Advisers targeting a niche generate higher fees: Research

Data from the research house showed 45 per cent of advisers surveyed said they worked with a specialised client base to some degree, most commonly being senior managers, medical professionals or blue-collar workers.

Adviser Ratings added that just 11 per cent of advisers exclusively serve specific sectors or client types.

Those advisers who had a specialisation, on average, managed funds that are 15 per cent higher than generalists. This was particularly obvious among sectors like legal and medical workers.

Given both type of advisers managed a similar client volume, Adviser Ratings said the higher funds under advice indicated clients in these professions had a higher volume of investable assets.

Specialised advisers also charged a higher fee volume, with specialists charging fees that are 18 per cent higher than generalised ones. For advisers working with senior management and legal professionals, fees rose as much as 30 per cent compared with a general adviser.

When it comes to future growth, 83 per cent of specialised firms said they plan to increase their client numbers in the future, compared with 78 per cent of generalised firms.

More than half of specialised advisers plan to grow their businesses by focusing their expansion on specific client categories.

“These findings indicate that while generalists may reach a broader audience, specialists manage larger funds and impose higher fees, particularly when targeting specific niches like the legal sector or top-level management,” Adviser Ratings said.

“This underscores a clear need for and higher degree of differentiation when it comes to client type.”

The firm added that there is an industry-wide change in the way the client book is “evolving”, with practices universally aiming to increase their number of clients.

“This expansion aligns with previous findings, showing a consistent trend among both generalists and specialists,” Adviser Ratings said.

“While practices with specialist advisers plan to increase their client book to a greater extent, both groups plan to do so by strategically and purposefully targeting growth among specific client types, rather than catering to a broad spectrum.

“The choice between a generalist or specialised approach in financial advice services will depend on the individual needs and preferences of clients, as well as the business strategy of the advisers themselves. Whether aiming to reach a broader audience or focusing on specific niches, the key is to align the approach with the desired growth trajectory and client base.”