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Specialization May Be Financial Advisors’ Quickest Path to Success

StratiFi Technologies Inc

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Most financial advisors begin their careers as generalists, offering a full range of investment and insurance products to anyone who will see them. Some remain as product salespeople while others develop the knowledge, skills, and credentials to perform comprehensive financial planning. But they essentially remain as generalists. While noble in its cause, and much needed by the vast majority of Americans, practicing comprehensive financial planning to the masses is not always the quickest path to success for independent financial advisors.

Think about it this way: When you practice comprehensive financial planning, you are bound to spend time in areas where you are competent, and maybe even some where you are excellent; but, you will never be able to spend enough time working in areas where you are exceptional and passionate – where you have the opportunity to set yourself apart. If your goal is to attract highly affluent or wealthy clients, you need to become relevant. You need to specialize.

Specialists Earn More Money

No matter where in business you look, specialists tend to do better than generalists. This is especially true in professions – medical, legal – and financial. We all know that thoracic surgeons make more money than family doctors. The family doctor may have more patients, but the thoracic surgeon, especially an exceptional one, is paid far more for his services. An attorney who specializes in generational planning for families with $10 million or more net worth will do much better financially, even with fewer clients, than one who practices generally in wills and trusts. It’s not surprising then that the most successful financial advisors carve out deep niches to specialize in a particular type of client. In fact, according to CEG Worldwide research, 70% of financial advisors earning at least $1 million annually in net income target a particular niche.

Specialization allows you to focus on what you love doing, that which comes effortlessly for you while working with clients who truly value your services. You not only become recognized as an expert in your field, you become someone who will get more referrals from clients and centers-of-influence. If you try to do everything for everyone, your phone likely will not ring as much because potential clients don’t understand why you’re relevant to them. Ultimately, the most successful advisors are the ones who have a clearly defined niche that makes them easily identifiable among the clients they are trying to attract.

Which Path to Specialization?

Specialization can take you in a number of different directions. Ideally, you use your unique ability or core competency as your guide to determine which niche offers the greatest opportunity for success. There are generally three paths you can follow:

Demographic specialization: Focusing on clearly defined demographic group, such as emerging affluent, high-net worth seniors, or medium-sized family-owned businesses.

Product/Service specialization: Narrowing your focus to specific products or services, such as pre-retirement tax planning, asset management, or income planning for retirees.

Life event specialization: Becoming an expert in handling the financial issues arising from life events such as divorce, survivor planning, or business exits.

Specialization doesn’t preclude you from offering comprehensive financial planning for your clients. In fact, specialists who do so on a collaborative basis with other specialists are in a better position to become the client’s “go to” person. By forming a team of specialists from the various financial and legal disciplines, each with their own unique abilities, the independent financial advisor can effectively compound the value a client receives in the form of exceptional service.


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Becoming More Marketable and Productive

When you specialize, you can more clearly define your target audience and your ideal client, which is critical to your growth. Your marketing efforts can be shaped and focused by your specialty, and your brand can come alive with a compelling story. You will be able to package your special skills and expertise in a unique way that communicates why you are “the one” to call for your specialty.

By narrowing your focus and building your practice through specialization you will be able to eliminate all the “stuff” that interferes with your productivity. With specialization comes the discipline needed to prevent distracting new issues from wasting your time, enabling you to concentrate on your most important money-making relationships and activities.  

Finally, it can free up time for personal and professional growth, allowing you to focus on your personal relationships, your health, and all the personal interests that make being an entrepreneur worthwhile.

Akhil Lodha Author
Co-founder & CEO StratiFi Technologies

Building the industry standard for understanding portfolio risk through cutting-edge technology at StratiFi.

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