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Financial advisory firms often consider launching multiple niches rather than focusing on just one. Though sometimes successful, this approach can dissipate your marketing efforts. This article offers guidelines to determine whether having multiple niches is for you.
The answer comes down to your resources.
Each niche requires its own marketing plan and champion to spearhead the effort. For example, let’s say your niche is employees with equity-compensation plans. You will need a website (or at least a webpage) for that niche. You will have to create content, such as blogs or videos, to demonstrate your expertise on topics directly relevant to your niche’s financial pain points (no generic content!). You will have to optimize your website for search engines and implement strategies to drive people to your website. You will have to participate in online and offline communities where members of your niche gather. You will need to develop niche-specific campaigns (e.g., download the ebook, register for a webinar, attend an event). And you will need to have at least one staff member who takes full ownership of the niche to ensure this plan gets executed consistently.
Now imagine repeating this process for a completely different niche. Or multiple niches. Do you have the employee bandwidth to accomplish this? Do you have the financial resources to execute an entire marketing plan for each niche?
Unless you have both the staff and the financial resources to pull off multiple niches, you’ll implement your marketing plans poorly versus one niche marketing plan well.
With that in mind, here are rules of thumb for whether you should have multiple niches depending on your firm situation and size:
Individual advisors
Whether you are a solo practitioner or an employee tasked with business development responsibilities on your own, you absolutely should focus on only one niche.
You have limited resources to dedicate to marketing, so you want to make sure you get the most impact for your dollars and effort. You will get much better results putting all your time, focus, energy, and money into one niche than if you spread yourself thin across multiple niches.
Boutique RIAs
RIAs with just a couple of advisors often want to work with multiple niches, mostly because they have a diverse client base to start with. Because time and money are limited, the firm should focus on one niche. You will get better marketing results with less effort than if you attempt multiple niches.
There are times when not all advisors are equally suited for the same niche. For example, one advisor may lack the empathy to work with widows. Or a generational divide can make one advisor unlikely to attract a certain niche.
While not ideal, these scenarios may require having multiple niches. The key to success is having as few niches as possible, with each advisor focusing on only one.
Enterprise RIAs
Unless your firm started with a niche focus, it’s unrealistic to assume you will ever transition to one niche for the entire firm. Instead, you should have multiple specialty areas to focus on different niches – for example, business owners, women in transition, executives, and socially responsible investors.
Large firms with plenty of talent and deep pockets can easily implement this. They can assign one financial advisor to spearhead each niche. And they have the support staff and the financial resources to consistently implement multiple marketing plans at once.
Final thoughts
Having multiple niches is tempting, but it dissipates your focus. Remember, the more niches you have, the more champions you require and the more marketing plans you must implement.
Before you attempt two or more niches, review the above guidelines and ask yourself if you have the staff, time, and money to go all-in on multiple fronts. If you don’t, concentrate your efforts on one niche. You can always turn to the other niches after you’ve succeeded with your current niche.
Kristen Luke is the president of Kaleido Creative Studio, a marketing agency that helps transform Registered Investment Advisors and their employees into experts in a niche, making it easier for them to stand out from the competition and attract ideal clients. Over the past 16 years, Kristen has consulted with hundreds of financial advisory firms and shared her marketing expertise via industry conferences and publications nationwide.
Read more articles by Kristen Luke
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives
