Why Advisors Must Be Specialists, Not Generalists

When individuals enter into financial services, they are encouraged to focus on friends and family to achieve early success. These broad circles represent different life stages, professions, economic levels and interests. Unfortunately, advisors may never deviate from this general strategy and will continue to accept anybody who pays for their services.

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Advisors who remain entrenched in this prospecting style will find themselves quickly overwhelmed. Through the years, it will become progressively harder to achieve the organic growth necessary to raise firm value. Clients may also question what makes their advisor worth the fees they are paying. Advisors can eventually burn out from the effort needed to do the best possible job for such a variety of clients.

6 Reasons to Specialize

Yet financial advisors who soar to the top of the industry are those who find a niche that allows them to provide exceptional service with passion. Here are six reasons advisors should steer their practices to a well-defined niche:

— Expertise.

— Referrals.

— Retention.

— Reduced liability.

— Enriched environment.

— Event enjoyment.


Just as a patient may value the opinion of a cardiologist over their family physician, clients often are willing to trust a financial specialist far faster than they are a general practitioner. Higher trust levels mean that clients will agree to recommendations faster, be willing to pay higher fees and feel more satisfied that they received a high level of value.

Trust is also more quickly established when the financial advisor has a commonality with their clients. For example, advisors with a pilot’s license may choose to specialize in pilots. In the introductory conversation, they can bond over their favorite aircrafts and past flight experiences.


Referrals are an ideal way to grow a practice. When clients are happy with their advisor, they are more than willing to refer others to them. It’s natural for a client to consider their circle of friends and recommend others who have the same common interest or background. The advisor regains valuable time because the referral has already been qualified by the client.


Once a client has worked with an advisor who understands the intricacies of their situation, it can be challenging for them to go back to a general practitioner. Thus, client retention tends to be higher with advisors who specialize. Bain & Company and Harvard Business School found that, across industries, improving client retention rates by 5 percentage points can boost profits, by 25% to 95%. Additionally, many studies have affirmed that the value of marketing to existing customers far exceeds the return on new client acquisition efforts.

Reduced Liability

An astute advisor understands that they cannot be an expert in all subjects, which could inadvertently lead to making critical mistakes. By specializing, an advisor is motivated to seek deeper knowledge. Not only can they reduce possible errors by narrowing their offering, they may also learn about obscure information that is of great value to clients. For example, an advisor who specializes in elder clients may have knowledge of financial streams of income available to surviving spouses of veterans who served in a military theater of war. As liquidity can be extremely valuable to a senior on a fixed income, this additional flow of funds may provide a cushion from inflation or allow the senior to purchase services that enable her to remain independent far longer.

Enriched Environment

When an advisor chooses a specialization, they can streamline their services to directly meet the needs of the niche. By eliminating overhead, an advisor can actually increase their offerings while simultaneously bringing in more revenue. Plus, they will find it easier to say no to people, products and services that are not necessary within the niche, freeing up physical office space and valuable time to focus more on both client and staff satisfaction.

Event Enjoyment

Client events can become less an obligation and more an opportunity to enjoy a chosen niche. Many clients are no longer interested in the traditional formal dinner that many advisors offer as a client appreciation event. Advisors with a specialization can offer more personalized, intimate events that truly make a client feel special. This satisfaction also can dramatically improve the advisor’s own satisfaction with their career by balancing work and personal interests.

Choosing Your Niche

Many advisors choose niches based on client demographics (e.g., age bracket or generational class, gender, relationship status, career status) or professional status (business owners, employees of major corporations in their area, gig workers, freelance creatives). They also may choose to hone in on life stages, such as college graduates, new homeowners, pre-retirees and post-retirees. The goal is to find a group that offers enough members to earn the advisor’s desired lifestyle, but narrow enough to truly specialize and differentiate oneself among the sea of look-alike advisors.

A delightful example includes a now-retired financial advisor who chose to work with divorced, entrepreneurial women who owned dogs. Some of the ways she communicated and reinforced her specialization included:

— Clients were greeted with a dramatic wall mural of a friendly dog face.

— An office space served as a “play area” for her clients’ pets when they met at the firm.

— Client events were often held at a local dog park, and candid event pics were featured in the firm’s newsletter.

— A professional photographer was hired to create a wall with black and white photos of each client with their pets. Each client received a photo, which sparked referrals because the women often displayed the picture in their own offices, becoming a conversation piece.

— The advisor incorporated canine care needs in her recommendations. For example, clients may delay setting up their own estate plan, but immediately take action to ensure their pets would be properly cared for in the event they could no longer do so due to disability or premature death.

— Client-focused staff was easy to recruit and retain. They were happy to come to work each day knowing they could interact with four-legged friends.

— Her own dog, a chocolate lab, was not only a friendly business ambassador, but also an important stress reliever for the team.

— This advisor did carry additional liability insurance. However, the firm learned each pet’s personality and took care to schedule them with their most compatible peers.

The Bottom Line

For the solo practitioner or boutique firm, specialization is a means to compete effectively with large, national firms. Women and minorities have found more lucrative success and satisfaction in smaller firms, and this can be key to their retention.

Large firms can afford to offer in-house services that can dwarf a smaller firm. But, with the addition of well-chosen centers of influence, the smaller practitioner can bring a unique level of personalization to the table without busting the budget.

In a commoditized world, this client-first focus can attract and retain clients who truly value the intimate connection and depth of knowledge that only the niche advisor can offer.

More from U.S. News

How Advisors Can Collaborate With CPAs

Why Advisors Need Insurance Strategies for Clients

Q&A: Understanding Captive vs. Independent Advisors

Why Advisors Must Be Specialists, Not Generalists originally appeared on usnews.com

Update 08/24/22: This story was published at an earlier date and has been updated with new information.

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