Assume small to work massive: why constructing a distinct segment offers advisers an edge

As the great female icon, Dolly Parton once said: “You gotta keep trying to find your niche or make one of your own.”

This sentiment was at the heart of a Women in Advice webinar that I recently hosted, where almost 40 female advice professionals came together to discuss how building a niche can help develop a successful and fulfilling career.

Over half of the group (54%) currently have a niche or are working on it. Almost all (93%) could think of a niche they would be able to develop.

The insights given by the speakers and the group are relevant for any financial adviser, regardless of gender, who wants to stand out from the crowd.

What is a niche?

Although by definition a niche is a subset of a larger market, in practice it boils down to being an expert in a particular aspect of life – and for financial advisers this translates as being expert in the financial implications of that aspect of life.

Niches can be grouped into a number of headings:

• Life events: for example divorce, bereavement

“Financial planning is really valuable for people going through a divorce – it gives clarity and peace of mind around future budgets – especially for those who weren’t involved in the money previously.”

– Tamsin Caine, Smart Divorce

• Occupation: for example medical profession, farmers, teachers

“Most doctors, nurses, dentists don’t know how their pension is calculated, but their pension scheme is becoming less advantageous and they aren’t even aware.”

– Rebecca Nkoane, Fidelium

• Gender: for example women, women entrepreneurs

“Helping women navigate psychological and behavioural barriers that keep them stuck is hard but important. Coaching and behavioural finance are crucial. You need to be able to invest and care about the outcome of the women.”

– Samantha Secomb, Women’s Wealth

• Life stage: such as marriage, first mortgage, starting a family, retirement, inheritance

“You need to be good with people where there’s been a sudden change in their money.”

– Julie Flynn, Ebb & Flow Financial Coaching

The key benefits to having a niche are:

• It allows you to stand out from the crowd and be known for having a very specific set of skills which will help a specific type of person.
• It enables you to run targeted marketing campaigns that mean you will feature higher in internet searches. This can result in working with people from a wide geographical area, not just restricting yourself to clients that are nearby.
• By understanding the needs and concerns of specific groups, it allows you to communicate key messages that will resonate and connect with them.

With social media at the heart of so many people’s lives, these days word of mouth can reach a huge number of people who share common issues, life stages and careers.

“All niches hang out together one way or another – eg widower Facebook groups have led to a number of referrals,” said Flynn.

Check out Money Marketing’s Target Market section

Risks

Being known for a particular type of advice could be regarded as narrowing your options and reducing the number of potential clients you can work with. This was not the experience of the group.

“I’ve never been busier – I think it’s because I’m clear on what I stand for and what I offer,” said one participant. “I now receive far more enquires from all kinds of areas.”

Depending on your chosen niche, it may be necessary to gain specialist knowledge or additional training, for example NHS pension schemes, or dealing with pensions post-divorce. The main cost, however, is in time and the group agreed that specialist knowledge will reap rewards.

Charging

While the consensus was that specialists should be paid more than generalists, a poll among the group discovered that only just over a quarter (27%) of those with a niche offering had actually increased their fees to reflect their specialism. Two thirds had not, with the rest thinking about it.

Some had changed fee structures a number of times, moving from ad valorem to hourly rates to fixed fees.

“Charging by the hour doesn’t work as it means people don’t want to speak to you as they’re scared how much money it will cost,” said one webinar participant. “And you can’t be a financial adviser without talking to people.”

Ideas from the group on how to increase fees include:

• You need to believe in what you are doing and that it offers value.
• Articulate what you do – focus on the outcomes that come from working with you.
• Write it down, then practice saying it, then practice saying it to someone else, record yourself saying it, you are always better the more you practice.
• The price conversation becomes irrelevant once clients value what you do.

Ben Peele is UK managing director at PortfolioMetrix