Financial advisors need to specialize in niche markets in order to set themselves apart and maintain profitability, says a researcher for the Financial Planning Association.
“It’s clear that planners need to focus either on enhancing value through specialization, communicating value more effectively or operating more efficiently” in order to maintain their businesses, says Julie Littlechild, founder of If Not Now Research, which conducted a study on the future challenges of the industry for FPA.
About half of the 771 planners surveyed say they specialize in working with a specific market segment, with business owners topping the list of most common at 28 percent. Only 10 percent of respondents indicated that they specialize in working with millennials, while 14 percent say they do not work at all with this group of clients, the survey says.
The survey also shows that more than half of advisors are using some form of robo planning or are willing to consider it as part of their services to clients as a supplement to their services.
“Robo technology should not be confused with financial planners, especially certified financial planner professionals who are skilled at looking at all aspects of a person’s financial life, including tax planning, estate planning, education funding, insurance, risk management, risk tolerance, life goals and so much more,” says FPA President Edward W. Gjertsen II.
“Financial planning is a process that involves much more than a simplified approach in allocating one’s investment portfolio. With that said, it stands to reason that some practices may be considering robos to augment current offerings, especially for younger clients and those with simple financial situations,” he adds.
Advisors say a wide range of topics are part of their conversations with clients, including navigating family dynamics, talking about emotions around money and managing risk, according to the survey.