Finding your niche in a targeted way

Why be all things to all people when you can excel in a particular niche market with business focus and tailored product design?

Money Managementhas identified six niche markets in the Australian financial planning industry specialising in demographics from age and sexual preference-related brackets, to geographical, philosophical and economically defined groups.

Each of the groups listed below focus on one of these niche markets.

However, this does not mean that they do not have any other clients outside of their identified target market. What it does mean is that they have a core source of clients they service and through this, are able to gain access to like-minded individuals with similar concerns.

There are two primary drivers of this specialisation trend — consumers are both increasingly proactive and discerning in what they expect from their service providers and likewise, financial planners are eager to streamline their businesses and target a particular market group where they know they can add value.

RetireInvest

Since1979, RetireInvest has had a niche market founded on providing investment advice to people retiring with large lump sums of money.

While the business also caters for people in the accumulation stage, the name has always suggested a focus on the retiree market. RetireInvest is owned by ING and is the company’s largest dealer group.

According to ING national marketing manager Lynn Wyatt, niche marketing to this particular group of customers does have its advantages.

“It is basically a homogeneous group which wants a secure future. This means we can train our advisers on how to cater for this,” she says.

However, one of the issues RetireInvest faces is that many older Australians are not highly educated in financial matters. While this is changing, it means the issue of trust is very important to this group.

Marketing the business is mainly done through referrals, with RetireInvest planning to open another 10 to 15 offices this year.

Another method of marketing is the free seminar, designed to give people a taste of what the company can offer them.

RetireInvest also does a lot of television, print and radio advertising.

While Wyatt describes the retiree market as robust, banks have increasingly moved into the financial planning arena and added to the level of competition between players vying for their slice of the action.

GFM

For thepast two years, Mark Grady, managing director of Gay Finanz Management (GFM), has been providing financial advice to gay and lesbian communities around Australia.

The services GFM provides do not differ dramatically from those available at mainstream practices. However, after two years of operation, Grady still finds himself the only Australian financial services group directly targeting the pink dollar.

As well as providing general investment and superannuation advice, GFM also provides financial management for HIV suffers.

Grady says mainstream groups would struggle to cater for these clients as some of the larger corporate groups are still wary of alienating themselves from the mainstream market by aligning themselves with gay groups.

One of the key advantages to operating in this market is that the gay community is very loyal and wary of mainstream companies marketing for the pink dollar.

In line with this loyalty, Grady says clients are more likely to choose GFM over a mainstream practice because they know that once the company is growing in the market, it will give back to its community.

However, one of the biggest hurdles Grady has come across in his business has been to identify people that fall into its target market.

“You can’t just walk up to someone and say, you’re gay,” he says.

This means marketing is done very strategically, with advertising and word-of-mouth the most common methods.

“We also organise sponsorships and donations and support the community and occasionally we do a letter drop,” Grady says.

“What we’re hoping out of it all is that we’ll be able to build a strong name in the community,” he says.

wealthadvice.com.au

Marisa Broome, the managing director of wealthadvice.com.au, sold out of the Millennium Financial Planning group two years ago to develop her idea for a target market.

Broome says it became apparent from her five years working as a financial planner that people in her age group were not being approached about financial planning, despite experiencing problems managing their own finances.

“My target market is the 25-40 age group. It is a completely untapped market with not very much competition,” she says.

Servicing friends at first, Broome’s business has grown exclusively through word-of-mouth and referrals.

She says individuals in her target market are characteristically young, very busy and looking for a trust-based and fee-orientated financial planning service.

While the advantage of her business niche is the huge opportunity to attract young people not currently receiving financial planning, Broome says the down side is that her clients generally don’t have a lot of funds under management.

However, Broome says she is not looking to sell her practice and therefore her focus is not to have a long list of high-net-worth clients to increase the sale value of her company.

That said, she says her business does have a few high-net-worth clients to balance out the costs.

RFS

For arelativenewcomer to the industry, Regional Financial Services (RFS) certainly has its business cap screwed on tightly.

The group, which began operation in February 2001, has built a budding empire by providing financial planning advice to members of Australia’s rural and regional communities.

“One of the primary drivers behind RFS is our belief that service should not be compromised to rural and regional businesses because of distance,” RFS managing director Chris Kopittke says.

Kopittke says RFS essentially targets people in rural and regional businesses who share similar and complex problems, and provides them with a financial and non-financial solutions package.

He says the biggest advantage to working in the rural niche market is that a lot of the group’s advisers are rural based and can provide personal one-on-one appraisals, with all stakeholders receiving a comprehensive range of services both on a business performance and investment and risk management level.

As for any disadvantages, Kopittke says the group’s reliance on a volatile industry could be seen as a drawback. He says in tough times, primary producers would normally tend not to spend on additional services, such as financial planning.

“However, the aim of our work is to position our clients as primary producers who have sufficient business performance and alternative investments to cater for these periods, and can recognise the advantages of paying for financial advice more than mitigate the fees they pay,” Kopittke says.

RFS targets its market through a top down/bottom up marketing approach. Kopittke says the group partakes in a mixture of forming alliances with producer groups and industry bodies, as well as being actively involved in conducting workshops and industry commentary.

Klevansky and Co

Ian Klevanskyestablished his specialist planning business for migrants some 14 years ago when he moved to Australia from South Africa.

His Perth-based company Klevansky and Co specialises in business migration to Australia, financial planning and investment advice, and self managed and public offer superannuation funds.

Klevansky says it was out of coincidence that his business became so specialised in looking after the financial interests of migrants, in particular, people from South Africa.

“A lot of people arriving knew me from overseas and people want to deal with someone they know,” he says.

Klevansky says his business has grown out of referrals and word-of-mouth, as people that are migrating are suspicious of businesses that advertise and run seminars.

While competition is growing in the market, Klevansky says he does all the migration work himself and does not outsource it to anyone.

“The advantages of this market is that it becomes an easy sell. People know what I do and I don’t have to keep reinventing the wheel when I meet a new client,” he says.

The disadvantage, Klevansky says, is that he doesn’t have his own dealers licence, working instead as an authorised representative of the Securitor Financial Group.

While he says it is a viable niche market, Klevansky says he supplements it with accounting work.

“You need to have a certain critical mass to make it work,” he says.