With margins being squeezed right across our industry, maintaining profits is a key challenge for many advice businesses, particularly those operating within niche markets.
Recent research from Business Health has shown that profit margins for advice businesses have fallen from 28 per cent to 16 per cent in just five years.
And with the value of most advice businesses now based on EBIT, rather than recurring revenue, maintaining existing profit margins and finding fresh sources of revenue is now even more important.
Here are just some of the strategies that we’ve been using with our advisers to help them grow their client base within different niche markets:
- Take a partnership approach. The first step, after deciding on your niche market, is to develop an ongoing relationship with the trusted industry association or educational provider that dominates that market.
This allows you to introduce your business to a large group of your ideal clients quickly and efficiently, as well as providing you with an excellent source of ongoing referrals as the relationship grows.
- Become the genuine expert. We encourage all our advisers to spend the time upfront learning everything they can about the niche market that they are targeting.
However, it is very important that you don’t limit yourself just to the technical side of the industry. You also need to build a profile of the people within it and get a really deep understanding of their common goals and interests.
- What are the issues that they’re facing in their personal and professional lives?
- What lifestyle do they want now, and in retirement?
- What career milestones do they have?
- What does their future in the industry look like?
We often find that doing their own research in this way actually helps our advisers to receive introductions into the markets they are targeting right away, which is great.
- A focus on education. Many high net worth niche markets have a strong emphasis on ongoing education and professional development. That is why it is important to take these clients on a journey.
Educating them each step of the way will help them understand the logic behind each recommendation, and how it ties back to their original goals.
We have found this approach helps to strengthen relationships within these markets, and allows the clients to become more engaged and make better, more informed decisions.
- Deliver first class advice and service. I know it sounds obvious but professionals within niche markets often have very high expectations when it comes to the financial advice and service that they receive.
So we work very hard with each of our advice businesses to ensure their value proposition and elevator pitch flows right through into everything they do.
Making sure that your operational processes, your service standards and the way your staff deal with your clients are all running smoothly will not only lead to more satisfied clients, but more referrals within your ideal market.
Matthew Brown is the chief executive of Financial Services Partners and works closely with its network of advisers to help them create sustainable, referrable businesses over the long term.
