It makes sense that doctors specialize. You cannot expect one physician to know everything, and when you have a serious medical issue, you want to be treated by someone with comprehensive knowledge of that particular problem.

The same logic can be applied to financial advisors working with clients in niche markets. If you are looking to focus on one segment, there are many kinds available, full of clients with particular needs:

  1. Geography. For instance, your clients might all be located in the same place. Back in the 1970s, one Wall Street firm ran a program where advisors in New York City adopted a city in another state and helped people there invest. These advisors would spend a few weeks calling and making appointments, then fly to the cities and spend the next week meeting with local prospects and clients.
  2. Stages of life. There are many people who might need, say, a retirement planning specialist. Or people going through divorce who need financial help.
  3. Professions. Maybe you want to work with teachers because you understand how their pension systems work in the local school districts. Maybe you want to serve airline pilots, who need investments that don’t require day-to-day attention. Or perhaps you want to work with engineers, whose backgrounds make it easier for them to understand the way you make decisions.
  4. Business segments. Maybe you want to take on something like medical practices—groups of physicians who not only own their businesses but are also leasing space and specialized equipment. They often have unique insurance and financing needs, too.
  5. Social circles. Maybe you are already in a place to serve certain social groups. Think of a realtor who knows a specific neighborhood very well. The people who live in the area likely know this realtor by his or her first name, and it’s the name that comes to mind when they want to sell their houses. In the same way, a financial advisor like you might be a fixture at a country club. Everyone knows you, and when they are ready to invest, you would be the logical choice.

We have only scratched the surface. There are also business niches to be found in religious activities or lifestyle pursuits. Or you could make yourself stand out for certain talents you have—being a “stock jockey” or active trader. Or maybe simply a fee-only financial planner.

How Do You Cultivate Your Niche?
We have established that there are many niches you can pursue. But once you have found one, what do you do next? This is when you have to ask yourself some questions:

  1. Why this niche? Are the people you want to serve not adequately serviced by a generalist financial advisor already? Would they not be doing online investing themselves without you? Is there some reason they are unique? Are there other advisors targeting them, either locally or nationally?
  2. Why is this niche going to be profitable? What makes specializing a better strategy than being a generalist? What needs does this client segment have (and what opportunities do they offer you) that you can’t find in the general population? Why should someone choose this defined market over another?
  3. What makes you the logical choice for this niche? Prospects will ask: “What qualifies you? Why are you a better choice than this other advisor?” Have you worked in this particular segment yourself before you were a planner? Or do you have family members, perhaps more than one generation, working in this field? Has learning about this industry become your passion?
  4. How will you succeed? When you want to build a clientele within a niche, what will define your success? Is it finding 100 people who will each turn over $1 million to you? Will you charge these 100 people 1% in ongoing fees to bring in $1 million in annual revenue? Is that practical? How large is the local market? And what should the plan be for getting those 100 clients?
  5. How will you break in? At this point, you’re just an outsider looking in. But maybe you have advantages. Maybe you already serve several clients in this field. Maybe you have done well for them and they are willing to introduce you to fellow professionals. If you serve people in a professional organization with a local chapter, perhaps they can get you in. Maybe you are going after people in the oil industry and there is a Petroleum Club, which happens to be a private luncheon club in town.
  6. How are you going to raise your visibility? Have you built a list of prospects within your niche? Have you connected with them via LinkedIn? Do you have a strategy for marketing to them? Can you write for their professional publications, host a luncheon or speak at their association meetings? How will you keep the momentum going?
  7. How can your current clients get you more clients? If your current clients are satisfied, maybe they know people who would like to work with you. Do your current clients know how to arrange introductions? Perhaps you can coach them. Will they introduce you at dinners or cocktail get-togethers? How can you make it easy for them?
  8. Can you build a moat around your niche? After you have established yourself as an expert, what if another advisor sees your success and wants to follow in your footsteps? You can’t forbid them or look territorial to your current clients. But what else can you do? Can you take on officer responsibilities in your professional association? Can you set up an advisory council? Can you sponsor events or advertise in your clients’ professional journals? You want to be the logical, experienced choice when there are other people around doing the same thing you are.

After asking all those questions, you should come to realize that developing a niche market isn’t easy. But it can be lucrative.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor is available on Amazon.