Research points to targeted marketing and ability to plan around life transitions as valuable growth factors
Financial advisors and planners who focus on specific client niches can experience stronger growth in the coming years.
That’s the conclusion supported by a new paper from Independent Advisor Solutions by SEI.
Citing a previous survey of advisors, SEI said that when asked to identify three crucial sources of growth for their business over the next five to 10 years, over three quarters cited client referrals as the most important. Nearly half chose centers of influence, while educational events for clients and prospects were cited as the third-most popular top answer.
Respondents were split nearly evenly between expecting growth to be harder and easier to achieve in the future. Those who predicted easier growth said they will be better equipped (cited by 48%), have more experience (21%), and get better at marketing activities (27%). The ones who said it will harder predicted that younger clients will be using hybrid advice platforms (40%), and that the market will be saturated with competition (22%).
But in follow-up one-on-one interviews with financial planners, SEI found that niche-focused practices are seeing growth driven by targeted marketing efforts. Aside from the original list of growth sources cited by SEI, they named strategies and channels such as:
- Google-search engine optimization;
- Social media strategy;
- Thought leadership content for target markets; and
- Active involvement on boards of local organizations.
“We expect that the digital providers and the mega firms will create more noise with their competing views, but the highly specialized lifestyle firms can use digital technology effectively to target the right clients with the right message,” the report said.
It also underscored the use of technology to help wealth management firms grow their business, citing building blocks such as robust CRM solutions, dynamic advisor dashboards, document management systems, email marketing services, and social media management platforms.
The report also noted a significant opportunity to grow by capturing clients on the rebound. Based on research published in the Journal of Investment Advisery Solutions last year, one third of clients across wealth strata and demographic profiles have switched providers or moved assets in the last three years, and another third have plans to move in the next three years. Decisions to shift tend to happen during critical life moments such as leaving a job, new parenthood, marriage, or inheriting a large sum, the research said.
“For planners and advisors who specialize, this is a double win,” the report said. Aside from being able to prepare their firm and clients for such milestones, specialized wealth professionals can use such events as an opportunity to market to people in their target niche who are going through similar experiences.
