Interest and Affinity Based Client Niches for Financial Advisors

February 15, 2021 by

Advisor Wealth Mastery Team

What if your business never stood out because you never stood out?

On one hand, “financial advisor” is a pretty specialized job. On the other hand, there are plenty of people with the title “financial advisor.” If you want to stand out from them, you need to find a particular client niche.

Not sure how to get started? We’ve written a complete guide to the different niches for financial advisors (both interest- and affinity-based). Keep reading to learn how your business can stand out!

Why Choose Niches for Financial Advisors?

We’ve put together a comprehensive guide to different niches for financial advisors. Before we go any further, though, we need to answer a simple question: why choose a niche at all?

The simple answer is that, to the average consumer, a financial advisor isn’t that different from countless other professional positions. It’s a “buyer’s market” to consumers, and they have plenty of different advisors to choose from.

The best way to address this issue, then, is to differentiate yourself from the other advisors. Choosing a niche lets you differentiate yourself while also establishing the unique value proposition of your business.

And it’s an open secret that the financial advisory business is fueled by relationships. By choosing a niche that you already know a lot about, you can make it that much easier to establish relationships with clients.

Is “Niche” the Same Thing As “Target Market?”

What do you think of when you imagine a financial advisor’s “niche?” Many people conflate the terms “niche” and “target market.” In reality, though, these terms are separate, though they remain closely related.

A target market refers to any group of people that your business is trying to target. Most financial advisors have some kind of target market already. For example, “those who are just a few years from retirement” makes for a common target market.

There are two basic problems with focusing only on target markets. The first is that this group is very broad: even if you focus only on those closest to retirement, many of these clients will be very different in terms of experiences, dreams, and overall financial goals.

The second problem is one that we already covered: there is a lot of competition for those target markets among financial advisors. Your best hope of standing out, then, is to differentiate using a niche.

What is a niche, then? Simply put, it is a smaller slice of that target market, and you can define that niche by specific client experiences. In turn, you must adjust your marketing, consulting, and services to reflect the specific niche you are trying to target.

How to Choose a Niche

Below, we’ve got a thorough guide to the six niches you can choose from. But just as important as knowing what these niches are is knowing how to decide between them.

One really simple way to choose is to determine what kind of work and what kinds of clients really make you feel engaged. If you’ve been in business for a while, this is largely retrospective. You are simply trying to figure out which work you have enjoyed the most over the years.

Another way to choose (which is related to the first) is to take stock of your own personal experiences and background. Ask yourself: what are the most important experiences and relationships in your life, and how do they translate to the niche below?

In order to understand your real value proposition, you can also interview your clients. Get a decent sample size (ten or more) and ask them all what your most valuable service is and what made them eventually choose you as their financial advisor. Ideally, you can also get these clients talking in a group environment and glean additional insights.

When you have decided on a niche, don’t forget to do your “homework.” Additional research can help you uncover what these clients must overcome, what they desire, and how you can bridge the gap between where they are now and where they’d like to be in a few years.

Now that you know how to choose a niche, we’re going to review the different niche options for your business.

Affinity-Based Niche

Affinity-based niches are some of the most popular. And out of all the niches, this one is based less on what you know and more on who you know.

That’s because the affinity niche is based on customers perceiving that you are “one of them.” Based on your experiences and social circles, they feel like you are part of their tribe, and they will trust you all the more for it.

By simply leaning into your own experiences and relationships, you can naturally embrace the affinity niche. And because this is already a business that revolves around relationships, you should have an easy time fitting in with this niche.

Educated-Based Niche

Despite the name, the education niche does not refer to your own education. Rather, this refers to customers who might need to learn key information that you can provide.

This is most common for clients who recently underwent some kind of major life transition. With any luck, the clients realize they have much to learn about their new situation in order to make the most of it. And as a financial advisor, you can be the one who shepherds them through this confusing time.

Remember, you don’t have to focus exclusively on a single niche. But by dedicating a portion of your business to those who receive financial windfalls via inheritances or lotteries, you can quickly corner a very specialized market in your area.

Values-Based Niche

On the surface level, a values-based niche is similar to an affinity niche. But while an affinity niche is based on the perception that you and the client are part of a similar social circle, a values-based niche means that you share particular values (regardless of your social circle).

You can showcase your dedication to things like very specific charities. And you can even lean into your current or former membership in certain organizations that range from Boy Scouts to the Army.

But these ideas primarily revolve around how you market yourself. Don’t forget that you can also create a values-based niche out of your services by offering things like environmentally-friendly financial advice that attracts nature lovers to your values.

Experienced-Based Niche

The term “experience niche” may make you think of your own experiences as a financial advisor, but that is not quite accurate. Instead, this niche refers to the kind of experience you create for clients.

And this niche isn’t simply devoted to providing a better experience. With any luck, you’re always seeking to improve your service to clients. Instead, it’s all about providing a different experience.

In some cases, this can be as simple as changing up how you provide your services. Inviting clients to your home instead of your office, for example, creates a more intimate experience. Another option (which is now more in vogue than ever before) is teleconferencing with your clients, allowing them to meet with you from the comfort of your own home.

If you’re feeling ambitious, you can also change up the core of your service delivery. Giving advice and seminars to small groups instead of individuals, for example, will instantly set your business apart from the competition.

Technical-Based Niche

On paper, the technical niche sounds easiest of all. But to do it right requires extensive and specialized knowledge on your part.

That’s because this niche is about offering services and advice that your local competition simply cannot offer. This may be because they lack the education, experience, and resources that you benefit from.

Because this is relative to your area, your technical niche could be almost anything. You might be the only advisor in your area, for example, that offers a full range of estate planning services. Or the only local advisor that helps clients manage their overseas assets.

Over the years, you may not remain the only advisor offering these particular services. But if you get started now, you can basically corner the market before your competition gets off the ground!

Psychosocial-Based Niche

Earlier, we mentioned how some clients undergo major life transitions. These transitions may be positive or they may be negative. To help these clients (especially those going through negative transitions), you may embrace the psychosocial niche.

As the name implies, this niche focuses on the psychological state of the client as much as their financial state. And advisors with the right training (like a Certified Financial Transitionist designation) can help walk the client through various steps to help them acclimate to their new state.

These major life changes are more common than you might think, even for groups like millennials. So many people experience things like divorce, spousal death, and even career changes, and you can definitely build a career on this niche.