"There are not enough hours in the work week to provide highly customized service to many different types of clients without completely sacrificing a meaningful profit."

Narrow It Down

By John Bowen

Looking around today's economic landscape, you can see there are countless opportunities to become more successful as a financial advisor. In fact, for most advisors, it's not usually a shortage of opportunities that is a barrier to their success, but rather that there are too many opportunities.

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How can this be? It's a matter of focus. Many advisors find it challenging to focus their efforts on just one or two opportunities. Instead of choosing to concentrate on attracting and serving one particular type of client, they take every prospect who comes in the door. To these advisors, it would feel downright unnatural to turn away business.

Because these advisors never establish themselves in a single sphere, they never become well known to any one community. Working with many different types of clients, each with different financial circumstances, also requires creating multiple service models.

The sheer time needed for this effort virtually ensures that clients will not receive the high-quality experience they want. Just as important, there are not enough hours in the work week to provide this type of highly customized service to so many different types of clients without completely sacrificing a meaningful profit.

But some successful advisors have found a different way. Instead of opening their doors to all, they are highly selective. They design their marketing efforts to attract clients from a single market niche, and they design their businesses to serve that niche extremely well.

The benefits of working this way are substantial—for you and your clients. Consider an example from my own career. When I first started out as a financial advisor, I had all kinds of clients, from airline pilots to small-business owners. Eventually, however, I decided to work exclusively with senior executives of just two or three publicly traded firms headquartered in Silicon Valley, and I prospered. Here's why:

Working in a single niche makes it easier to become the expert your clients need. At the time, Silicon Valley had about 500 public companies. The likelihood of my becoming an expert on the executive-compensation and stock-option plans of all 500 companies was exactly zero. But becoming an expert on two or three companies was easy. So my clients—all employees of those firms—received precisely the expertise they needed.

Working in a single niche makes it easier to pull in qualified prospects. As the expert in a small community, you can't help but become well known. Whenever I met with my clients, I made it a point to let them know that I was focused on working with the senior executives of just two or three companies. Once they recognized my expertise, they were happy to provide referrals—they knew plenty of other people facing similar financial challenges. At the very least, they would refer other senior executives from their own company. Sometimes they would refer me to executives at one of my other niche companies. Growing my practice by adding clients from my market niche became effortless.

Working in a single niche makes it easier to provide world-class service. By focusing on a select market of clients with similar needs, I was able to create a single, high-quality, streamlined service model, and then customize it to meet the specific needs of each client. I could realize the benefits of scale, while still providing personalized service.

Working in a single niche is simply more enjoyable. When you work with one type of client that you've chosen because you truly enjoy them as people, you have a substantially higher quality of life. This is not just a feel-good benefit, but also a true business benefit: When you work with people with whom you have a high affinity, you tend not to burn out and are happier staying in business.

Finding Your Niche

Your challenge, then, is to narrow your focus and concentrate on one defined group of clients. If you're like most advisors, you want this group to be affluent. Recent research by CEG Worldwide found that sourcing new wealthy clients is the single most important issue among advisors nationwide.

It is much too broad, however, to simply say that you'll work with the affluent. To be effective, you must narrow your choice much further, choosing one of that market's many niche opportunities.

Choose a niche that is particularly suited to your talents, skills and interests. Each of us has unique talents and comparative advantages in different areas. Your goal will be to match your own skills and interests with those of your niche group.

For example, if you excel in stock-option planning and live in an area where there are major employers who use stock options as an important part of their compensation packages, the employees of these companies may be an excellent niche for you. Or, if you enjoy helping clients secure their retirement and there is a retirement community nearby with large numbers of wealthy retirees, this could be your niche. Likewise, you might have a passion for sailing. If you live near a wealthy seaside area, you could easily match your love of sailing with the interests of a local affluent yachting community.

Niche opportunities are everywhere among the affluent. To narrow down your choices, it's helpful to think first in terms of segments, then broad niches within that segment, and finally narrow specific niches.

Affluent niches are target-rich environments. However, it's an absolute necessity to focus on one niche that is narrow enough. You must be as specific as possible about industry, occupation, company, job and geographic location. If you target too broad a community, you will encounter great difficulty and often end up spending extraordinary time and expense identifying specific target prospects.

One of my favorite examples of a truly narrow niche is the advisor who set up his office in the retirement building where his affluent target market lived. Later, and only after achieving considerable success focused on that one building, he expanded—all the way to the building next door.

A Five-Step Approach

Once advisors become convinced of the value of working within a single niche, their next challenge is choosing the right group to focus on. By taking a systematic approach to identifying the niche best suited to you and your practice, you'll soon overcome this challenge.

Step 1: Identify where the largest concentrations of wealth are located in your local area. These may be specific communities, industries, companies or organizations.

Step 2: Identify a few potential niche markets within a concentration of wealth where you could deliver substantial value-added service to people who are willing to pay for it and with whom you enjoy working.

Don't get caught up worrying about a lack of expertise—you can acquire that. Instead, identify the most opportune market that you want to serve. You have to enjoy it, like working with the people, feel passionate about it.

Step 3: Identify significant opportunities within the niche community. Do this by talking first to the centers of influence in each niche you wish to consider. Then choose an approach that complements your interests (for example, fine dining, entertaining, golf, tennis or sailing).

Step 4: Analyze your client base to identify opportunities to leverage existing centers of influence. Is there anyone among your clients who is a member of the niche you are considering? If so, find out if he or she would be willing to introduce you to others in the community.

Step 5: Finalize your decision on your primary market niche. A great way to double-check that you've chosen the right niche is to do some market research with centers of influence in that niche. As you talk to movers and shakers in the niche, it will quickly become clear whether the niche is deep enough to provide plenty of opportunity, yet narrow enough for you to focus on effectively.

To provide high-net-worth investors with the personalized, high-quality experience that will make them your clients for life, you must concentrate on a select community. By fully establishing yourself in this niche and designing your practice to meet the specific needs of its members, these individuals will seek you out. You'll place yourself in the perfect position to build a highly profitable and highly enjoyable business.