Finding a good way to differentiate yourself amid a sea of people who call themselves financial advisors has never been easy task, but it’s become all the more difficult in recent years as the ranks of advisors who offer “comprehensive financial planning” continue to grow. The problem is only compounded for newer advisors trying to find a way, not to get new clients, but just to get noticed within their firms (and get opportunities for client face time) as they launch their own careers.
In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss why niches and mini-specializations are a great way for advisors to differentiate themselves, the differences between the two, and cover specific and actionable ways to market yourself and grow your exposure in your mini-specialization of choice.
At the start of their careers, most advisors are generalists – having just completed the comprehensive CFP certification educational curriculum – and haven’t yet had the time, opportunity, and experience to develop a specific target niche audience. However, one way that newer advisors can start to differentiate their expertise is simply to dive deep into a particular subject area and make themselves more referable and top-of-mind by becoming the go-to expert for that topic in their firm or within their community – a form of “mini” specialization.
Because the reality is that early on, in particular, you don’t need to be an expert on everything to succeed. You just need to become really good at only one thing and be known for doing it well… and that can happen in a relatively short period of time!
Of course, just because you become an expert on something with a (mini-)specialization doesn’t mean that the masses will automatically beat a path to your door. You still have to get the word out, and that’s where a good inbound marketing strategy comes into play, from building a website that showcases your expertise, to starting a growing an email list and a social media presence to get the word out about your expertise, and creating “lead magnets” like ebooks (or even self-publishing a real book) to establish your “authority”, which you can then leverage further to teach and speak on the topic.
Ultimately, by going through the mini-specialization process, you’ll learn more about the things that matter most to your target clientele, and where they spend their time gathering such information, which makes the process of getting new clients even more efficient over time. But at the most basic level, developing a mini-specialization is the most straightforward path to being more than just another advisor who offers “comprehensive financial planning and investment management to affluent individuals and families”, and can be the key to making you the one that lead advisors choose to bring into their client meetings to gain more real-world experience!
(Michael’s Note: The video below was recorded using Periscope, and announced via Twitter. If you want to participate in the next #OfficeHours live, please download the Periscope app on your mobile device, and follow @MichaelKitces on Twitter, so you get the announcement when the broadcast is starting, at/around 1PM EST every Tuesday! You can also submit your question in advance through our Contact page!)
#OfficeHours with @MichaelKitces Video Transcript
Well, welcome, everyone. Welcome to Office Hours with Michael Kitces. For today's Office Hours, I want to talk about how to leverage a specialization to market and differentiate yourself as a financial advisor, and particularly for younger advisors to get more opportunities for client-facing time in the first place.
Today's discussion is based on a question that came in recently from Jack, a 20-something advisor, who wrote me and asked, "Dear Michael, I've created a sort of tactical niche, versus the usual strategic client lifestyle niches, in utilizing CRUTs, Charitable Remainder Unitrusts, as a planning tool. I've given an overview of the structure, how we model it versus a control scenario, key factors for when a CRUT is likely to be a useful tool, major drawbacks, etc., because CRUTs have actually become really underutilized in recent years, with fewer than 30,000 CRUTs in the wild with over half a million dollars in assets, and the number has been declining every year. So, I've given this overview internally to our advisors and to some estate planning attorneys and CPAs, and I think it's both useful for other professionals and a great opportunity for the firm I work for and myself to gain some mindshare. So, my question is, what avenues would you consider for sharing this kind of expertise? Should I go to CPA societies and estate planning councils and apply to speak at their conferences? Should I start by figuring out how to get my material to count for a professional CE credit? Am I going about it all wrong by focusing on estate planning attorneys and CPAs? What should I do?"
This is a great question, Jack, and I love how you've created a subject matter expertise for yourself. Especially as a younger advisor, this is a great way to start to differentiate and stand out even within your own firm and pursuing your own career track, not to mention eventually with prospective clients. In fact, it's actually the same path that I used to get my own advisory career going in my early days.
