Today, any help you can get to build your book—and your bottom line—is helpful.
One key way to give your practice a boost is by serving a niche. Whether it’s a profession, a company or even a hobby, serving a niche market can allow you to increase your assets under management and set you apart from other advisors in your area.
But it’s not as easy as it sounds. Where do you find a niche? What do you do with the rest of your clients? How do you become an expert?
I spoke with Kirk Hulett, senior vice president of strategy and practice management at Securities America, about doing just that. In the first part of this series, Hulett talks about where to find a niche and how to know whether or not it can be profitable.
Q: Once you’ve decided you want to find a niche to serve, where do you look?
A: The first place to look is in your own book; you may already have a niche and not even know it. You should do some very detailed research that really looks at clients in terms of their affiliations and hobbies, current and past employers and other demographic characteristics. You want to gather that information and see where there are common characteristics that indicate that you already have a niche. If you do find that you already have a niche, concentrate there because there’s obviously something about that niche that’s attracted to you.
You may also have a micro-niche. Say, for instance, you have three clients who are all veterinarians. By now, you’ve learned a little bit about that niche. While you may end up with only 10-12 clients with a micro-niche, going from three to 12 clients in a year is pretty good. Look for micro-niches in your current book too.
Q: What if you don’t find any common characteristics between current clients that can be a niche?
A: Going out and finding a new niche takes a lot more time and is a lot more work, but plenty of advisors do it and it’s not impossible. For a new niche, you want to look for interest and opportunity. By interest, I mean you need to find something about that niche that interests you, that relates to you personally, such as your interests and hobbies. You have to feel comfortable with what’s unique about that niche. One advisor whose hobby is sailing, for example, can use that to build a niche around people who own boats, and make it a business opportunity.
Q: And what about the opportunity part?
A: The opportunity means you really need to do your market research to see if there’s an opportunity there; you’ve got to go where the money is. For instance, you may be interested in a certain charitable activity, but it may not involve a lot of investable assets. So you may want to work with them on the side or help out in your spare time, but the people involved may not be a good client and they’re not going to be a great niche for you.
Q: Where can an advisor find the right research?
A: The Department of Commerce, both state and federal, puts out data each year on income in certain occupations. LinkedIn, the social networking site, is another good form of research. One of the uses advisors can have of getting on LinkedIn is looking up a member of that niche and see who they link to. This way, you can find the movers and shakers in that niche, the opinion leaders, and then start doing some target marketing.
In next week’s In the Game column, the second part of this series will show you how to become an expert in your niche and how to present your unique value to new clients in that niche market. Stay tuned!