what we do and how we do it.

A true niche may bring big efficiencies such as everyone having the same 401(k) plan, stock options or business issues. Yet niches this tight are hard to develop, plus you aren’t guaranteed that everyone in a classical niche will have a personality that fits your style. By developing a personality niche, you save time and energy where it counts the most – on the basis of human interaction.

Carolyn McClanahan

Carolyn McClanahan

Carolyn is the Director of Financial Planning at Life Planning Partners in Jacksonville, Florida.