In my second year as an advisor, I was working in a paraplanner role at an independent broker-dealer. And this was back in the very early 2000s, which was the heyday of variable annuities with living benefit riders. And the annuity companies were creating new riders with new features, like, every couple of months continuously. And it was getting really difficult and complex just trying to keep track of them all and which was which and how they worked and the differences between guaranteed minimum income benefits and new guaranteed minimum withdrawal benefits that were coming out.
And so I decided to get copies of specimen contracts for all the major annuities that were popular at the time, and I read every single one, and I made a giant spreadsheet that cataloged them all. Which type of rider it had and how it worked, and did they have a ratcheting high watermark benefit base or a guaranteed growth rate on the benefit base? Was that growth rate 5% or 6%? And were there investment restrictions? And what was the cost of the contract and the rider and all the underlying funds? All the information that you would need to be an expert in this space. So I did my homework, I put together my giant spreadsheet, and I created my own mini-specialization in variable annuities with living benefit riders.
And in the process, I immediately became the go-to expert on annuities for all the advisors in our firm. And as a younger advisor trying to get more experience and facetime with clients, it was amazing. Because now whenever there was a discussion about annuities, anytime it came up with a client, the advisors just called me to come in because they knew I knew the details better than they did, so bringing me in made them look good, and I got a ton of valuable client experience early in my career because I formed this own mini-specialization and leveraged it within the firm to grow my career. And eventually, it turned into a book I published that we've now done five editions on, "The Advisor's Guide to Annuities."
The Value Of Niches And (Mini-)Specializations To Differentiate [3:49]
And this is precisely why I'm such a huge advocate of advisors finding niches and specializations. Now, there is actually an important difference between the two. A specialization is typically about some kind of subject matter expertise. Mine was variable annuities with living benefit riders, Jack's is charitable remainder trust, and Ed Slott is the IRA guru... everybody knows that's his specialization. A niche, by contrast, is about serving a particular group of clients that have a particular need, and you've crafted some kind of service or solution to solve that need. You might have a niche in serving airline pilots who need to navigate their airline pension system or executives at a corporation that need to know how to handle their firm's unique executive compensation package of options and restricted stock and deferred compensation. Or maybe you're working with recent widows who're trying to figure out how to transition to the next stage of their lives or new retirees who are trying to make that transition to the next stage of their lives.
The reason why this matter is that, ultimately, whether it's a niche or a specialization, you become more referable when you have one. People can more easily refer to you when your introduction goes beyond just saying you're a financial advisor. Because now, if I've got one of these niches or specializations, when I meet someone, I don't have to say, "Hi, I'm Michael, I'm a financial advisor," which usually makes people take a couple of steps back, because no one likes to talk to financial advisors these days. Instead, I could say, "Hi, I'm Michael. I advise recent widows on how to put their lives back together after a tragic loss," or, "I'm Michael, I work with people who are charitably inclined and want to leave a bequest to charity after they pass but don't want to undermine their current retirement plan while they're still alive."
These are niches and specializations that define really specific needs or problems. And if you have that problem or you know someone that has that problem, I'm instantly going to come to mind. If I say, "Hi, I'm Michael, I specialize in recent widows trying to put their lives back together after a recent loss," and any time you meet a widow, I am immediately going to come to mind, beating out any other financial advisor you know. Your brain is going to make that connection all by itself. That's what our brains do. They make connections. And now I own that spot on your brain for, "Who do you call when you meet a widow who needs help?"
Now, the caveat for newer advisors is that building a niche often takes up to three years to really get established and to gain momentum. And it's complex and it takes a lot of experience to really be able to figure out who you best serve and how do you craft a differentiated solution to help them? So that's why I'm really a fan of specializations or even just these, we'll call them, "mini-specializations." Practice management guru Philip Palaveev wrote about this strategy in his recent "G2: Next Generation" book, where he made the excellent point that if you really want to get more credibility with clients, especially as a young advisor, you don't have to start a relationship by trying to figure out how to play golf and be social with your clients, start it by simply being an absolute expert in something that matters to them.
