The Top 5 Target Markets for Financial Advisors

target markets for financial advisorsAs a direct result of the crowded financial sector, differentiation is key to growing your business. As a financial advisor, the only way to become an expert within a new, niche target market is through hard work and specific data-driven marketing tactics.

The good news, however, is this: Only 30% of American workers currently work with a financial advisor, which leaves plenty of room for specialized advisors to grow their market share (source). Continue reading to learn more about areas of potential growth for financial advisors today.

The Top 5 Target Markets for Financial Advisors:

Young professionals:

Research shows, 29% of Millennials say their hesitation to employ a financial planner is induced by fees and costs, followed by fear (16%), and the ability to ‘do it themselves’ (10%).

A large number of these individuals are also turning to robo-advisors for their asset management needs, due to their low cost and self-sufficient nature. Though not necessarily high-earners now, Millennials are the easiest way to create sustainable growth for your business. As they progress through their career, you’ll see your ROI increase steadily year-over-year.

In the short term, the most pressing issue this audience faces is student debt. Because student debt is such a burden, Millennials might not plan properly for retirement and could use the guidance of a trusted financial advisor to help get their financial life on the right track.

Core competencies needed:

  • Flexible fee structure
  • Tech savvy
  • Clear communication skills
  • Retirement planning

Baby Boomers:

Pre-retirees have been the “go-to” market for financial advisors, so some might consider this group low hanging fruit. In fact, 64% of advisors are already actively targeting Boomers (source).  If you’re confident in your knowledge of Social Security and everything retirement, you should still consider Baby Boomers among your target audience.

Core competencies needed:

  • Retirement planning
  • Changes in Social Security
  • Incapacity/death planning

Small Business Owners and Freelancers:

With the creation of online e-commerce platforms like eBay and Etsy, more people are creating small online businesses. E-commerce has spawned a new age of entrepreneurship, and, many of these new business owners will need help navigating the many rules and regulations associated with business ownership. Yet, shockingly, only 40% of small business owners have turned to a financial advisor for guidance (source).

Even more shocking? Less than 25% of business owners have a succession plan in place for when the time comes to retire. And, fewer than 33% have a formal financial plan to manage income and expenses during retirement (source). These are huge decisions that have the potential to affect their business and personal life for years to come. As a result, an experienced financial advisor should be met with a warm welcome.

In a similar vein: The rise of the ‘gig economy’ has created more opportunities for freelancers to grow their own business using platforms such as Fiverr and Elance. Come tax time, those new to the game will go running for a financial advisor. A knowledgeable advisor can help save freelancers from the headaches that stem from dealing with income tax, business deductions, and employment tax.

Core competencies needed:

  • Cash flow management
  • Cost controls
  • Self-employment taxes
  • Succession planning

Multicultural markets:

‘Multicultural markets’ is a term used to describe many different groups of people, all with their own unique financial needs. As such, there isn’t a ‘one size fits all’ solution. For example, many people immigrate to the U.S. for work, but still need to support family members back home. These individuals will have vastly different financial needs as compared to local clients.

Too often, immigrants, non-native English speakers, and other minorities are taken advantage of. As a result, these individuals may be skeptical, or even fearful, of your desire to help them. Rather than approaching this audience as you would a standard client, reach out to local community groups where this niche regularly congregates. You will be able to make valuable connections within the niche, as long as you communicate your services as a means to help the community. Mentioning any fiduciary obligations would also go a long way in building trust, as transparency is key. Disclose upfront what type of fees you charge to ensure that families don’t feel exploited.

Core competencies needed:

  • Foreign language skills
  • Cultural sensitivity
  • Clear communication skills
  • Currency exchange

LGBT Families:

In 2015, Supreme Court legalized same-sex marriage in all 50 states. As a result, there are thousands of new American families that need help managing the impact of marriage on their finances. After all, marriage affects everything from taxes to social security, estate planning, and more.

Until this ruling, many gay families had to work with financial advisors to create workarounds to ensure the same financial protections heterosexual couples enjoy. Now that gay marriage is legal, advisors have a unique opportunity to help those couples undo previous workarounds and correctly manage their finances going forward. This often includes options like filing joint taxes or applying for survivors benefits.

Core competencies needed:

  • Cultural sensitivity
  • Estate planning
  • Incapacity/death planning

Key Takeaways & Financial Advisor Niche Markets

Do you need help identifying your niche or finding new prospects that fit within your target market? ZoomInfo’s Growth Acceleration Platform can help by analyzing your existing data to identify your best clients, and suggest new contacts that match your buyer persona.

Originally published on June 29, 2016.