CPD: Five steps to create a niche market

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How can a niche market be beneficial for both client and adviser in a financial planning practice?

Five steps to create a niche market

No business can be all things to all people, especially when that business is a small business. In this article, Zurich explores the development of a niche market and how that can be beneficial for both client and adviser in a financial planning practice.

A niche market is very specific. As a specialist financial adviser, your niche may be a specialist service you offer to clients – you may be an SMSF expert, an estate planning guru or a retirement specialist. Alternatively, your niche may be focused on a specific market segment – you may choose target lawyers, dentists, military personnel or business owners. A niche is a focused, targetable part of the broader market and importantly, with a niche strategy, you should leverage your expertise or knowledge.

The benefits of a niche strategy

According to ASIC’s Financial Adviser register[1], at 1 February 2018 there were more than 25,000 financial advisers practicing in Australia. That’s a sizable competitive set. At the same time, research from Investment Trends[2] suggests that while Australians understand the benefits of financial advice, 80 percent currently don’t receive it, nor do they intend to seek it. Looking at that data in combination could be confronting, particularly to those advisers new to the industry. Developing a niche strategy has a number benefits, not least enabling you to stand out in a competitive field of financial advisers which, to the uninitiated, may seem much the same.

Benefit #1: It helps you stand out from other advisers

Whether you’re targeting clients looking for a niche service, such as SMSFs, or your focus is on a niche market, such as doctors or academics, positioning your business as a specialist in this area will help you stand out from the pack. When you have a highly specific service offering, or one that is tailored to a defined group of individuals, there will be fewer practices out there offering exactly what you’re offering.

Benefit #2: It keeps you focused

Trying to be all things to all clients is hard. There’s regulatory change to keep on top of, a proliferation of investment products to understand and continuing education requirements. Instead of trying to cover everything and believing everybody is a prospective client, a niche will help you to focus on a specific group of people and their specific needs.

Benefit #3: It helps you reach new clients

When you deal with a niche market, it’s much easier to learn what’s important to them, what magazines, websites and newspapers they read, and the sort of information they want. From there you can develop a marketing strategy to target this group; offer to write blogs for a website speak at seminars or create an interest group on social media. A niche market helps you to develop targeted marketing, based on your knowledge and understanding of what the people in your niche are interested in.

It may also help with word of mouth referrals; after all, referral is a great way to generate new business. When it’s clear what you specialise in, and you have built up trust in this area with a group of clients, you increase both your visibility and credibility. As such, existing clients will be more comfortable referring prospective clients to you.

Benefit #4: It builds credibility

Focusing on a niche enables you to focus your attention and become an expert in your niche. Expertise builds credibility, credibility builds a business.

Focusing on a niche makes it easier for prospective clients to others to understand what you do. As this group is more targeted, it’s easier to raise your profile and increase your visibility to your target market.

Benefit #5: Better client relationships

Because you’re working with a very specific group of clients, you can focus on nurturing those relationships and delivering services and ‘add-ons’ that work for that group. This might be a quarterly seminar in which you provide strategy and update targeted to your niche, a weekly blog or a monthly email. Your contact can be more personalised and the content more tailored. Satisfied clients are loyal clients; and loyal clients keep their business with you and are more likely to refer new business.

While there are clearly benefits to be gained from focusing on a niche, how do you decide on that niche and then implement it?

How to create a niche advisory business

Whether you’re starting out in business, or you have or are part of an existing practice, you can still create a niche.

Step #1: Examine your existing business

Look at your existing practice and think about the types of client you most like working with and think about what they have in common. Are they a particular demographic, do they work in a similar industry, or have common interests? Do you have deep personal experience with a unique cohort that you can draw upon? It’s important to be as specific as you can.

Developing a niche approach does not mean you need to ‘sack’ those clients who don’t fit in that niche. You keep servicing those clients but look for new clients who fit your desired profile.

Ideally your niche should be compatible with your interests and experience. If you’re an avid sailor, find a way to focus on like-minded individuals. Younger advisers might prefer to work with millennials; after all, they are going to be the largest adult segment globally by the end of the decade[3].

Step #2: Start with ‘why’

You may be familiar with Simon Sinek and his ‘Golden Circle’, which includes his focus on why, how and what[4]. According to Sinek, successful businesses tell their market why they are in business, how they do business and what they do – in that order.

While every company has a ‘why’, most tend to focus on what you do and how you do it to attract and retain clients. In Sinek’s view, you should focus on the why – why are you in business? Why do you go to work every day? Why should people engage with you?

Sinek’s ‘Golden Circle’ stems from his belief that people don’t buy what you do, they buy why you do it.

Successfully defining your why is a crucial element when defining both your business and your niche. This is particularly pertinent for high involvement service-based businesses, such as financial planning practices, focused on a niche market.

Step #3: Have the conversation

Talk to clients who fit your chosen niche and learn from them; what do they need from you, how can you best communicate with them, what do they – and don’t they – like about your service offering and approach? Such knowledge helps with client retention as well as feeding into strategies to attract new clients. Importantly, when you ask clients for feedback, offer them the same courtesy – let them know the findings and implement appropriate strategies.

Step #4: Put your ideas into practice

You know the niche you wish to target, you know why you want to target them and you know why they should want your services over the competitor down the road. What’s next?

Be prepared to tailor your value proposition to the niche you have targeted. A younger demographic would potentially feel more comfortable dealing with an interactive digital experience you should look to invest time and money into creating a digital platform that meets this modern expectation.

If you know your niche is time poor, enhance the experience by being prepared to meet them on their terms, being able to mobilise your sales and service offering to be flexible would be incredibly valuable to a busy executive, or a tradesperson who works changing hours, you should be prepared to work out of a construction site, a high-end office, or a small café without diminishing the value proposition on offer.

Using our sailors as an example, you might discover that the local sailing club is a focal point for those clients – if so, it’s most likely fertile ground for prospective clients too. See if you can provide content to the club’s website or newsletter, sponsor a race, or run seminars for members.

Step #5: Evaluate

Any plan needs to be evaluated, whether it’s a financial plan, a marketing plan or a business plan. If you’re not attracting the right clients, you need to identify the issue and adjust accordingly. You may find that the niche you chose needs further refinement, or while you have an affinity with a specific group of people, it’s not a viable business opportunity. On the other hand, you might just find it’s the perfect business niche for you.

 

 

Case study – MEDIQ Financial

Ravi Agarwal, Managing Partner of MEDIQ Financial, the AFA’s 2017 Practice of the Year, is no stranger to niche marketing. Mediq is a multi-disciplinary advice practice dealing exclusively with medical professionals and their families across Australia.

Ravi’s background set him up perfectly to focus on this niche market – his father, brother, uncles and many cousins are doctors. In the 1960s, the United Kingdom’s NHS struggled to attract doctors and put a call out across commonwealth countries. Ravi’s father was one to heed that call. As first-generation immigrants to the UK, they had no family to hand; fellow medical professionals were the social network and in time, became one another’s family. In subsequent years, the second generation mostly became doctors too; over time, taking over the medical practices established by their fathers and dealing with the intergenerational transfer of businesses and wealth.

Having this extended family of doctors enabled Ravi to experience the entire lifecycle of medicine and understand the needs and drivers of these medical professionals. In setting up MEDIQ, his aim was to build a service to meet those needs and provide insights to clients from his personal experience.

A niche business appealed to Ravi – aside from his experience, he understands that when you start a business, there are limited resources available. He sees two reasons for a niche business:

  1. The pragmatic reason, to utilise your resources in the most effective way possible.
  2. The idealistic reason, a focus on helping a specific group of clients that you are best placed to work with. After all, in this modern, complex world it’s truly hard to fully understand the needs of many groups of people.

To Ravi, the benefits are clear – niching allows you to build a service offering that offers the highest possible value to a particular market. This means you can be an authority in your area of specialisation; and as success begets success, so too it begets referrals to others in that niche.

There are two pieces of advice Ravi has for anyone setting up a financial planning practice targeting a niche market:

“If you are going to niche, you truly must know and understand the market, or at least having the willingness to learn it. The incongruousness of not knowing that market will show through.”

“Consider who you can add the most value to – whatever demographic that is – professional, trade, age. If you can add value to that demographic, you will have a successful practice.”

Consider this: if you were in search of a specialist best suited to provide a specific service for someone like you and you found them, would you choose to work with them? Most likely, your answer is yes. That, in a nutshell, is the purpose of having a niche – to be sufficiently differentiated to attract the clients you want to work with and build a business around them.

 

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[1] https://data.gov.au/dataset/asic-financial-adviser/resource/691ff9ed-b601-481d-8283-88127dbbc869
[2]Investment Trends 2015 Direct Client Report
[3] Millennials and wealth management: Deloitte
[4] https://www.youtube.com/watch?v=IPYeCltXpxw

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