Many advisers achieve success only after targeting a certain group of clients and focusing their expertise and time on serving that niche.
Three years into his career in financial services, Alan Kondo decided to focus on the Japanese-American community. Mr. Kondo, who was born in Canada but is of Japanese descent, knew this community as conservative and cautious, but also very loyal once it believes in something or someone.
To get his name out in the community, Mr. Kondo, president of Kondo Wealth Advisors LLC, writes a
financial planning column for the local Japanese-American newspaper in Pasadena, Calif., and hosts seminars on different financial topics, incorporating Japanese-American history, community and culture into PowerPoint presentations, he said.
He also participates in Japanese-American organizations and wrote a
financial planning book aimed at this group.
“I understand Japanese-Americans want to be more conservative with their investing, and we use an investment philosophy that provides more-consistent returns, with a lot of protection on the downside,” Mr. Kondo said.
His business has grown from $25 million in assets under management 15 years ago, when he decided to focus on this niche market, to about $100 million today.
When advisers consider focusing on a niche, they should first examine its market potential, said Eliza DePardo, a principal and director of consulting for FA Insight. This may require buying secondary market research from sources such as a chamber of commerce, she said.
Competition
And advisers should weigh how much competition they have in serving that niche before diving into the scene, Ms. DePardo said.
“If others are already pursuing the market, maybe other low-hanging fruit will be easier to crack,” she said.
Mr. Kondo estimates that a half-dozen planners cater to his particular niche market in Southern California but observes that the Japanese-American community is still underserved for financial planning — and the niche is continuing to grow.
Some planners may find a hidden niche has developed within their practice if they look closely. With that in mind, advisers should re-examine their current clients' characteristics to see whether they have developed a cluster.
“You have a head start if you already have clients in a particular space,” Ms. DePardo said.
For Michael Pellman Rowland, identifying a group to focus on didn't come from being part of the community he seeks to help, unlike many advisers who pursue their natural affinity groups. But it took only a quick look around to recognize that he had a strong kinship and connection with the gay community.
“I have a large number of gay friends and grew up in Greenwich Village where my parents were one of only two straight couples in our building on West 4th Street,” said Mr. Rowland, an adviser with Morgan Stanley in New York. “A lot of gay friends were asking me questions about planning for them, and I was doing lots of research for them already.”
Like other advisers who set their sights on a particular cultural or minority community, Mr. Rowland has had to develop certain technical expertise, including attaining the accredited domestic partnership adviser designation. And with the recent Supreme Court case that voided part of the federal law restricting benefits for people in same-sex marriages, he has to stay on top of changing rules for his clients.
Networking
Mr. Rowland also has aligned himself with other professionals focused on serving lesbian, gay, bisexual and transgender clients, and he participates in community activities. He teams up with estate lawyers, and together they provide educational seminars on the rights and benefits of same-sex couples.
It all comes down to
trust.
“With any niche, you have to care about them and have a story you can tell to prove you really care,” he said. “I tell them how my life progressed and make them understand why a straight man would care about them.”
Among high-performing advisory firms that target a specific client profile, 97% of those firms stick almost exclusively with clients that fit their niche, according to the 2012 Fidelity RIA Benchmarking Study.
Mr. Rowland, who includes a line in his LinkedIn profile noting his LGBT specialty and mentions it on his firm's website, said same-sex couples are his fastest-growing client segment. He is part of a three-person team of advisers who manage $600 million in client assets.
Wealth stewardship
Greg Gilbert focuses on meeting the planning needs of Christians as a financial adviser with Ronald Blue & Co. LLC in Atlanta. His whole firm, in fact, is centered on helping clients with sound wealth stewardship through the teachings of the Bible.
Mr. Gilbert has had to become very familiar with the 2,000-plus biblical verses related to money issues and how to use them in addressing financial problems. He said clients often are relieved to find someone who understands their principles.
Prospective and new clients tell Mr. Gilbert they are “tired of having conversations with their broker, who just doesn't understand why I want to give away so much,” Mr. Gilbert said.
His clients don't have to be Christian, but he said some of the conversations around giving and contentment are easier when people have the same philosophical alignment. Elements of faith come into conversations about philanthropy, as well as raising the next generation and living debt-free, he said.
“The overlay of the faith component gives extra meaning to discussions and makes for strong relationships,” Mr. Gilbert said.
