Financial planning strategist and commentator Michael E Kitces writes about the pressure on advisers to find a niche to establish true differentiation from the competition.
As financial planning continues to grow, consumers increasingly have more and more access to qualified advisers. At the same time, the growth in the number of financial planners is leading to a troubling counter-trend - the more financial planners there are, the less differentiating it is to simply be a financial planner. As a result, while in the past financial planners might have competed primarily with stockbrokers, insurance agents, and ‘do-it-yourselfers’, now they're increasingly competing with... each other. And the trend is only exacerbated by the fact that large firms are increasingly steering their advisers in the same direction as well.
The outcome of this trend is a rising new pressure on advisers to focus and find a niche to establish true differentiation from the competition. Realistically, no one adviser can be the best at everything for everyone, but it is possible to be the best for a particular group of clientele, with a genuinely unique value proposition unlike what any other adviser provides. And the efficacy of this approach will only increase as search engines become better and better at helping to match people in need of help with the providers who can offer them the best solutions.
“Ultimately, the point is … to have a niche that's so well established that the only people who contact you are those who seek you out for your niche.”
While most planners fear that establishing a niche will make the ‘pie’ of potential clients smaller, the reality is that most advisers already take only a very, very tiny slice of their current pie, and for many, the size of that slice is shrinking. By establishing a focus to the business, it creates a scenario where the size of the pie may be smaller, but the adviser has the potential to capture the entire pie! Or viewed another way, 100% of something is a whole lot better than 0% (or 0.00001%) of everything. Ultimately, the point is not to turn away prospective clients who don't fit your niche; it's to have a niche that's so well established that the only people who contact you are those who seek you out for your niche... and that there are so many, there isn't time to serve anyone else, anyway!
This is an excerpt from Michael blog. Read the full article at Michaels website.