The problems faced by small independent financial advisors in trying to grow their business are quite a few. These problems are not unlike the problems, which many small businesses face when they try to scale up. Some of the problems are:-
This article does not aim to address all these concerns. We will discuss some of the concerns in a set of articles over the coming months. Also, we will hear stories from advisors, on how they were able to overcome these challenges. In this article, we will discuss niche marketing as a technique to successfully grow your financial advisory business on a sustainable basis
Niche market is a small but profitable segment of a market suitable for focused attention. While for large financial advisors, niches may often be too small to serve profitably, small advisors may explore specific niches to optimize their sales effort and grow their business profitably. In developed markets like the US, there are examples of financial planners and advisors focusing on particular niches like college professors, professional sportsmen, doctors, retired communities, specific immigrant groups with common economic backgrounds. The logic of niches, from a financial planning perspective, is obvious. People in particular niches have similar income levels and patterns, financial aspirations, tax concerns, and more importantly similar cultural values. Referrals are more relevant in this context and advisors can customize their advice to meet the requirements of such niches
Independent financial advisors in India also focus on niches or communities. What needs to be evaluated is the strategy, if there is one in the first place. The traditional form of communities in India is undergoing a transformational change. Some of these are:-
These changes, present a great opportunity for financial advisors to be relevant in the current paradigm of niches in the market. While breaking into a niche takes a lot of effort, once advisors are established as the go-to expert for that particular niche, referrals within the niche are way more effective compared to more traditional sales activities. Once an advisor is established as expert for a particular niche, it is also easier to charge fees for financial planning. There are examples of financial planners in US, who service employees in just one large organization, e.g. Coke. What makes this constituent attractive to financial advisors is that they have a strong corporate culture, similar values and common financial concerns, like stock options, variable compensation, retirement plans, so on and so forth. By specializing on a niche, advisors can create barriers to entry for their competitors, with respect to their specific niches. While corporations in the US are larger in size, large sized Indian companies, like TCS, Infosys, HUL, L&T, Reliance etc, represent a large enough target segment, from a financial planning business perspective. Going beyond organizations, financial planners and advisors can focus on specific industries or industry segments, like legal practice, dental or medical practice, media and entertainment, small businesses, so on and so forth
There are several key factors that determine the success in niche marketing:-
While we continue to discuss marketing and sales strategies for IFAs, it will be valuable to have your comments and thoughts. Please share your thoughts with connect@advisorkhoj.com or comment below.
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Oct 11, 2024 by Advisorkhoj Team
Oct 11, 2024 by Advisorkhoj Team
Oct 11, 2024 by Advisorkhoj Team
Oct 11, 2024 by Advisorkhoj Team
Oct 11, 2024 by Advisorkhoj Team