The undeniable value of niche advising

The undeniable value of niche advising
If you want to grow your advisory practice, don't try to be all things to all people. Specialize in a few areas and build your own niche.
APR 09, 2024

I recently had a conversation with a couple of advisors whose concentration is advising nurses. They’ve focused on a handful of hospitals, learned the nuances of the employee benefits and retirement plans, become well acquainted with work schedules and even learned the language the nurses spoke.

These advisors are crushing it.

If you want to grow your advisory practice, don’t try to be all things to all people. Rather, specialize in a few areas and build your own niche.

As our firm has grown through partnerships and M&A, we’ve had the opportunity to talk with hundreds of advisors. Some firms are adding new assets, but excluding market gains, the vast majority aren’t. And I have found that the firms that are growing organically are focused on a niche.

A niche can be a profession. One firm that joined us a couple of years back had a specialty in dentists. The advisors learned all about the challenges dentists face in running their own small businesses. Not only did the advisors have expertise in financial planning tools such as quasi defined-benefit plans, but they also understood the working rhythms of dentists. For example, most dentists plan their calendars six months out and don’t work Fridays.

A niche can also be an employer. Many successful advisors have built their businesses by becoming the go-to firm for a specific company or type of employer. For example, I’ve met a few different advisors who focus on Boeing employees. Without having any company endorsement, these advisors have become experts in Boeing’s retirement and employee benefits and have attracted hundreds of clients from this giant employer.

Being an expert in specific areas of financial advice can also be a niche. Some advisors have chosen to be specialists in business succession planning, or advanced estate planning, or college education planning. Being known as an expert in a field where most others are generalists can lead to a high number of referrals.

When I launched Allworth Financial in 1993 (then known as Hanson McClain) alongside my business partner, Pat McClain, we had a significant focus on retirees from Pac Bell. The company had an aging workforce, technology was disrupting jobs, and the company was using an over-funded pension plan to entice older workers to retire.

We were hungry to add clients and we made the strategic decision to become experts in everything related to telecommunications. We learned their terminology, how to calculate pensions, the impact of interest rates on pension buyouts, the nuances of the stock options for the executives, and how medical worked in retirement. We became so knowledgeable that people from Pac Bell’s human resources department would call us to get clarification on certain aspects of their retirement plans. We gathered hundreds of clients from this niche in our early years and set the foundation on which we’ve built much of our success.

Even today, we still have a handful of niches upon which we focus, and I remain convinced they are a fantastic way to build and grow an advisory practice.

Scott Hanson is co-founder of Allworth Financial, formerly Hanson McClain Advisors, a fee-based RIA with more than $19 billion in AUM.

Retirement savings gap persists despite bull market, Ascensus CEO says

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.