In the November 2012 issue of Financial Advisor magazine, the Efficient Practice column “Finding Your Niche” created a groundswell of interest among readers. So much so that it seemed prudent to revisit this subject. The concept is to create a niche market for a financial advisor’s services that matches a unique body of knowledge or experience held by that advisor. Apparently, this subject touched a number of readers, who have responded with their own stories of creating a niche (in other words, differentiating).

One is a financial advisor in Texas. James Poe is the chairman and founder of Texas Retirement Specialists (, a registered investment advisory firm with offices in Fort Worth and Dallas, Texas. In a phone interview, Jim explained his unique niche—investing for women. He is the proud father of six daughters, four of which work in his practice. He is also the host of two radio shows (one in each city), and last year his firm generated more than $20 million in new business.

Jim, who has more than 35 years in the financial services profession, recognized a trend among families nearing or at retirement. According to him, husbands were generally selecting a maximum payout for themselves from Social Security (and other retirement income sources) without considering the impact on their spouses. Since statistics have shown that women outlive men, it struck Jim that the women would be left with considerably less (or potentially nothing) after the passing of their husbands.

So he created a unique set of services that embraced a focus on maximizing retirement income for both husbands and wives. This includes a focus on retirement income sources, asset accumulation, tax planning and estate planning, (what he refers to as his “RATE” system). Jim indicated that he has uncovered 81 different ways to maximize Social Security.

And he mentioned that highlighting Social Security makes the women pay attention in client meetings. In his words, “They get it.”

Jim’s passion for this was undoubtedly influenced by his large and extended family of women. He has written a number of books on the subject and has authored a number of articles in the Erickson Living Tribune. In addition, he has been quoted on Fox Business. But he credits his radio shows for delivering the largest percentage of new clients to his practice.

Poe’s approach should resonate with financial advisors who are struggling to define their differentiation strategy. Often, the answer is in front of them in that some experience or influence in their lives and/or work can be the key to a unique niche for their practices. To uncover it may take a certain amount of introspection and self-evaluation.

But there is more to be done to incorporate a new differentiation strategy into an existing financial practice. In the book Blue Ocean Strategy by Renee Mauborgne and W. Chan Kim, a methodology was described to find differentiation through a combination of value innovation, fair process and tipping point leadership. Of the three, by far the most difficult to achieve is value innovation, which requires a fair amount of research, labor and creativity to accomplish. The cornerstone of the Blue Ocean Strategy is value innovation. A “blue ocean” is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in products, services or delivery) must raise and create value for the market while simultaneously reducing or eliminating features or services that are less valued by the current or future market. This does not necessarily mean that the offering must be cheap, just a great value to the client. And by definition, the blue ocean denotes uncontested market space where competition is irrelevant because the rules of the game are waiting to be set. The blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.

By contrast, in the “red ocean,” industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or focused on niches, and cutthroat competition turns the ocean bloody, hence the term.

In the case of a financial advisory firm seeking a new differentiation strategy, exploring the blue ocean may mean developing a unique client profile (or type), an innovative investment strategy or model and/or a newly developed way of analyzing a client’s situation and needs (a new planning approach).

“Fair process” means offering the service with the recognition that it is done with fairness to the clients who use the service. This is accomplished by following the three “E” principles: “Engagement,” “explanation” and “expectation clarity.”

Engagement means involving individuals in the strategic decisions that affect them by gaining their input and permitting them to be involved in the development of ideas and assumptions. Some financial advisory firms have approached this by creating an advisory council made up of a select group of existing clients. “Explanation” simply means that everyone involved and/or affected by a new differentiation strategy understands why the strategy has been put into effect. And “expectation clarity” requires that, after a strategy is set, the financial advisory firm clearly communicates the new strategy, requirements and/or benefits.

“Tipping Point Leadership” (an idea based on the book The Tipping Point by Malcolm Gladwell) states that, once the service or offering is designed and offered to clients, a continuous effort is made to promote and use the new differentiation strategy, even in the face of initial resistance—not from clients but from employees at the financial advisory firms who are wedded to the old ways of doing things. Effort must be made to encourage those employees to adapt to the new differentiation strategy as it can benefit not only the client but the employees as well. This is particularly true in cases where adopting a new differentiation strategy provides greater focus on a narrower set of deliverables or a smaller subset of existing clients. As the strategy unfolds, it should be the goal of the firm to streamline processes and procedures to provide greater overall efficiencies. This will help the firm develop greater capacity to take on new clients.

The goal is a firm focused on a strategy that offers higher levels of efficiency, productivity and profitability. Bringing on clients who fit the new business model can produce substantially increased business, without the need for more staff or money spent on operations.

David L. Lawrence, Ph.D., is founder and president of Efficient Practice, a consulting firm that provides financial practices, broker-dealers and independent firms with comprehensive, profit-driven efficiency consulting and resources. For details, visit