Financial planning is not one-size-fits-all: groups with unique needs and backgrounds or who have faced societal inequities have often been left out or on the periphery of financial services. From middle- and low-income professionals grappling with financial stability to socially conscious investors looking to align their portfolios with their values, there are communities in the U.S. that require specialized financial guidance. In addition, the challenges and perspectives of foreign nationals, LGBTQIA+ individuals, and other underserved communities present prospects for financial advisors. In this article, we explore some of these niches—looking at their needs, aspirations, and the subtleties involved in each community's situation—to outline approaches that can enable financial advisors to find success in building out their firms to serve a specific clientele.

Women

Women hold about one-third of personal wealth in the U.S., experience a gender wage gap that has female managers earning 77 cents for each dollar earned by their male counterparts, and, despite all that, head almost half of U.S. households. Just as in many other parts of our society, our relationship with money re🅷flects what’s left of traditional gender roles, with women classically given control of household expenses and males given primary authority over major financial matters, including investments, savings, and property.

The financial power of women, though, is poised to change dramatically in the coming decade. By 2030, it’s expected that American women will control a significant part of the $30 trillion in financial assets owned by baby boomers, marking a wealth transfer almost equivalent to the annual gross domestic product of the U.S. After years of being placed in the background in financial matters, women are on the brink of assuming a far more central role. Younger women, particularly, are readying themselves for this: 71% of Millennial women self-identify as investors.

A November 2023 article in the Journal of Financial Planning by Lindsey McKay points to how financial planners can better serve female clients. She says financial planners should begin by acknowledging the barriers women face and “how those barriers have impacted their financial lives.” Here are key points she makes, in line with other studies on gender and finan🎐ce in the U.S.🐷:

• Financial advisors have to play an educative role: Understanding women’s historical and generational roles in financial management means recognizing that too many women may not have financial experience or confidence since they have not been previously empowered to act in this area. This might be especially true if they are divorced or had a partner who took care of the finances that passed away. She suggests that advisors and planners create workshops, seminars, and online resources aimed at women to enhance the financial literacy of those who need it.
• Empower female clients who might be cautious: Acknowledge when clients appear cautious about financial risks, influenced by factors like wage gaps and longer life spans. She suggests asking open-ended questions about their financial experiences, even childhood memories, to clarify how the client approaches money.
• More and better communication: McKay says women prefer more regular updates and check-ins as their situations evolve. Financial planners, she says, should be ready to offer thorough explanations and help women understand the basis of diverse financial decisions and strategies. Effective communication can foster trust and a sense of security while strengthening the bond between client and advisor.
• Practical advice with concrete steps: Many women work best with pragmatic options directly applicable to their financial circumstances, she notes, not just broad generalities about the investing world. Highlighting clear goals and offering actionable recommendations are crucial in helping them reach their financial targets. Such a practical approach can encourage a more engaged involvement in their financial affairs, McKay says.
• Emphasize financial protection: Financial security is frequently a top priority for women, McKay says. This is born out by studies examining savings rates for women and men. Women save an average of 9% of their pay each year and earn a 6.4% rate of return, while men save only 8.6% and have annual returns of 6%. Thus, an advisor should incorporate protective strategies into their financial plans. A financial advisor should address each client’s specific concerns head-on and offer solutions to reduce risk, including evaluating insurance needs, estate planning, risk management, planning for long-term care, safeguarding against identity theft and fraud, and preparing for the financial implications of a potential divorce or the end of a relationship.
• Capitalize on positive client experiences for referrals: Studies show women are more likely to refer their financial planners to others if they’ve had a good experience. The key is not the planner’s gender, McKay says, but their ability to listen and instill a sense of security. Strive to surpass client expectations, ensuring their needs are met and exceeded.
  

Middle- and Low-Income Professionals

The financial advising communit🌌y has traditionally focused on high-net-worth individuals, overlooking middle- and low-income professionals representing a significant yet underserved segment. Thes🐼e investors may not have the flexibility or resources to invest as much as wealthier Americans, but they nevertheless have significant assets.

