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.
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