Niche practices have not traditionally been one of the financial planning industry’s strong suits. But the buzz that has been generated over the last several years is that things are going to change in that regard.
There’s an increasing number of financial planners who have taken it upon themselves to carve their own niche and specialize in a particular area such as financial gerontology, transitions, or a specific generation like X or Y.
While this comes as exciting news to many financial planners who have been thinking about specializing, one of the reasons that financial planning niches have not been more prolific is that committing to a specific niche can be risky and challenging.
In the world of finance and economics, a niche can be defined as a group or segment in a particular sector who have investable assets and who share common problems as well as common solutions to those problems. Financial planning niches are becoming more popular largely because of they are so potentially lucrative due to a high demand for the too-few planners with the right kind of specialized experience and skills.
According to studies published recently by Cerulli Associates, only about 15 percent of financial planners in the United States are niche planners. Nevertheless, the study also found that those niche planners owned nearly 30 percent of all financial advisor assets.
The proof of these findings comes in part from the growth of clients and assets under management that is being seen among these niche planners. Whereas most general planners experience practice growth over an extended time line, niche planners have seen exponential growth in as little as five years.
Many niche planners point to other professions such as accounting, law, and medicine in which niche practices are always more lucrative.