About 40% of U.S. households are middle-income, earning between $35,000 and $100,000 per year. Another 23% are lowe🧸r-income, meaning they earn less than $35,000 per year. Just 21% of Americans qualify as upper-income, making them part of householders earning more than $150,000 per year.

In 2022, the median family between the 40th and 60th percentile in income had $39,000 in retirement accounts and $298,700 in assets. The median family in the 20th percentile or below for income still had $17,500 in retirement accounts. As a financial advisor looking to build a business teaming w⛄ith these clients, here are some strategies that co༒uld be used:

• Understand their unique needs: Middle- and low-income professionals ordinarily have different financial priorities and challenges than wealthier clients. Managing debts, tight budgets, and needing to save for emergencies or education—or having to deal with them directly—are typically front and center. Adapting your services to address these specific needs can make your practice more relevant and valuable to these demographics.
• Affordable and accessible services: Traditional fee structures may be prohibitive for some middle- and low-income individuals. Offering more affordable, flexible pricing models, such as hourly rates or subscription-based services, can make financial advice more accessible to a broader range of clients.
• Empowerment through education: There is a tremendous opportunity to present educational resources and tools to help these clients make better financial decisions. As with other client segments, empowering clients by giving them the knowledge they can put into practice builds trust, the lifeblood of long-term advisory relationships.
• Leverage technology to meet clients where they are: Best practices still suggest one-on-one (or one-on-several for families or partners) in-person meetings to build trust. However, online platforms, apps, and tools can help you and your clients collaborate more effectively in budgeting, investments, and financial planning.
• Community engagement: Building relationships within local communities can help you reach and serve lower- and middle-income professionals. Conducting workshops, seminars, and community events can help you market your services and show off your approach to clients, but also demonstrate your commitment to financial inclusivity.

As with other niches and segments discussed here, your approach should always be personalized and personable. Building♌𒁃 on these strategies, financial advisors can successfully create a practice that not only fills a significant market gap but also contributes to the financial well-being of an underserved but deserving group of potential clients.

Socially Conscious Investors

Investors up and down the income scale and across different ages and other demographic markers tell pollsters that they want to make a difference in the world with their money. Environmental, social, and governance (ESG) investing has exploded in recent years. As of the first quarter of 2022, 8.4 trillion in ESG assets were under professional management, representing about 13% of professionally managed assets.

Overall, ownership of sustainable investments has doubled since 2018, according to Bank of America, with 26% of wealthy investors and 73% of Millennials holding sustainable investments.

Defined broadly as investments that match the social and ethica🔯l values an investor wants to su🔯pport, the most common areas represented by ESG investments include the following:

• Political spending/lobbying
• Climate change/sustainability
• Human rights
• Equal employment opportunity/executive compensation
• Negative/exclusionary screening (avoiding investing in goods/services deemed harmful or unethical)

Given rapid developments in the ESG sector and the adoption, if not the practice, of ESP rhetoric by companies aware of the public relations benefit, it is difficult for the average investor to choose where to place their investments. This is where a financial advisor can build trust and help clients steer their funds to the investments that be♏st meet their values.

Here are strategies to b🦩etter serve socially conscious investors:

• Emphasize socially responsible investing: You should tailor your services to clients who prefer to invest in companies with strong ESG practices. This includes advising on mutual funds, exchange-traded funds, and other investment vehicles focusing on ethical, sustainable, and socially responsible criteria. Just as importantly, be prepared to narrate your story of why you are taking on clients in this area, helping them to connect their values with yours.
• Empowerment through outreach and education: As we’ve seen, a key part of being a financial advisor is to be an educator. While many socially conscious investors are keen to understand how their investments impact the world, you’ll often also come across potential clients unaware that they can invest this way. Workshops and educational resources can help clients connect their financial needs and values with the services you offer.
• Customized portfolio management: Each financial advisor should offer advice personalized to the person in front of them. In this case, your personalized investment strategies will reflect each client’s specific social and ethical priorities. What particular causes or kinds of firms do they wish to invest in? You can screen out companies or industries that don’t align with their values or educate them about investing in sectors that contribute positively to societal and environmental goals.
• Client engagement: For those who wish to go beyond reviewing how and where their investments are directed, you can encourage and educate them about participating in shareholder advocacy and community investing. This can empower clients to further their interest in using their portfolio as a tool for social change.
• Technology and tools: Many online and app-based platforms specialize in ESG analytics. These tools can help identify and evaluate investment prospects that align with your clients’ social and ethical criteria.
• Connect with your community: You can connect with nonprofits, social enterprises, and other groups in your community. This can help you better understand where your clients are coming from and afford chances for networking and client engagement.
• Demonstrate impact: In addition to regular updates on how their portfolios are performing, you can communicate the social and environmental impact of your clients’ investments. This reinforces the value of their choices and strengthens the advisor-client relationship.

