Financial advisors who want to succeed in the next decade will need to become specialists for niche markets because generalists will fall by the wayside, according to John Anderson, managing director of the SEI practice management solutions team.

Clients will be looking for advice tailored to their specific situations, whether they are widows, ultra-high-net-worth couples or accumulating 40 year olds, more so in the future than they do today, Anderson said in an interview with Financial Advisor magazine.

SEI, a global provider of investment processing, investment management and investment operations solutions for financial advisors and others, and the Financial Planning Association teamed up to to look at advisors who are succeeding at gearing their practices to niche clients. The results were presented in the “Advisory Firms in 2030: Growth by Specialization” research paper released Monday.

The research was designed to help other advisors follow the lead of those who have successfully made the transition from generalists to specialists, Anderson said.

“Firms focused on growing throughout the next decade must find a way to differentiate themselves and create personalized and fulfilling experiences for their clients to compete in what will likely be a very competitive advisory business,” he said in a statement. “Those successful in doing so can create value and loyalty by thinking beyond investments, while transforming unmet, unrealized needs into solutions.”

“Consumers are changing. They want more customization,” Anderson said. “For instance, in our research we focused on an advisor who left a large wirehouse to create a firm focused on life planning for ultra-high-net-worth clients. Another advisor we interviewed has a second-generation firm that was a generalist and now specializes in equity compensation and stock options for executives and is attracting clients from all over the country.”

For others who want to make the transition, Anderson said advisors should stop segmenting their clients based on what is important to the advisor and, instead, focus on what is important to the client. In this way, a few similar clients might stick out and become the basis of a niche market that can be expanded.

“One advisor we worked with had four widows who he enjoyed working with, so he honed in on those types of clients,” he said.

The first step is to make a business plan for the new set of client parameters and then make a plan to capitalize on technology, both to find new clients and to communicate with them, Anderson explained. According to the research firm Cerulli, there will be three types of advisory firms in the future: mega firms, inexpensive digital firms and lifestyle advisors who specialize, Anderson noted.

In addition to creating a business growth plan and targeting a niche market, advisors should consider developing, either internally or through partnerships, the types of services a target market may need currently and in the future. For example, expertise in Medicare and long-term care for pre-retirees and retired baby boomers or a student loan and debt management program for Gen Y investors could become niche markets, the report said.

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