However, there's a widespread reluctance to work with a particular target market, I believe caused by a fear of alienating clients that don't fall into a specific niche. Recently, I spoke to one of our clients to explain that the more he can define a customer segment and say, "This is the type of customer we would like to appeal to", the easier it will be to communicate with them.
By picking a niche, you will better understand their needs and concerns which will allow you to share the right messages to appeal to them.
Nonetheless, many are hesitant as they fear that if they start to focus all their messages on one particular client segment, they risk putting other people off. I think that's an entirely irrational fear.
Talking specifically to a niche doesn't turn other people away, it increases your appeal to the market to which you are talking.
Within the Financial Planning profession, we've heard a lot during the past few years about segmentation. Historically, Financial Planners have segmented clients by assets, and they would typically have different service propositions based on the size of portfolios.
That's a very old-school approach, and I'd argue that modern methods don't require multiple propositions for different client segments, they need one proposition delivered well that appeals to the client segment that you've defined as being ideal for you. This is also perfectly aligned with regulation.
The PROD regulations were introduced to make firms prove the products they recommend deliver good outcomes and are sold to the right clients. However, I think PROD has steered a lot of Financial Planners down the wrong path when it comes to client segmentation because it's driven by regulation, not by client need.
Don't let regulation drive your business decisions; do what's right for your business, staff and your clients. If you do that, regulation falls into place anyway.
It makes life so much easier if your business has one ideal client and one very clear way of reaching that client. Once you've acquired the client, then every aspect of your business will improve, become more efficient and more profitable. You stop wasting money on marketing tactics that don't really work because they're not going to appeal to the type of client you're trying to target.
Another advantage of having a clear niche is that you don't go it alone anymore. As a Financial Planner, you've got a broad skill set, but Financial Planning works best when it's combined with the right legal, accounting, and coaching services.
For example, if your speciality is divorce Financial Planning, you can find a fantastic divorce lawyer to work closely with as well as a relationship coach.
You can have all of the introductions ready-packaged for that client. You become the linchpin of their entire world. As a trusted adviser, it's much, much harder to do that if you're working with a multitude of different types of clients and different niches.
Don't be scared of a niche, because it's transformative as soon as you decide to not just work with a particular age, wealth or life stage of a client, but thinking about things like locality and other key drivers that bind client groups together.
Martin Bamford FPFS is a Chartered Financial Planner at Informed Choice and CEO of Bamford Media.