Think big? Nope. Think niche.
With the number of financial advisors in the U.S. now exceeding 300,000, it’s not enough to be experienced, well-credentialed, responsive and trustworthy. Those attributes, while important, are increasingly seen as a given for prospective clients.
In a perceived ocean of sameness, it’s imperative that advisors differentiate themselves and articulate in detail what is their unique selling proposition. A kneejerk fear of “leaving money on the table” should be silenced swiftly given that trying to be everything to everyone is increasingly a losing formula.
According to research by CEG Worldwide, 70 percent of advisors earning $1 million or more annually focus on a niche while 35.1 percent of those earning less than $150,000 have a niche.
For Thomas Nowak of Quantum Financial Planning in Grayslake, IL, the decision to become an advisor occurred after a successful career as a scientist. Around the time he left his previous profession, Nowak made a choice to embrace a plant-based lifestyle and an “a-ha” moment was born.
Believing that clients might want to invest according to their own ethical framework and recognizing that people sometimes only need a few hours of advice to establish a plan, Nowak set up a one-person shop in 2005. An hourly, fee-only planner, Nowak caters to vegans and socially/ethically conscious investors. “My scientific curiosity got the best of me,” he says. “I got into sustainable investing.”
While socially-responsible investing has become part of the everyday lexicon for investors, in 2014, Nowak self-published Low-Fee Vegan Investing: Taking Veganism to the Next Level, a book that teaches potential clients how to DIY invest in ethically sound products. “Readers could use the help of an advisor or work on their own to put together a portfolio in line with their worldview that is relatively inexpensive.”
His timing is not only sensible, but profitable and of the moment. In 2018, the US/SIF Foundation, which tracks ESG information, estimated that more than one in every four dollars under active management in the U.S. was screened with some kind of ESG filter. Though his book title mentions vegan investing, his recommendations are informed by a socially-responsible framework, inspired by the U.S. Vegan Climate Index (VEGAN). Lest one imagine it’s over-weighted Beyond Meat, big-caps from a multitude of industries dominate.
The index’s fact sheet says it excludes “companies engaged in animal exploitation, defense, human rights abuses, fossil fuels extraction and energy production, and other environmentally damaging activities.” Top holdings include Apple, Microsoft, JPMorgan Chase, Intel, Visa and AT&T.
“My niche allows me to align my own personal values with my work,” he says. “Where some struggle to get clients, I get a new client once a week.”
Britton Gregory, principal of Austin, TX-based Seaborn Financial, has carved out a demographically attractive niche. The firm’s goal: assist tech professionals in their 20s-40s with their financial planning. “It was the single best business decision I’ve made to date,” he says. “It’s helped me to narrow my focus on everything from marketing to planning features to how I conduct my meetings.”
Gregory says his embracing of a niche has helped him to generate great buzz and client retention. “Rather than driving away clients that would otherwise work with me, [my niche] has helped me stand out from the crowd and attract clients,” he says.
Meanwhile, his enthusiasm for tech has also paid off when it’s time to have a conversation with clients. Rather than engage in perfunctory small talk, Gregory and his clients wax poetic about their shared passion: tech.
Gregory says attracting “nerds” for clients makes working together fun. “We’ll chat about video games and fantasy novels in between conversations on investments and cash flow management.”