How to find your adviser niche

Post on: 16 Март, 2015 No Comment

Brian Pert

Most financial advice practices offer a range of services to diverse client base, but sometimes it can pay to offer a broader range of services to a narrow segment of consumers.

The main reason for a practice to deliver advice to a defined set of clients is to position itself as an expert and then leverage that position to refine the client base. If a practice knows who its target audience is it can refine its marketing message. This will help a firm explain to prospective clients the challenges they face.

Prior to deciding to work in a specific niche, a principal will need to research challenges and obstacles. How can you add value? Is it a commercial decision you want to embark on?

If you think offering a specialised service is a strategy which will pay dividends, it is worth looking at your current client base to see if there are any professionals there which might qualify, such as engineers, pilots or dentists. Our first niche was Qantas Airways pilots and although we did not have any pilots as clients we knew third parties who could introduce us.

Once you have decided the niche you are going to target, based on conservative assumptions of prospective client numbers and fees, you must determine how to add value to the advice process and discover the challenges the target faces.

Research meetings are highly valuable in determining whether your instinct to target a niche is likely to pay off. People who can help you with this survey of attitudes to advice might already be in the client base or may be recommended through centres of influence such as lawyers or accountants. Normally you would expect to have one client in the niche, which is how the idea was germinated in the first place.

Proof is in the groundwork

Research meetings should take about 30 to 45 minutes and focus on discovering what it is the client niche wants from the advice process. You are not there to sell your services.

The main questions you want answered are: what are the major changes occurring in the niche; what are the financial challenges people in the niche face; and have they been successful in solving them.

That line of questioning should take up your allotted time, but if there is a chance to keep going, it is useful to start mining for more information about the target client base. How big is the pool of prospective clients? What would be the best way to contact these people? Are there events such as state conferences? What other professionals service this niche?

Once you have conducted about eight research meetings you should have a good idea if you can add value and a deep understanding of what is going on in your chosen niche.

Assuming you still think this is a commercial project, you then need to write a research paper detailing your findings. Our first paper on Qantas pilots included two case studies pilots could relate to.

This whole process, from first interviews to a completed research paper, should take about three months. You may need to employ a ghost writer if professional writing is not your strength.

Now that you have completed the research paper, what do you do with it? First, you go back to the people you interviewed. This is the time you can ask them if they know others in the niche who would benefit from your services. At the end of the day the research paper is a big business card.

One-stop shops advantages

There are a number of different value propositions from financial advisers in Australia. Many will have an investment focus or a self-managed super focus. Professionals in a niche tend to be time-poor and often benefit from a one-stop-shop offering.

A number of advice firms are offering this project management role in order to act as personal chief financial officers to clients. You dont need to be an expert in every area of advice but you should have a good grasp of the major themes.

Estate planning has often been an area that advisers will make reference to in their advice documents. More often than not nothing happens, as this puts the onus on the client to see a lawyer. By project-managing this process you are adding value and executing the clients wishes.

The value proposition then shifts to being a personal CFO, as compared with an investment adviser or an insurance salesperson.

This whole business offering may totally change your client engagement strategy upfront.

Instead of running through the clients income and balance sheet, a personal CFO should be finding out about clients desires and ambitions and developing strategies to turn them into reality. This is where clients will pay for advice.

Clients can get insurance, loans and investments from the banks. We know what goes on when clients go to the bank. It seems to be about product, not advice. So your service offering needs to be led by professional advice and if product drops out that is fine but not the other way round.

If you run this type of service offering there will still be competition, and it may come from accountants who have often held the position of being the clients trusted adviser.

The transition to this type of service may take many years. We have been at it for 10 years and are still refining the process, but there needs to be a mind shift and too many advisers will struggle with this.

One advantage is your revenue will be less dependant on investment markets which are out of your control. Why should your income go down when sharemarkets fall? You tend to work harder in down markets. There will be a shift in client conversations from investments to outcomes.