How advisors are finding like-minded clients.
As a former engineer, Tom Horton, president of Horton Financial Planning in Shelby Township, Mich., has found a natural niche among engineers and technical managers, primarily in the automotive industry. "As a career-changing engineer, I market mainly through acquaintances and my university alumni association," he says.
When Horton entered the financial planning field at age 49, established planners warned him that engineers would make terrible clients. They said that engineers were "too anal, they want to see where all the numbers came from and want to analyze the plan themselves," he says. "Then, I would admit to being an engineer, and their faces would turn red."
Horton says he's found the opposite to be true, perhaps because his clients know him as an ex-engineer. "They seem very comfortable with a high-level overview of where they are and what it will take to get them to where they want to be. They are impressed that I use my own spreadsheets to do the analysis work, rather than a commercial software package. Like me, they want to know that the numbers are accurate and have been analyzed correctly. I have never had an 'anal' client (knock on wood)."
Each client in a new facility has become a source of referrals, especially when layoffs and early retirements sweep through that company. After two years in business, Horton says the lesson is to work with people like yourself. You want to feel comfortable with them and they with you. Once you've found your niche, concentrate your limited marketing time on it alone. "I wouldn't turn away other clients, but I no longer look for them," Horton says.
Now that Horton has become known as the engineers' go-to guy for financial advice, his marketing strategy consists of stimulating referrals and staying active in the organizations to which the people in his niche market belong. Writing for their publications, attending business functions, and placing an occasional ad are all he needs to do to keep his pipeline full.
Get Niched--Drill into a Profession
Niching yourself makes sense--no matter which niches you choose (you might want to mine one or two at a time). Lucrative niches include doctors, lawyers, medical professionals, professional athletes, executives within a large company, non-profits such as community foundations or the United Way--and yes, even engineers.
Smart advisors will find and specialize in serving small but profitable market segments. For big advisory companies, these market segments are often too small to serve profitably, but for small or midsized companies (a description that fits most financial planning firms), serving unique market segments can be profitable indeed. Niche marketers (and service businesses in general) often rely on the loyalty of key clients to maintain profitable sales and/or service fee volume. While breaking into a niche may be difficult, once you are established as the go-to expert for that particular group, you can rely on word of mouth supplemented by traditional but targeted marketing activities such as ads, client/prospect dinners, participation at key charitable events, focused networking, and PR tactics.
Getting a toe in the door is often the first step. Turn off the phone and e-mail and get out a note book and pen--or type up a list on your computer. Get focused and brainstorm alone or with your team. Who do you know in various niches in your community? How can you get an introduction to the right people? Who are the right people? Now outline your plan of attack and faithfully execute it.