Serving a niche client base creates a key advantage for financial advisors, branding specialist Diana Oddi explained in her presentation at the Women Advisor Summit hosted in New York City by InvestmentNews on Tuesday.
Oddi, who is based in Ontario, Canada, works with advisors to strengthen their brand and client engagement strategies. She wants advisors to get out of the mindset of viewing a niche market as excluding them from serving potential clients.
“I know you might be thinking, if I define a niche market, am I limiting myself? I don't really want to turn business away, and I really enjoy working with some of my clients. But here's the mindset shift, a niche market doesn't exclude, it clarifies,” Oddi said on stage at Tribeca 360 in Manhattan.
Oddi said in her presentation that studies show advisors who have a niche market obtain 30 percent more revenue and 20 percent higher client retention and referrals than general advisors. A 2023 research study from Kitces found that niche firms maintain a 58 percent average client growth rate compared to 26 percent for non-niche advisor firms.
“The question is, how do you go about finding your niche? But sometimes the answers lay right before you in your own existing book of business,” said Oddi. “Sometimes, if you look at your book of business, you can see where you're already gaining traction. And you can ask, what are my best clients, the ones that really give me energy versus those that drain me?”
Niches could take the form of being value based or serving specific industry or life stages. For example, Oddi mentioned potential client niches for advisors to be serving teachers, doctors, business owners who are selling their firms, or women who are going through divorce.
“You can ask, what are my best clients and the ones that really give me energy versus those that drain me,” said Oddi. “We tend to gravitate to the things that excite us. You want to identify who those clients are, and really think what do those clients have in common? Perhaps they have common problems or values or lifestyle, and so you can ask those questions.”
Several large RIAs have made acquisitions this year of firms that serve niche client bases. For example, Savant Wealth acquired a firm focused on Silicon Valley employees, Savvy Advisors added an RIA that caters to medical technology professionals, Mercer bought a firm focused on serving Hollywood's entertainment sector, while both Merit Financial Advisors and Modern Wealth acquired RIAs whose niche is serving first responders such as police and firefighters.
Speakers from both Modern Wealth and Merit Financial Advisors participated in panels at the Women Advisor Summit. Other featured speakers included women from Ameriprise, Modera Wealth, Beacon Pointe, Rise Growth Partners, Osaic, Captrust, Fairport Wealth, and more.
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