As the financial advisor profession becomes more crowded, niche marketing is seen as an increasingly important way to reach new prospects. At the 2020 TD Ameritrade Institutional’s LINC conference, the subject was explored in depth
A panel called, “Niche Market Success Stories,” led by Vanessa Oligino, director of business performance solutions at TD Ameritrade, explained how important it is to define a niche. By identifying the characteristics and common needs of a client type, an advisor can help build a specialized offering, deliver a compelling message to the market and become better at winning prospects.
The Increased Need To Be Specialized
When picking a target market, Oligino advised the attendees to look through three lenses: one, a market; two, business capabilities and three, one’s personal definition of success. In doing so, advisors can be more credible, become an expert in that space and stand out from the crowd.
As Tom Nally, president of TD Ameritrade Institutional, pointed out in his opening remarks to over 3,000 attendees in the general session, the trend in independent registered investment advisor growth has and will likely remain positive. Nally said, “RIAs will continue to increase market share.”
He showed 2018 research from Cerulli that showed RIAs grew at a faster rate than wirehouse and IBD advisors from 2006 to 2016. They are also predicted to grow faster from 2016 to 2021.
With this momentum, competition within the RIA space will continue to increase. It will no longer is enough to just boast that one is an independent "RIA." That's even more reason that advisors should have a clear focus of what types of clients they want to win over.
Examples Of Advisors’ Niches
Oligino’s panel gave three examples of how they focus on different niches. Sarah Paris, a financial advisor at DHG Wealth Advisors LLC, focuses on women in transition, which she developed expertise in after she went through a divorce herself. “When you do have a personal connection, that is incredibly powerful,” said Paris. She has a high level of empathy. “To be able to say, ‘I walked in your shoes' is a differentiator,” added Paris.
Abraham Martinez, a financial advisor and chief operating officer at Brio Financial Group, focuses in on the LGBT community. They found that before laws changed, LGBT couples had a hard time with financial matters like moving money and gifting, so they were able to specialize their services. Martinez added, “It snowballed from there.”
That market was underserved. “We are like a moth," Martinez said. 'We see the light and try to go after it.” This focus can even help with picking the right centers of influence. He advised the attendees to pursue what they are passionate about and then make money from it.
While some stay away from physicians because of debt issues arising from medical school and their bad reputation as being difficult clients, Colin Wiens, partner at Larson Financial Group, makes that profession their main focus. Wiens’ firm started a separate organization that focuses on the doctors’ student loan issues, which has become a great feeder for their advisory practice.