What’s Your Niche? The Top 5 Niches for Financial Advisors

financial advisorWith the addition of robo-advisors and nearly 300,000 advisors crowding the financial sector, differentiation is the key to growing your business (Source: Cerulli Associates). Determining a niche and becoming an expert within it will require hard work and data-driven marketing tactics to successfully build your reputation.

In fact, only 30% of American workers are currently working with a financial advisor, which leaves plenty of room for specialized advisors to grow their market share. Continue reading to learn more about areas of potential growth for financial advisors today.

The Top 5 Niches for Financial Advisors

Young professionals:

According to Cerulli Associates, 29% of Millennials say their hesitation to employ a financial planner was caused by fees and costs, followed by 16% of respondents indicating fear and 10% believing they can take care of their financial needs by themselves. A large number of these individuals are also turning to robo-advisors for their asset management needs, due to their low cost and online tools to help them manage their own assets. 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 they’re facing is likely student debt. Because student debt is such a burden, many Millennials might not be properly planning for retirement and could use the guidance of a trusted adviser 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 typically been the “go-to” market for advisors, so some might consider this group low hanging fruit. In fact, 64% of advisors are already actively targeting Boomers (Source: Cerulli Associates).  If you’re confident in your knowledge of all the Social Security changes and everything retirement, you should still be able to attract new business, as long as you are able to demonstrate your expertise to prospects. That being said, this demographic has limited opportunity as most are too far along in their career for any further retirement planning.

Core competencies needed:

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

Small Business Owners and Freelancers:

With the advent of online platforms such as eBay and Etsy, more and more people are creating small online businesses as either their main source of income or as a side business. Ecommerce has spawned a new age of entrepreneurship, and many of these business owners will need help navigating the many rules and regulations associated with running a business. Yet, only 40% of small business owners have turned to a financial advisor for guidance.

And according to American Express, less than 25% of business owners have a succession plan in place for when the time comes for retirement. Even more surprising, fewer than 33% have a formal financial plan for managing income and expenses during retirement. These are huge decisions that will affect their business and life for years, so an experienced advisor should be met with a warm welcome.

With the rise of the ‘gig economy’, platforms such as Fiverr and Elance are creating more opportunities for freelancers to grow their own business, as well. Come tax time, running a freelancing business will cause much confusion for the uninitiated. 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 one 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 that works across all groups. For example, many people immigrate to the U.S. for work, but still need to support family members back home or are trying to bring them over. 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, so there might be some underlying tension or suspicion of your motives. To overcome this fear, reach out to local community groups where your 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:

With the 2015 Supreme Court decision to legalize same sex marriage in all 50 states, there are now thousands of new American families that will need help managing how marriage will affect their financial planning. After all, marriage affects everything from taxes to social security, estate planning, and more.

Until the ruling, many gay families had to work with advisors to create workarounds to ensure the same, or comparable financial protections that heterosexual couples enjoyed. Now that marriage is legal for all, advisors will be able to help those couples undo all of those workarounds and make sure they know how to correctly manage their finances going forward – which can include filing joint taxes or applying for survivors benefits.

Core competencies needed:

  • Cultural sensitivity
  • Estate planning
  • Incapacity/death planning

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.