I’ve come to believe that all businesses are niche businesses. Larger businesses have larger niches and smaller businesses such as financial advisory businesses should be micro-niche or multiple micro-niche businesses.
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The first challenge I find is that most financial services businesses have not identified niches they want to work with. If they have identified a niche, the niche is much too large. The second problem that happens come from firms who have identified niches, but have allowed themselves to drift outside their niche to service people they have not identified as their best and most valuable clients.
Some of the reasons you want to develop a niche business are:
You can become the expert within your niche -
I once saw a video that talked about a financial advisor who had developed a niche of working with Native Americans. This person owned the market for this group of people in the area he lived. Not only was he extremely well known within the niche, he understood the issues and could work very effectively and efficiently with this group of people.
You will not be re-creating the wheel every day -
When you become an expert in a niche you will have systems, forms and methods in place for servicing this market segment. After doing six to ten plans for a particular niche you will find a remarkable similarity as you work with more people in your chosen niche. Much of the work can be automated and many deliverables will be so similar that you might just have to change names. This allows you concentrate on the person and not learning what their hot button issues might be.
You become more valuable to your clients -
Understanding what the drivers are for a particular niche makes you more valuable. Other advisors will have a very difficult time replacing you because they won’t have the deep knowledge that you do about what makes your niche tick. When you completely understand a niche it’s often easy to cross sell services because you know how to service your client in a holistic manner.
You can charge higher fees -
When you are seen as an expert in a particular market you can charge higher fees. You will have a better understanding of the value you bring to your market segment and will be able to communicate this expertise in a manner the people in your niche will understand. Taking the complicated and making it simple is something that niche experts can do and when they do so, they will command higher fees for the work they do.
You might just have more fun -
I find that those who choose and stay within a niche have more fun. They aren’t worried about fit with their clients because they often have a natural affinity for the niche they choose. This allows you to build rapport with potential clients quickly which often decreases the time it takes to make a sale.
I find the truly successful businesses that I work with are those who develop niches. In the financial services business, it’s almost a crime to not have at least one to three niches that you become an expert. I’m always interested in hearing about those who have successfully built a niche. If you have a good story, please leave it in the comments below.