Advisers who double down on client niches stand to multiply assets: Study

Focusing on a specific client niche can help advisers increase their business, according to Cerulli Associates

Oct 15, 2013 @ 2:08 pm

By Megan Durisin

Financial advisers who are looking to multiply their assets under management may want to focus on a more specific group of clients.

Advisers who take on clients in a specific niche area, such as high-net-worth investing or retirement planning, are in charge of double the amount of assets per adviser than the industry average, according to a new study from financial services research firm Cerulli Associates Inc.

Only about 15% of all advisers are specialist advisers. But this group manages 29% of overall adviser assets, according to the study, which measured assets through the end of June 2013.

The study focused on specialist advisers whose practices have zeroed in on the areas of defined-contribution plans and retirement plans, small to midsize institutions and high-net worth clients.

“They have chosen to focus on a specific type of client and that tends to breed itself,” Bing Waldert, a director at Cerulli, said of specialist advisers. “Rather than trying to be all things to all people, they really develop something within a specific market. It starts to take on a life of its own.”

Advisers who aim to boost their growth by specializing in these areas need to know that steep levels of due diligence are often required, according to Mr. Waldert.

Focusing a practice specifically on one niche also decreases the number of potential clients, according to the study, but it gives an adviser a greater chance of earning business.

However, Mr. Waldert said, specializing isn't for all advisers and he doesn't expect every generalist to become a specialist.

“I think every adviser would tell you they want to work with fewer, wealthier clients,” Mr. Waldert said. “It takes a careful examination of whether they're set up to do so.”


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