Focusing on the Wrong Niche Could Be a Disaster
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You’ve heard the conventional wisdom: choose a specialized niche and watch your business grow with clients who seek the expertise you offer. With the rise of the retainer model, more advisors are claiming their niches. It is seen as a powerful way to differentiate your practice, target your marketing message, streamline your client experience and increase sales conversions.
In other words, niches allow you to work smarter, not harder.
Picking the wrong niche, however, is one of the worst decisions you could make for your practice. I’ve seen too many financial advisors follow the crowd in a race to specialize – then claim a slice of the market that’s not economically viable. Choosing the wrong niche will derail your business before you ever hang up your shingle!
The ultimate success of your niche choice boils down to five Ps: pay, pain, people, platform and professionalism. Your niche needs to have all five in order to be profitable. If it’s missing one of them, that is a sign of trouble.
Let’s break them down.
This seems obvious, and yet I still watch advisors choose a niche that lacks the financial resources needed to pay them.
One advisor I counseled wanted to build her business model around undercutting other advisors with a flat fee. I advised her against this. Clients aren’t always searching for the lowest-cost provider. If they are, they may turn out to be less-than-ideal clients.