Clearly, niche marketing can be a powerful way for advisors to acquire new clients through referrals by establishing themselves as knowledgeable and skilled professionals who can address the unique needs of certain investors, such as vacation home owners, doctors, business owners, entertainers, and professional athletes.
In the wake of Sandy, many owners of vacation properties in coastal resort communities have embraced—at least temporarily—a myth that Federal Emergency Management Agency (FEMA) flood insurance doesn’t apply to non-primary residences. The confusion resulted from homeowners failing to discern between FEMA flood insurance and grants. FEMA flood insurance is clearly available for vacation homes—otherwise banks would refuse to provide mortgages for properties in flood plains and the agency would be hard pressed to justify charging homeowners for the insurance.
Yet, other FEMA aid, such as low interest loans for homeowners who are straddled with repair bills that exceed their insurance benefits, are only being offered to owners of primary, or full-time, residences. For homeowners of vacation properties, the confusion, which could have been avoided by having an advisor that provides clear explanations on insurance policies, has been a needless source of anxiety.
Vacation homeowners, of course, have other needs that advisors can addrkess. They may need supplemental flood insurance that will pay for damages in excess of limits imposed by FEMA. By leaving their homes vacant during the offseason, furthermore, homeowners may need vacant dwelling insurance instead of homeowners insurance.
Issues around mortgages, such as evaluating refinancing when rates decline, can also be significant because vacation home owners typically have mortgages on their primary homes as well as their second homes. The amount of cash, or the size of an emergency fund allocated to vacation home expenses, also needs to be evaluated when creating investment programs for vacation homeowners.
Those needs illustrate how the unique concerns of specialty niches can create attractive opportunities for advisors seeking to grow their businesses. Niches, of course, aren’t limited to vacation homeowners. Indeed, they exist for various types of investors, such as medical doctors, athletes, individuals with special health conditions, and entertainers, to name just a few examples.
Case-in-point: rather than subject their careers and investments to the same type of risk—that is the risk that the medical industry or a special area with the industry may face an upheaval, doctors seek advisors who can build portfolios that underweight the health care sector. In addition, doctors may need help with understanding malpractice insurance and may have unique business planning needs, such as providing employee benefits and finding partners or other associates to help them grow their practices.
From a marketing perspective, advisors who can demonstrate that their specific knowledge is appropriate for a niche can have a strong competitive advantage. With that in mind, advisors should be familiar with not only the investment and financial planning needs of a niche, but also with terms and trends that are specific to their target markets.
By doing so, they will be viewed by their clients and prospects as someone who is closely involved with their niche community and is a valuable resource. That will increase the likelihood that clients will recommend the advisors to other niche members.
Niche markets also provide unique opportunities for advisors to prospect for new clients. For example, advisors seeking to serve doctors can attend medical industry conference and offer to provide presentations at the events on relevant financial planning topics.
Advisors pursuing vacation homeowners, likewise, can find events in resort communities during which they can conduct seminars on financial planning topics specific to the needs of vacation property owners. Niches members are also likely to be qualified prospects, or prospects with significant wealth and therefore worth pursuing. Vacation home owners, for example, typically have sufficient means to afford owning a second house, while doctors and business owners are usually financial successful.
Clearly, niche marketing can provide a powerful way for advisors to compete and growth their busines