Adopting some of these approaches not only meets the needs of a growꦅing market segment but also contributes to a more socially responsible and sustainable investment culture.

Foreign Nationals

Over 29.7 million foreigners work in the United States. Moving to a🍃 new country is daunting enough; making financial decisions even more so. Your first meeting might open with a barrage of questions your client needs answered: How do I file my taxes? How do I purchase a home? Can I take out a loan from the bank? Can I start a small business? I’m not American; can I still save for retirement here? What happens when I decide to go home? These are all important questions foreign nationals must address, and the consequences of gettไing them wrong can be serious.

This is where financial advisors step in. There is significant room for specialization here, such as highly skilled workers on H1B/O-1 visas, people from specific regions, or 🦄higher-n🎉et-worth individuals in the EB-5 program. It will take some time to learn the specific requirements and laws your niche has to meet, but you’ll gain from being a relatively rare expert on these communities.

Here are some strategies for effectively serving foreign nationals:

• Handling regulatory complexity: Foreign nationals typically face complex tax and regulatory situations in their home countries and country of residence. Advisors should be well-versed in international tax laws, immigration policies, and cross-border financial regulations to deliver comprehensive advice.
• Customized financial planning: Adapt your services to accommodate the unique financial situations of foreign nationals, which may include managing assets across different countries, dealing with currency exchange risk, and planning for their eventual return to their home country or relocation to this or another country.
• Cultural sensitivity and language skills: It should go without saying, but meetings can quickly go awry if you misunderstand the cultural background behind certain financial or other choices. Understanding and respecting cultural differences is crucial. Being proficient in the languages spoken by foreign national clients or using good translation services when needed would ensure clear communication.
• Building trust: Establishing trust is particularly important with foreign nationals, who may be unfamiliar with the local financial system and investment culture and may otherwise have been given reasons to be mistrustful of financial advisors if the conditions in their home country meant that advisors acting in their client’s best interests wasn't a given. Take the time to understand their background, financial goals, and concerns.
• Networking and community engagement: Building networks with communities and groups that foreign nationals are part of is the most effective way to understand their needs and let foreign national communities know about your services as an experienced and trustworthy advisor.
• Education and empowerment: Education will be a key part of your services for your clients, helping them understand key differences between a country and financial practices that could still be quite new to them.
• Technology and digital tools: Digital tools and platforms can benefit clients who travel frequently or live between countries.
  

LGBTQIA+

People who identify as LGBTQIA+ arrive in financial adulthood with a raft of systemic disadvantages, including less access to intergenerational wealth, greater food insecurity, hiring and workplace discrimination, and more. Civil rights for the LGBTQIA+ community may have advanced over the last two decades, but for personal finance, this set of different demographics remains underserved.

One reason may be a lack of support from their own communities. According to the Center for LGBTQ Economic Advancement & Research's LEAF Survey, 73% of LGBTQIA+ people said they could rely on their family for financial support before revealing their sexual orientation, but this number dropped to 62% after coming out. For transgender people, the difference was considerably worse, with 85% of respondents saying they could rely on their family for financial support before coming out, compared with 57% afterward.

Another is that LGBTQIA+ people often earn less than their peers. About 57% of respondents to the LEAF survey reported a household income under $50,000 per year compared with 36% for all adults nationwide. Similarly, while 34% of adults report household incomes of $100,000 or more, that was only true for 13% of LGBTQIA+ respondents. Given this data, it's no surprise that LGBTQIA+ clients are more stressed about their financial situation. Twice as many LGBTQIA+ individuals reported negative emotions about their finances compared with the general public (46% versus 23%).

