Advisors looking to grow their businesses and their own wealth should consider a specific niche and become a specialist if they haven't already done so, according to Michael Kitces, chief financial planning nerd at Kitces.com and head of planning strategy at Buckingham Wealth Management.
Just like accountants, doctors and lawyers, advisors who specialize tend to see higher incomes than those who are generalists, he said in a "Scaling Advice" webinar on July 28. The event was hosted by fpPathfinder, a membership service offering financial planning checklists and flowcharts, of which Kitces is a co-founder.
Ed Slott, head of Ed Slott and Co., is a highly successful example of an advisor specializing in individual retirement accounts, Kitces said.
Other Specialties
Some advisors specialize in the needs of a specific type of client, such as airline pilots or doctors, he noted. These clients are paying for the added expertise that typically comes from being a specialist advisor.
Kitces pointed to data showing that while the average annual income of a traditional financial advisor is $142,500, the average annual income of a niche advisor is $160,000.
That 12% difference in income, though, pales in comparison with the 56%-69% increase that specialist accountants such as forensic accountants and IT auditors see, the 151%-183% increase that specialist doctors like thoracic surgeons and neurosurgeons see, and the 64%-101% increase that specialist lawyers such as corporate and patent attorneys see, he conceded.
