Adviser explains his process for creating a successful niche practice

Scott Oeth could have taken his advisory career in several different directions nearly a decade ago when he decided to focus his business on serving a specific sort of client.
Formerly a competitive volleyball player, Mr. Oeth had a nice collection of blockers and hitters on his client roster. He also had a cluster of physicians who he was helping to straighten out their finances.
But when he thought about which of his clients he was offering the most value, he realized that the advice to corporate executives about non-qualified deferred compensation plans, concentrated stock positions and the tax implications of these and other types of compensation plans, set him apart from other financial advisers.
Today executives make up most of his client list at Cahill Financial Advisors and that's the area of his business showing the fastest growth.
“It's appealing to be the specialist in an area,” said Mr. Oeth, a principal at Minneapolis, Minn.-based Cahill Financial Advisors. “When you get a referral, it's almost a prescriptive referral, where a client says to someone in a similar situation, 'You have to talk to my adviser about this.'"
(More: (More: What constitutes a niche practice?)" target="_blank">Scott Oeth talks about the benefits of a specialty practice and tells his own story)
When advisers specialize, the quality of the advice they provide improves, Mr. Oeth said. He works with many executives at Target Corp. now and knows the specific details of the company's stock options, the deferred comp plans, pension plans and the investments in their plans.
“Having a solid understanding of the tools we have to work with can really help in crafting the advice specific to that client,” he said.
Gaining the knowledge needed to serve a particular group of clients is crucial to becoming a specialty adviser.
For Mr. Oeth, he was already teaching a certified financial planning course that covered much of the information executives need, but he added to that education from a specialized master's degree in financial planning to develop even more skills.
“Make sure you are competent and can deliver what you promise,” Mr. Oeth recommended to other advisers seeking to create a niche. “Don't sell something that you can't really back up.”
(More: What constitutes a niche practice?)
He also built up the relationship he had with an executive at Target, also based in Minneapolis, and created a study group with other professionals and centers of influence who work on different issues for executives. This group of attorneys, trust officers, private bankers and others gather for lunch monthly to discuss specific planning issues of executives.
He also became even more involved with financial planning organizations, which resulted in other advisers recognizing his skills and recommending him when they couldn't meet the needs of certain clients or prospects, Mr. Oeth said.
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One of the challenges of focusing on a specialty is having to sometimes turn away clients who aren't part of a firm's “ideal client” demographic.
Practically speaking, such rejections might not be feasible in the earliest years of growing a business, Mr. Oeth said.
And all happy clients, of course, are good “advertising,” he said.
Another challenge is staying focused on a particular specialty when other niches start to look opportune.
“You need a balance between looking around the corner to see what's coming in the industry and looking for opportunities, but not abandoning what you've already put time and money into,” he said.
Tip sheet:
• Identify a group with specific needs, such as those requiring technical expertise or certain financial products to serve them well
• Consider forming a study group with other professionals who target the same clients
• Networking is crucial when you market through centers of influence; take larger roles in industry groups so you become known as an expert in a particular field of study
• If targeting clients directly, use videos, podcasts and other digital media to build a brand that identifies you as an expert at helping this type of client
• Pursue specific certifications or other education that pertains to the area of expertise you're establishing; make sure you are technically competent to provide the advice and deliver what you promise
• Give yourself time to grow this area of business; don't get distracted by other specialties that show promise