Two financial advisers have shared why they opted to specialise in certain client niches when setting up their own business.
Research by Adviser Ratings found those financial advisers with a client specialisation are likely to manage funds which are 15 per cent larger than those with a generalised approach.
Specialised advisers also charge a higher fee volume, with specialists charging fees that are 18 per cent higher than generalised ones.
Speaking to Money Management, two financial advisers who recently set up their own practices discussed why they selected their particular niche.
Melbourne-based Carlos Medrano set up his practice called Atrium Wealth Advisory in May 2024 and opted to specialise in insurance. The number of risk advisers has substantially declined in recent years, with just 480 advisers responsible for writing half of all risk advice, according to Adviser Ratings.
For Medrano, this presented an “untapped market” for him as more advisers opt to focus on wealth advice instead.
“Something that I’ve been focusing on is insurance. I feel like that’s a very big untapped market where few advisers are willing to do it. I’m seeing more risk insurance now than I have in the last four years. It’s about identifying gaps in the market, and insurance is one of them as more people are focused on wealth than risk.”
He added that focusing on one area can simplify the complexities of running an advice business which can be time-consuming and expensive to enact.
“Everyone wants to make their lives simpler, especially a financial planning practice. They don’t have the capacity to offer their service to everyone. I think they just want to keep it simple for their business models,” he said. “Having a niche market makes the process and their life quicker and easier.”
Meanwhile, Chris Carlin, who set up his Sunshine Coast firm Glasshouse Wealth in August, opted to specialise in working with clients who are young, “ambitious accumulators”.
He said narrowing down the client breadth could lead to longer-lasting relationships with that demographic as well as allow him as an adviser to become an expert in that field.
“When planners focus on a specific niche, clients feel more understood and supported because they are an expert in that particular niche.
“This can lead to stronger, longer-lasting relationships, which are crucial for growing a sustainable advisory practice. Specialisation makes the financial planning process more efficient, enabling advisers to streamline their services and use proven strategies that are effective for their target audience.”
Working with younger clients is also a way to build a client relationship at the start of their careers which will hopefully develop over time as they potentially get married, have children and receive inheritances.
This is particularly important as a recent Natixis survey found 43 per cent of advisers are concerned they will not retain assets from clients’ spouses or next-generation heirs in the event of their death. The survey also found when a client’s children inherit, advisers are successful only half of the time in retaining them as clients.
Three-quarters of advisers globally cited long-term relationship building as the most critical factor for retaining assets.
