It began as a standard exercise to help Lou Tranquilli gauge where he and his financial planning practice stood in the wake of the economic crisis of 2008 and 2009. But by the time the strategic assessment was done, it had taken on an entirely new and more profound meaning, for it led Tranquilli to conclude that it was time to chart an altogether new course for his Clinton, New Jersey-based firm.
After almost two decades as what amounted to a general practitioner, Tranquilli, motivated by an epiphany of sorts, took the bold step of pivoting his firm into more specialized territory. And he hasn't looked back since. The decision to focus his practice on delivering holistic financial planning services to female clients, and specifically divorced women, has proven to be both financially rewarding and personally fulfilling, he says.
As of late summer 2015, his firm, Tranquilli Financial Advisor, was managing more than $55 million in assets, marking an AUM increase of about $18 million in 18 months. Then there are the intangible benefits. "I'm a much better financial advisor now that I have identified a market to focus on," he says. "I'm more confident that the message I'm delivering is the right one, and I don't have all that excessive noise of moving from market to market as a generalist."
The epiphany that led to the pivot came after Tranquilli, at the suggestion of his business coach, examined his book of business to identify the types of clients with whom he most enjoyed working. "That exercise really clarified who I liked doing business with — and it was predominately female clients," he explains. "Then it became a matter of figuring out how do we replicate that time and again."
It may seem counterintuitive, but for many advisory practices today, growth comes not by expanding focus but by narrowing it. "It's about getting more specific, not less specific," says Ray Sclafani, founder and CEO of ClientWise, a Mt. Kisco, New York, executive coaching firm for financial professionals. "The more they can focus on their ideal client types, the likelier they are to succeed."
"Most advisors, I think, feel uneasy about focusing in on a specific niche, because they worry about pigeonholing themselves," adds Maribeth Kuzmeski, principal at Red Zone Marketing, a financial advisor-focused marketing and management consulting firm in Grayslake, Illinois. "But I look at focusing a practice as a strategic growth opportunity and a really smart play. If you want to grow, you better find a niche or two."
As daunting as it may seem to pivot and refocus an already-established practice, the payoff from doing so can be huge. Here's how to go about identifying a niche and carving out a strong, sustainable presence within it.
Determine what stokes your passion. As a precursor to a pivot, figure out "what you're passionate about — who you enjoy working with and the types of people you want to build the firm around," suggests Sclafani, author of the new book, You've Been Framed: How to Reframe Your Wealth Management Business and Renew Client Relationships. When you genuinely enjoy working with people in the segment you've targeted, prosperity, fulfillment and professional longevity tend to follow, he says. "You need to think about your life's work, the business you want to build and the legacy you want to leave."
See where your passion and your current client base overlap. To further define your niche, comb through your existing client base to identify any common themes and where those themes intersect with your passion. For Tranquilli, divorced women represented that intersection. For another advisor, it could be young professionals or small business owners or members of Generation X, for example. "You have to find your tribe," says Russ Weiss, CFP, who specializes in the "modern lifestyle" niche (so-called non-traditional families and clients) for Marshall Financial Group in Doylestown, Pennsylvania. The segment in some instances can be narrow, even esoteric, Sclafani notes, pointing to an advisor he knows who has built a successful practice catering to boating enthusiasts.
Identify a void, then move to fill it. It was during the process of planning for his own "modern lifestyle" situation — he's in a committed unmarried relationship with a long-time girlfriend — that Weiss says he realized, "Wow, this is an area not a lot of advisors are focusing on. Then I did some research and saw what a huge market it is. Half the [adult] population is unmarried." On one hand, you want to be sure a segment is substantial enough to provide a market for your services before you commit to pivoting into it, says Sclafani. But on the other, you need to be wary of moving into a niche where the competition is already stiff, such as the ultra-high-net-worth segment.
