Kitces & Carl Ep 80: How Advisory Firms Evolve Their Specializations Over Time

Kitces & Carl Ep 80: How Advisory Firms Evolve Their Specializations Over Time

In recent history, implementing a niche or specialization has given many financial advisors a competitive business and marketing edge over the growing number of advisors in the industry. For many, the challenge may not be so much about choosing a niche, but more about when to begin taking steps toward committing to a particular niche and how to let it evolve over time, because taking action toward any major business decision can feel scary and risky, especially when there is uncertainty as to where the business will be years down the line. Oftentimes, the fear of choosing and committing to a niche can be so overwhelming that it stalls the advisor from taking action and making progress, leading to lost business opportunities.

In our 80th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the importance of flexibility when exploring a chosen niche, when to course correct the plan as the initially chosen niche evolves over time, and deciding how far in advance to start planning in the first place.

As a starting point, it’s important to remember that even the most well-laid, analytical plans consist only of best guesses for the future, and that there will be inevitable changes that must be considered. And while financial advisors are typically strategists that enjoy creating detailed master plans for what lies ahead, creating excessively rigid plans to implement a niche decades into the future with no potential flexibility may end out to be more detrimental than helpful. Instead, arranging plans recognizing that niches and specializations will shift and evolve (a lot like our lives and preferences!), can help advisors be more successful in a chosen niche than they could have imagined at the start.

While some advisors may have a general idea of what they want to pursue as a niche, it’s important to note that a niche worth pursuing may not always present itself until later down the road. Other advisors may choose to pursue multiple niches throughout their career and may not end with the niche they began with. But by approaching marketing strategies and niche exploration with the understanding that there is no way to know how things will end out, advisors can incorporate changes into the planning process to maintain momentum as they gather new information that will help them course correct along the way and get to the right spot in the end.

Ultimately, the key point is that advisors don’t necessarily have to choose – and commit to! – a niche at the start of their careers. Instead, as opportunities to select a niche are presented to the advisor, taking steps toward a shorter 3- to 5-year plan (instead of a longer-term 20- or 30-year plan) allows the advisor to explore the niche and decide if it is a good fit. Regardless of whether the initially chosen niche is the one the advisor will stay with, the time spent exploring a niche is an investment for advisors. Because, more often than not, the true value of the process is reflected by the actionable steps that are taken as a result of exploring a niche, which will ideally leave the advisor in a better place than where they started!

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