Bill Moran's career as a financial advisor with Merrill Lynch blossomed in the 1990s when he came out as a gay man and started focusing on the needs of the gay and lesbian community.

He stopped cold calling prospects as he had when he was building his business in the late 1980s, and began to network with attorneys and other professionals who were expert in lesbian, gay, bisexual and transgender issues, and worked with a local HIV/AIDS related charity.

Moran remembers becoming a "go to guy," for LGBT individuals and couples looking for financial advice in the Washington area.

Slowly but surely, he began to find clients more easily.

Now, as head of the nationwide LGBT Financial Services Team at Bank of America's Merrill Lynch, he manages about $200 million in assets and assists other advisers who want to learn how to better help LGBT clients.

He doesn't think every advisor should follow him into his own specialty, but he does suggest that advisers find their own right niches if they want greater financial success and personal satisfaction.

"Find where your comfort zone is, whether you're working with small business owners, the LGBT space, people with special needs" or some other target client group.

His firm agrees. Throughout its wealth management businesses, Bank of America encourages advisors to specialize. It provides marketing materials to help advisors attract segments such as women and those with special needs. Advisors can also target their local communities or focus on a planning specialty, such as helping clients who want to transfer wealth to the next generation.

The higher the net worth of the clients served, the more critical specialization is. BofA's U.S. Trust unit, for example, requires private bankers to "choose a major" to help attract ultra high net worth clients.

"All of our advisors are encouraged to narrow," Justine Metz, head of marketing for Bank of America Global Wealth and Investment Management, said. "You can't be all things to all people."

Sophie Louvel Schmitt, a senior analyst at Aite Group, says her research on wealth management firms and advisors shows that many are striving to specialize in hopes of differentiating themselves in a crowded field.

"Now more than ever, it's extremely competitive," Schmitt said. "If you can relate to a client within the context of their specific situation, not just help them with their financial affairs, you're going to stand out."

Michael Kitces, a partner and director of research for Pinnacle Advisory Group and publisher of the financial planning industry blog Nerd's Eye View, views specialization as a must.

Advisors who don't pursue a niche because they don't know which one would be the "right" one are missing an opportunity, he said.

"Virtually any remotely reasonable niche is better than being a generalist right now," he said, because comprehensive financial planning is no longer the differentiator it once was.

The Ethnic Niche

Alan Kondo found his niche in his Japanese-American heritage.

Growing up, the founder of registered investment advisory firm Kondo Wealth Advisors in Pasadena, saw his Japanese grandparents and others in the Japanese-American community were leery of financial institutions. Many had lost money during World War II when they were incarcerated and their financial assets frozen.

Kondo saw that his Japanese-American clients were likely to be ultra-cautious but also loyal. He began to target the segment by writing a financial advice column in a local Japanese-American newspaper, and, later, books that addressed the lingering concerns.

"One of the best pieces of advices I got," Kondo said, "was to find your niche and pursue it. Don't try to shotgun it; be very specific about who you want to serve."

Personal Experience

Justin Reckers, founder and chief executive officer of Pacific Divorce Management in San Diego, chose to focus on divorce as a financial advisor, when at the age of 21 he watched his parents "go through one of the nastiest divorces" he has ever seen. Since the children were grown, the divorce became all about financial matters, Reckers recalled, and it wasn't pretty.

"That definitely gave me my first jolt of ambition, to help people do this in a better way," he said. He also realized the field was wide open. "There wasn't really any place to get financial advice when you were going through a divorce," he said. Learning as much as he could about local divorce laws, and networking extensively with divorce attorneys helped Reckers stand out and build his practice.

Now 33, Reckers oversees about $250 million in assets, and is expanding his business by offering divorce-planning franchises to other advisors.

He sees specialization as the only way for advisors to differentiate themselves in a crowded field. "Being an expert in something, and doing a deep dive into a field," he said, "is most definitely the way of the future."