And that's what Jack is doing with his charitable remainder trust mini-specialization. And that's what I did early in my career with my mini-specialization in variable annuities with living benefit riders. Because when you shrink the domain of what you need to learn on a specific topic, you really can become an expert in a relatively short amount of time. You don't need to be an expert in everything about everything, you just need to be a really good expert on one thing and be really awesome at it, both to establish yourself in your own advisory firm and get credibility with clients as a younger advisor, and eventually develop and get your own clients who come to you as a recognized expert in your area of specialization. So, for those of you who don't have at least some kind of mini-specialization expertise to differentiate yourself, I would strongly urge and encourage you to go down that path.
How To Grow And Market Your Mini-Specialization [7:29]
But for the rest of today's Office Hours, I want to talk to those of you, like Jack, who maybe haveformed some kind of mini-specialization and now you're trying to figure out what to do with it. The virtue of having a niche or specialization, again, is that it makes marketing a lot easier as a financial advisor because you become more referable. If you know exactly who it is you're trying to serve, you can make really targeted marketing plans to reach them. A few months ago, I wrote about this on the blog. If you have a niche in a particular profession like architects, you can immediately get focused in your marketing. Write articles for the architect trade publications. Get interviewed on the architect podcast. Join the architect association and volunteer. Find opportunities to speak at architect conferences.
Now, one of the problems with, or I should say challenges with specializations and particularly mini-specializations is that there may actually be a lot of different people who could potentially fit that particular mini-specialization, like who have that problem and need to know about that thing. Which means the process of marketing your specialization is a little bit harder. If I have a niche in architects, I know where to go. I join architect association. If I have a mini-specialization in charitable remainder trusts, well, there's no association for consumers who are planning to set up a charitable remainder trust next year.
If I need to set one up as a consumer or learn about them, I may go searching for information, but I'm probably not involved in a charitable remainder trust association leading up to that moment. It's that I'm just going to go online and search when the time comes. And because of that, I think the best possible way to establish yourself with a mini-specialization is to make a website, a blog, that little virtual office of your own on the internet that makes it possible for others to find their way to you and this specialized expertise that you have.
So, Jack, I'd begin by starting a website on CRUTs. You can write about what CRUTs are, how they work, the history of CRUTs. Why use CRUTs and not CRATs. How new tax law changes impact CRUTs. How CRUTs compare to alternatives like Donor-Advised Funds, charitable planning strategies with CRUTs, retirement planning strategies with CRUTs. Your goal, simply put, is that when someone types a question to Google about CRUTs, your website comes up as one of the answers. And when they show up at your website, if it looks like a quality, professional website, the kind of website where a prospect might say, "Wow, this advisor really knows what he or she is talking about, this is really professional, I need more help, I think this is who I'm going to call."
Now, the reality is that for most advisors just getting started in a mini-specialization, your website isn't going to instantly become "the authority" in your area of specialization, even if you've crafted the real expertise. Because developing credibility for the website and improving it, broadly called search engine optimization, or SEO, takes time. But you have to build a foundation first. And your blog and your website to showcase your expertise on CRUTs is your foundation.
From there, you need to start getting the word out. I'd encourage you to check out Michael Hyatt's book, "Platform," which is all about how to begin what he calls "narrowcasting" your specialized expertise to get noticed in a really crowded, noisy world. Because the reality is that none of us are going to be on television (or few of us are going to be on television) reaching millions of people, but any of us can create our own platform that narrowcasts our expertise to our target market of people who actually want to learn about the thing that we're experts in.
And in practice, this usually means building an email list using software like MailChimp, creating social media accounts on places like Twitter and LinkedIn and Facebook, where you share out your content and expertise, write articles about CRUTs and charitable planning, and become a go-to source. You may even start interacting with the media any time they write about charitable strategies. Connect them with your blog posts about an angle that they may have missed related to CRUTs, and so forth. Start narrowcasting your mini-specialization so that people can learn about your expertise, share it with others who might want to hear about your expertise, and begin building a base of people you may someday do business with.
