Carving a niche in a particular area enables advice firms to differentiate themselves and focus on specific types of profitable clients.
Examples of niche markets include occupations such as sports or medical professionals, or life events such as divorce and bereavement.
There is a good deal to consider when carving a niche, so what is most important according to those who have already found innovative approaches within such markets?
Demand and sustainability
For online pension advice firm Wealth Wizards, a key consideration is assessing whether the demand for advice within your particular niche is big enough.
“It has to be an area with enough demand to sustain you as a business,” says director Phil Blows.
The Wealth Wizards team decided to focus on the digital delivery of pensions advice in 2009, having identified the need for affordable expertise about retirement saving. Developments such as automatic enrolment and pension freedoms have ensured the opportunity will be there for the long term.
Blows says: “We went digital to provide a service everyone can afford. If you move to the lower end of the market, you have to be efficient in what you’re doing – and that meant digital was the only approach we could take. The more efficient and digital you are in the back office and the delivery of advice, the more refined the niche you can aim at. But make sure your costs are as low as possible – if you’re adopting a targeted approach, you might not get the volume.”
Blows adds that advisers who are contemplating this strategy must keep the long term in mind. “Be sure to focus on a specialism that isn’t going to die out,” he says.
Be commercially savvy
Langley Park Wealth director Jo Read found her own niche – advising newly single women going through a marriage break-up or bereavement – after it was suggested she write a book as part of a course for small businesses. She got the idea for her book, Suddenly Single, while on a flight to Vietnam for a charity bike ride.
“I was seated next to a lady in her seventies whose husband had passed away from cancer. She said to me, ‘People like you need to help people like us,’ ” says Read. There is nothing wrong with being adept in a niche field, but do not specialise to the exclusion of everything else
Suddenly Single is now a separate business. Read’s advice to anyone thinking of focusing on a niche market is to be commercial. “A PR duo does my social media work and brand development on a monthly retainer. That raises my profile – we financial planners are often slow to invest in PR and marketing,” she says.
With the book generating media interest, Read developed spin-offs that have the potential to refer business to Langley Park Wealth. These include an online community and Suddenly Single Retreats – an events business focusing on newly single women, which she launched with parenting coach Sue Atkins and family lawyer Nicola Ingram.
She points out that some areas demand specialist qualifications. “Divorce often involves pensions and pension transfers. I have additional qualifications and I will be taking AF7,” she says.
There is nothing wrong with being adept in a niche field, but do not specialise to the exclusion of everything else
Nurture your reputation
Over the past 10 years, Glasgow-based McCrea Financial Services has built up a reputation among sports professionals as a firm that understands their particular needs.
The company currently sponsors clubs and individuals across a range of sports, including the Glasgow Warriors rugby team, Partick Thistle football club and Gordon Reid, the current Wimbledon wheelchair- tennis champion, ranked world No 1. This enables McCrea’s to offer staff, clients and professional connections alike access to sporting events via the provision of complimentary tickets and hospitality.
Managing director Douglas McCrea points out that sports professionals comprise a relatively small percentage of the company’s client base. “It’s not our only business – after all, there aren’t thousands of elite athletes,” he says.
“But we market ourselves partly through sports sponsorship and that has led to the sports clients coming in. It’s to do with name awareness: we’ll be the ones the players have heard of. The best way to get new clients is to look after the ones you already have. They all talk in the rugby and football dressing rooms, and word gets about that you’re providing a great service and understand their needs. A large number of our clients are referred to us by existing clients.”
While he says there is nothing wrong with being adept in a niche field, McCrea warns against specialising to the exclusion of everything else.
“It’s good to be the go-to guys, but if you specialise in one market and something happens to that market, you could be in trouble,” he says.