By PATRICK BREWER
We've all heard about the benefits of finding your own niche as a financial adviser. A niche lets you narrow down your client pool and stand out in a crowd. What's more, it shows clients how you can provide real value to them.
However, a wrong niche can potentially ruin your advisory business.
Here, we’ll talk about the five signs that your chosen niche may not be as healthy as you’d like. We’ll also talk about what to do when you recognise these issues and how to head them off before they wreak havoc on you.
Sign 1: You're having a hard time finding clients
The degree of success you have in finding your ideal clients will be the first canary in the coal mine. A healthy niche should have a pool of clients that you can approach for business. If you’re having a hard time locating clients, it could be an early warning sign that your particular niche may not have sufficient client base to support it.
In thinking this through, be sure to separate locating clients from landing clients. Availability of interested business leads is different from your ability to convert those leads into clients.
For example, if you are regularly meeting with prospects and pitching them on your services, or if have a stream of referrals coming in, then the niche could very well be a healthy one. No matter what your conversion rate is, the simple fact that you can get to your prospects alleviates a significant concern out of the gate.
Sign 2: Your clients struggle to pay your fee
Let’s say you’ve found a healthy client base and have started landing clients. Fantastic! But what if they struggle to pay your fee, leaving you without dependable revenue?
You may discover that they don’t pay on time. Or, perhaps they ask for work beyond your initial contract scope without additional fees. If you have just one or two of those, it’s probably par for the course. But if you are seeing a trend, it could be a red flag that the prospects available in your niche may not have the financial stability or capacity to pay your fees.
If you find yourself in this situation, there are several options available to you here. You could reduce your fees to make your service more affordable. You could change your service to make it easier (and less expensive) to deliver. Or, you could find more financially-viable clients. Ask yourself whether staying in your niche is worth a pay cut, and how long you will be able to tread water until you hit inevitable capacity issues.
Sign 3: You don't have a compelling offer for your niche
Beyond locating clients, consider how you (and what you do for your clients) fit into this particular niche. Understanding the pain points and solutions for a highly-specialised niche market isn’t easy, and it isn’t for everyone. It may require you to re-design your offer, get additional training, or stretch outside of your comfort zone.
If you are unsure what your clients need, you have a problem. The fit between their needs and the advice or solutions you offer is paramount to your success. If you struggle to build an offer that solves real problems for that niche, it may not be for you.
Sign 4: There are no networking opportunities
Networking isn’t always easy, even if you know where the centres of influence are. If you’ve picked a healthy niche, however, then this shouldn’t be an insurmountable issue. Finding leads and influencers should come naturally with effort and time.
Consider this: If you can’t find centres of influence to facilitate your connection with the audience, then they may simply not exist for your niche. Additionally, they may not be accessible to you. In either case, consider how you plan to build traction in a niche where allies are difficult to find.
Sign 5: You're not passionate about helping those in that niche
This is a personal matter — yet critical to long-term success. If you aren’t truly excited about helping the clients in your niche, then they aren’t going to be excited by you.
Even if you choose an otherwise healthy niche, your lack of enthusiasm will eventually put up barriers between you and prospects. Finding networking opportunities, evolving with your niche, having a compelling offer … none of these things matter if you aren’t excited about the niche. Having a few “difficult” clients is normal and happens in virtually every practice, but if you find yourself frustrated, annoyed, or bored with your clients, you need to pivot.
The difference between the right and wrong niche as a financial adviser
Here’s a piece of good news. You don’t have to jump into an untested niche feet-first. There are a few ways to “test-drive” your niche and its future viability.
Talk with your ideal clients. Find those you would consider your ideal clients. Interview them. Identify their pain points and see if you have what it takes to speak directly to them — and solve their problems. With that information, you can have an insider's view on what clients need and how you might fit the bill.
Talk to other financial advisers and planners in that niche. Reach out and talk to the other professionals in the trenches. Get real information about the lay of the land and how your peers have navigated it. You would be amazed at how many advisers and planners are to sharing their knowledge.
Follow a decision tree to test your niche of choice. Working in a niche market isn't just about clients. It's about the whole business. It helps to know which certifications you need, which COIs you may want to connect with, and the degree of your personal connection with the niche.
If you are curious about using decision tree algorithms, you are in luck. Our team at the Model FA has created several of those decision mind-maps (we call them Niche Maps) — and we have recently released three of them into public access. Niche Maps are based on our experience helping 300+ advisers choose a profitable and sustainable niche for them. And now, you can do the same.
So, follow the link, download your Niche Map of choice (we have retirees/pre-retirees, doctors and other professionals, and executives): http://modelfa.com/niche-maps/. I hope this free resource helps alleviate your concerns — and illuminates your path as you choose a successful niche for your advisory practice.
PATRICK BREWER, CPA, CFA is the Founder and a Partner at SurePath Wealth, co-founder of Brewer Consulting, and host of "The Model FA" podcast. Connect with Patrick on Facebook or LinkedIn.