These are the important foundational steps for several reasons. The first is just, even if someone hears about your specialization or sees your presentation and thinks you sound awesome, they're probably not going to give you their life savings or make a massive irrevocable gift to a charitable trust based on one interaction or one recommendation. They're going to go check you out online. They're going to vet that you're a real expert. They're going to see if you're credible. They're going to get more familiar with your expertise. And that website has to be there first so they find something that's recognized as credible and authoritative. That's what actually turns this into a business opportunity for you instead of just being a thing you know stuff about. From there, you can get more targeted going outbound. So take all that information you've written on your website about CRUTs and turn it into a presentation on CRUTs that now you can offer to local CPA societies and estate planning councils.
I would point out, Jack, your question about CE, most of these organizations actually handle their own CE submissions and reporting. So typically, you'll need to have an outline, a session description, learning objectives that you make once as a standard thing for your presentation to establish that it's CE-eligible and will qualify when they submit. But you usually don't actually submit for CE yourself, just focus on making a good educational presentation that takes your online expertise and brings it to the physical world and an in-person event.
From there, you might even publish an e-book or a physical book on CRUTs. Because the truth is that if you've already been writing some content on your website for a period of time, you might create a full book in less than a couple of months at a fairly modest cost, because you're simply going to take all the articles you've already written and just work with an editor to repackage them into a book format. Each article you wrote on your site is a chapter or a part of a chapter for a book. And boom, now you're a recognized author and really establishing credibility as a true expert in your specialization.
And the deeper that you go with the mini-specialization, the more you'll eventually figure out ways to better target the content to people who might do business with you based on that specialization. So, Jack, maybe you'll start with CPAs and estate planning attorneys, but, you know, a lot of them already know about charitable remainder trust because they draft them or do tax reporting for them and won't necessarily want more information for you. So maybe you'll write articles that showcase your expertise in other publications. Submit it to journals, submit it to trade publications. You can submit a guest post on Nerd's Eye View to showcase your expertise for the wider audience who might be able to refer to you. And you'll likely find other places to go over time as well. Perhaps to business owners selling their businesses who might want to set up a CRUT for the deduction in the year of their liquidity event, or executives who have their own stock option liquidity event and want to offset income from their options exercises that all hit in a single year.
In essence, once you establish your mini-specialization, the focus will start to shift from, "How do I get the word out about my expertise," to a more targeted, "How do I finally reach the people who would most likely be interested in hearing about my expertise and do business with me?" But first, you have to establish yourself as the expert. Otherwise, your pitches to those organizations to speak or write just sounds like a salesperson and not credible. Because they'll look you up online and not be able to establish that you're an expert. You have to build the foundation first to establish your credibility in your area of mini-specialization. And in the process, you'll learn a lot more about who really wants to hear about the specialized expertise you're writing about, your presentations, and see who contacts you about your book, and so forth. But you'll have a lot more to talk about to differentiate yourself than just saying, "I'm a financial advisor who offers comprehensive financial planning and investment management to affluent clients," like every other advisor.
The key point, though, is that mini-specializations don't take a lot to get off the ground in the first place because most advisors are generalists. You can pick nearly any financial topic and really focus in on it and become more knowledgeable than most other advisors and virtually every consumer, and to begin to differentiate with that expertise, starting in your office, and then eventually branching outside as well. Niches are great, but they are a little more complicated. Mini-specializations are great and a little easier as a place to start, especially for new advisors.
I hope that's helpful as food for thought about the importance and value of crafting a mini-specialization to start to differentiate and gain credibility, both within your advisory firm to advance your own career, and eventually outside your firm to develop your own clients.
This is Office Hours with Michael Kitces. We're normally 1 p.m. East Coast time on Tuesdays, although I had meetings all morning so we're a little bit late today, but thanks for joining us, and have a great day.
Disclosure: Michael Kitces is a co-author of The Advisor's Guide to Annuities, which was mentioned in this article.