Monday2June2014www.afr.com | TheAustralianFinancialReview Asset 25

Comment

Brian Pert

Most financial advice practices offer arange of services to diverse client base,but sometimes it can pay to offer abroader range of services to a narrowsegment of consumers.

The main reason for a practice todeliver advice to a defined set ofclients is to position itself as an expertand then leverage that position torefine the client base. If a practiceknows who its target audience is it canrefine its marketing message. This willhelp a firm explain to prospectiveclients the challenges they face.

Prior to deciding to work in aspecific niche, a principal will need toresearch challenges and obstacles.How can you add value? Is it acommercial decision you want toembark on?

If you think offering a specialisedservice is a strategy which will paydividends, it is worth looking at yourcurrent client base to see if there areany professionals there which mightqualify, such as engineers, pilots ordentists. Our first niche was QantasAirways pilots and although we didnot have any pilots as clients we knewthird parties who could introduce us.

Once you have decided the nicheyou are going to target, based onconservative assumptions ofprospective client numbers and fees,you must determine how to add valueto the advice process and discover thechallenges the target faces.

Research meetings are highlyvaluable in determining whether yourinstinct to target a niche is likely topay off. People who can help you withthis survey of attitudes to advice mightalready be in the client base or may berecommended through centres ofinfluence such as lawyers oraccountants. Normally you wouldexpect to have one client in the niche,which is how the idea was germinatedin the first place.

Research meetings should takeabout 30 to 45 minutes and focus ondiscovering what it is the client nichewants from the advice process. Youare not there to sell your services.

The main questions you wantanswered are: what are the majorchanges occurring in the niche; whatare the financial challenges people in

the niche face; and have they beensuccessful in solving them.

That line of questioning shouldtake up your allotted time, but if thereis a chance to keep going, it is useful tostart mining for more informationabout the target client base. How bigis the pool of prospective clients?What would be the best way tocontact these people? Are there eventssuch as state conferences? What otherprofessionals service this niche?

Once you have conducted abouteight research meetings you shouldhave a good idea if you can add valueand a deep understanding of what isgoing on in your chosen niche.

Assuming you still think this is acommercial project, you then need towrite a research paper detailing yourfindings. Our first paper on Qantaspilots included two case studies pilotscould relate to.

This whole process, from firstinterviews to a completed researchpaper, should take about threemonths. You may need to employ aghost writer if professional writing isnot your strength.

Now that you have completed theresearch paper, what do you do with

it? First, you go back to the people youinterviewed. This is the time you canask them if they know others in theniche who would benefit from yourservices. At the end of the day theresearch paper is a big business card.

There are a number of differentvalue propositions from financialadvisers in Australia. Many will havean investment focus or a self-managedsuper focus. Professionals in a niche

tend to be time-poor and often benefitfrom a one-stop-shop offering.

A number of advice firms areoffering this project management rolein order to act as personal chieffinancial officers to clients. You don’tneed to be an expert in every area ofadvice but you should have a goodgrasp of the major themes.

Estate planning has often been anarea that advisers will make referenceto in their advice documents. Moreoften than not nothing happens, asthis puts the onus on the client to seea lawyer. By project-managing thisprocess you are adding value andexecuting the client’s wishes.

The value proposition then shiftsto being a personal CFO, as comparedwith an investment adviser or aninsurance salesperson.

This whole business offering maytotally change your clientengagement strategy upfront.

Instead of running through theclient’s income and balance sheet, apersonal CFO should be finding outabout clients’ desires and ambitionsand developing strategies to turnthem into reality. This is where clientswill pay for advice.

Clients can get insurance, loans andinvestments from the banks. We knowwhat goes on when clients go to thebank. It seems to be about product,not advice. So your service offeringneeds to be led by professional adviceand if product drops out that is fine –but not the other way round.

If you run this type of serviceoffering there will still be competition,and it may come from accountantswho have often held the position ofbeing the client’s trusted adviser.

The transition to this type ofservice may take many years. We havebeen at it for 10 years and are stillrefining the process, but there needsto be a mind shift and too manyadvisers will struggle with this.

One advantage is your revenue willbe less dependant on investmentmarkets which are out of your control.Why should your income go downwhen sharemarkets fall? You tend towork harder in down markets. Therewill be a shift in client conversationsfrom investments to outcomes.

Brian Pert is the director of Pert & Associates, which specialises in financial advice for medical professionals.

How to find your niche as an adviser

Extensive research is vital when analysing a client niche in the advice market. ISTOCKPHOTO

Clients can getinsurance, loans andinvestments from thebanks. So your serviceoffering needs to beled by professionalfinancial advice andif product drops outthat is fine – but notthe other way round.

Stepstospecialistservice• Research challenges and obstacles.How can you add value? Does it makecommercial sense to target a niche?• Look at your client base to see ifthere are clients who qualify.• Gather a sample and conductresearch meetings. Respondents mayalready be clients or may berecommended through centres ofinfluence.• Detail your findings in a researchpaper.• Conduct further research into aclient base and refine the valueproposition.

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