Should you have a client niche? That is one of those “yes” or “no” questions that can determine the direction (and success) of your practice as a wealth advisor. 

The idea behind having a niche clientele is pretty straightforward: it helps you stand out as an expert to a specific target audience to become the apparent advisor choice for them. Many advisor-growth strategists recommend this approach to keep you focused on growing your business, creating efficiencies, and differentiating you from other advisors. 

The thing is, not every advisor needs a niche. In fact, our research has shown that most advisors don’t need one. Over-prioritizing niche characteristics can be counterproductive and ultimately harmful to nascent and growing RIAs. Here are five unspoken truths about client niches.

1. You Don’t Need a Niche To Win Clients

Niche-defensors would claim that having a specific target market will make your client acquisition efforts more effective (aka, having a better hire rate). The logic behind this statement is valid. Think about it: if you meet with a dentist and you are entirely devoted to helping dentists, it is likely that they will think your expertise makes you the right fit. 

However, from speaking with tens of thousands of clients, we’ve found that it isn’t as impactful as many would think. In reality, what clients value in an advisor is not based on how they serve many clients like them, but how they show genuine interest in their unique situation. Zoe’s data shows that the #1 reason clients hire their advisors is that they are “personable.” 

In other words, what matters to clients is meeting with an advisor who is well prepared for their introduction and who takes the time to listen and understand their financial concerns. Advisors in the Zoe Network who use the Zoe Financial Snapshot tool to prepare for their introductory meeting have up to 20% higher hire rates than those who don’t. Nothing to do with niches.

2. Niche-Less Practices Don’t Lack Expertise

There’s a common misconception that an advisor who doesn’t have a niche market lacks focus. Zoe has seen that this could not be more far-fetched. Most advisors on our platform do not have a niche, and their practices are (very) successful. They scale their business growth by offering great financial advice and caring about their clients. 

Not having a client niche does not mean you can’t have an area of expertise. For example, your firm can specialize in retirement planning, tax management, estate planning, 401k management, legacy planning, ESG investing, etc. Focusing on areas of wealth management rather than particular types of clients is a way to stay focused without sacrificing potential client reach.

3. Niches Don’t Necessarily Align With What Matters The Most

Wealth management is not about the hypothetical client. It is about the actual client. With that in mind, rather than focusing on a particular ideal client, two other areas will impact your business growth much quicker: your definition of success and the client experience you offer. 

Picture Success. What’s It Like? 

Everyone has their definition of success. If that looks like 100 clients who are all dentists, then you need a niche, no doubt. If, on the other hand, success looks like helping 100 people achieve their lifelong financial goals, what you need is clients (and knowledge).

It is all a matter of perspective, and deciding to have (or not) a client niche can determine how likely it will be for you to achieve your success. Do not rush into having a niche client focus because others do. Instead, start by understanding your definition of success and see if a niche aligns with it. 

Client Experience > Client Niche 

The highest priority for a wealth advisor should be offering an outstanding client experience, not the client’s personality or profession. Why? Simply because your service is the only variable you can control. 

Like the market, some factors are out of your control, so it does not make sense to spend mindshare or time worrying about them. Meanwhile, you can fully control the experience you offer. So make sure to perfect your client acquisition, onboarding, and retention strategies. Ensure they are delightful, organized, and progress-effective.

4. What Numbers Tell Us About Niches

Imagine your favorite client is a dentist. Then, you decide that you’d enjoy working with more dentists, or maybe only dentists. 

Let’s examine this from a purely statistical standpoint. 11.6 million affluent people in America could need a wealth advisor. Of those, just over 200,000 are dentists. So your addressable market has shrunk to 1.7%.  

Statistically, at least 38% of those dentists already have a wealth advisor, so you’re trying to attract about 124,000 prospects. Assuming your marketing is effective, let’s consider a scenario where all 124,000 prospective clients 1. find your website (which is already unrealistic) and 2. have that “wow” moment (also improbable). 

The average advisor sees conversion at 0.75% from viewing websites to booking a meeting. That would be 930 appointments, translating into ten prospect calls a week for two years. Having this amount of activity would be excellent traction! But is this realistic? I don’t think so.

5. People Evolve, Niches Don’t

Niches are usually determined based on a person’s demographics. That is their age, gender, occupation, lifecycle stage, etc. But some of these variables may change throughout time. To continue with the dentist niche example, let’s imagine you get hired by a client who has this profession. What will happen if the person decides to switch jobs? Or to drop out of work? Do they just fall out of your niche? Do you stop being the right person to guide them? 

Additionally, just because someone has the same profession does not mean they have the same goals. A doctor who’s growing their family versus a doctor who is selling their practice require different expertise beyond just their profession.

To Niche or Not To Niche?

While having a niche clientele has proven to be a successful strategy for some advisors, it is certainly not the only effective way to scale business growth. 

Having a niche clientele might not be at all strategical for you. Think about it this way: you will use your resources (which are, by definition, limited) to target a smaller base. Does that make sense? Especially since it’s not what clients want or need. Like in other categories, clients don’t care if the product or service is only for them; they just need it to work for them and want to feel comfortable using it. Our research has shown that this is the best approach to describing how clients think about wealth advice. 

If your goal is to grow and scale your business to help people improve their financial lives,  doesn’t shrinking your potential client market size from 100% down to 1% could seem detrimental? Believe it or not, there are more than enough “core” clients for all advisors. I’ve seen it at Zoe.