For a man who does more than 55 presentations a year—which equates to seeing his hometown airport, Washington Dulles International Airport, at least 110 times a year—making money as a financial advisor is simple: “Tie income to individuals’ pain points,” says Michael Kitces.
Recently, I was honored to spend 90 minutes with Kitces when he presented not one but two topics—Rethinking Risk Tolerance; and Cutting Edge Tax Planning Developments and Opportunities—at a recent Financial Planning Association (FPA) of Colorado event. He is generous with his time and passionate about helping the financial advisor community. The insights he shared with me were vast and valuable, so true to form, I am highlighting two of the key takeaways: notching out a niche and creating solutions to pain points. Both topics are important factors in growing your business.
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“We make a living by what we get. We make a life by what we give.” ― Winston Churchill
This would sum up Michael’s goal. His ideal is to spend 99% of his time giving to the financial advisor community and the other 1% of the time getting paid for his advice.
To say that Michael has a load on his shoulders is not giving his schedule justice. He indicated he splits his time evenly between the work on his own financial advising business with Pinnacle Advisory Group, conducting 55 plus presentations a year, working on his blog, and volunteering (he had to fly home the evening I met with him to attend the board meeting of the theatrical society he belongs to). Yet, somehow he also has time to research all the information he provides. And he does it all while juggling a young and growing family.
Kitces is known for his in-depth analysis of financial planning issues as well as his ability to convey significant research to the financial advising community, which he does through public speaking and his blog. Recently, a survey compiled by Zywave Financial indicated that Kitces’ blog is the most popular among financial advisors. Clearly, he knows what he’s talking about.
Two Keys to Grow Your Business
We discussed at length the strategies, or the lack thereof, for advisors to grow their businesses. As analysts, advisors often struggle at marketing or sales. In fact, we all know how daunting it is to bridge one’s analytical mind with the creativity needed to grow one’s business. We excel at what we know; not at what we don’t. But Kitces stresses that it’s not as hard as it looks.
Two areas that Kitces focuses on for advisors to grow their businesses are:
- Establish a niche
- Determine what pain points clients experience and offer solutions
When the account base is small or assets shrink, like in 2008, the knee-jerk reaction is for advisors to lower fees, lower their minimums and expand their focal point as broadly as possible. “DON’T,” says Kitces. Financial advisors need to focus on a niche, understand the hurdles these individuals are having and then provide services and products to meet their specific needs. By focusing on a niche, you build your reputation as being an expert—people seek you out, and people give you referrals. It sounds as though this has worked extremely well for Kitces, which his record would confirm.
Kitces’ niche on advancing knowledge in financial planning has paid off. He is the go-to person. In fact, the FPA and College of Financial Planning seek Kitces out to speak and provide insight on the latest research. People from across the country follow Kitces’ blog. As a result, Kitces is known by financial advisors and financial planners to provide intensive research and insights to manage one’s practice.
Notch Out Your Niche
You can do the same. I know of an advisor who focuses on horse owners. These individuals have a hobby that entails significant expenses, but they love the sport. They may own their own farm or lease out space. No matter, these individuals have specific planning needs and this advisor has become the go-to person to handle all things equestrian.
So how can you tap into a niche?
Step 1: Look at your book of business. Do you have clients who are focused on a specific industry or hobby? If you do not find a theme, look within your community. Any trends or similarities?
Step 2: Go out and interview individuals in the identified niche. What are their goals? What keeps them up at night? What government regulations do they face?
Step 3: Build a pain sheet. A pain sheet lists out all the hurdles or pains the niche has. On the list, add the reason for the pain, the impact the pain has and the capabilities you have to address each of these pain points.
Step 4: Think of three ways to get the word out. Here are a few ideas:
- Create a blog on your website and post weekly entries on issues and solutions to pain points specific to your identified niche.
- Find communities online under LinkedIn and the like and monitor them. Then begin inserting comments and ideas on how to help.
- Contact associations and organizations around your niche community and offer to speak at meetings.
- Call or mail individuals in your niche and explain to them how you can help them.
Offer Solutions to Pain Points
After you identify your niche and start to grow interest in your services, Kitces recommends offering fee-based content and classes for solving your niche market’s pain paints. Kitces believes the two primary pain points for the popular retiree are Social Security and Medicare. The amount of information and the number of questions that arise from both Social Security and Medicare provide an opportunity for financial advisors to give value to prospects.
Create ebooks, presentations and classes that address these or other pain points. By charging a fee, people will value your content more and you can build a name for yourself—a brand per se as an “expert” in the topic for your niche. But to truly succeed, test what people like and dislike (which will help with your overall marketing strategy even if you think you don’t have or need one). Is the copy you use for newsletters, invitations or advertising working? If not, what can you change? How about the colors of the materials? And the location of the event? By testing all of these variables, while providing valuable information, you are getting more bang for your buck—you’re improving your marketing, building your niche and developing into a trusted expert on topics pertinent to your niche.
Kitces points out that this strategy can play a hand in developing future revenue streams as well. If one topic is more popular than another, you can beef up your content and classes in that area. If invites sent at 9 a.m. are more popular than those at 5 p.m., you can adjust your future communications. It’s a win-win!
Take these two tips to heart. Identify a niche market and then focus on pain points for that market. Kitces’ insights do not stop with those two tips though. He is truly devoted to helping the financial planning community. Follow him online, attend his presentations, and read his research. You won’t regret it.