Compounding matters, a study from the Certified Financial Planners Board found that about half of surveyed CFPs said they were not prepared to effectively assist LGBTQIA+ people with their needs, including estate planning and domestic partnerships. This makes it crucial for members of this community to find 澳洲幸运5开奖号码历史查询:LGBTQIA+-frien♚dly financial advisors and provides a great opportunity for advisors 🧔seeking a niche to focus on.

Here are some strategies for how financial advisors can thrive while serving the LGBTQIA+ community:

• Understanding the unique financial needs: LGBTQIA+ clients may have specific financial planning needs related to family planning, estate planning, and retirement, particularly in light of varying legal recognitions of LGBTQIA+ rights. Understanding these nuances is crucial to providing relevant and effective advice.
• Practice inclusivity: Ensure your firm is a safe and welcoming space for LGBTQIA+ clients. This includes using inclusive language, respecting preferred pronouns, and demonstrating a nonjudgmental, open approach.
• Keep current about legal and policy changes: Stay informed about legal and policy changes affecting the LGBTQIA+ community, particularly regarding marriage, adoption, and anti-discrimination laws, as these can have significant financial implications.
• Estate and legacy planning: You can offer specialized advice in estate planning to cater to the unique needs of LGBTQIA+ clients, considering factors like nontraditional family structures, property rights, and healthcare directives.
• Retirement planning: Adapt retirement plans for each client to account for disparities in earnings history and the impacts of any career breaks or reduced earnings because of discrimination.
• Insurance and risk management: Address the specific insurance needs of LGBTQIA+ clients, including health, life, and disability insurance, considering factors like healthcare and transgender health services.
• Community engagement and networking: Actively engage with LGBTQIA+ communities and networks. This not only helps in understanding their financial planning needs but also establishes your practice as an inclusive and supportive financial advisor for the community.
• Collaborate with other professionals: Connecting with other professionals who have expertise in LGBTQIA+ issues, such as attorneys and tax experts, can enable you to provide a far more comprehensive service to your clients.

By adopting these strategies, financial advisors can effectively meet the distinct financial needs of LGBTQIA+ clients, fostering a more inclusive and supportive financial planning environment. This approach not only serves an underserved community but also enriches the advisory practice with a diverse client base.

Changes in Fee Arrangements

Here are some approaches used as financial ♍specialists move to adapt to a changing clientele:

• Embedded financial planning: This involves integrating financial planning services directly into platforms and products that clients already use. For example, a banking app might offer built-in budgeting advice or investment suggestions. By embedding these services, financial planning firms can reach clients who are already active, making financial advice more accessible and convenient.
• Social media marketing: Financial planners and advisors increasingly use social media platforms and content marketing strategies to find and engage with clients. This includes sharing educational content, participating in financial discussions online, and using platforms like LinkedIn, Twitter, Instagram, and YouTube to build a professional brand.
• Virtual consultations: The rise of virtual meeting technology allows financial planners to hold consultations online. This has been particularly important since the pandemic when both financial specialists and clients became used to getting services without physical meetings. Clients with health issues or who work long hours, making it difficult to slot in physical meetings, may find this crucial working with you.
• Personalized email campaigns: Using data analytics, financial planners can send personalized email campaigns to clients and prospects. These campaigns should provide tailored advice, market updates, and other relevant information to not quickly devolve into the junk-mail-type messages least likely to be opened.
• Financial planning software and apps: There’s a growing trend in developing sophisticated financial planning software and apps, even by individuals and firms not working with major campaign budgets. These tools can offer clients a self-service model where they can manage their finances, with the planner stepping in for more complex advice and personalization. This efficiency may be needed as you could be looking to serve many clients at once.
• Educational content and workshops: Offering free or low-cost educational content, like workshops, e-books, or online courses, can attract clients by providing value and establishing your expertise and bona fides in the field. Consumers may not always have graduate school levels of finance education, but they can quickly distinguish between content that’s just pitching them and content that’s helping them (and indirectly pitching them).

These approaches reflect a broader shift toward digital engagement, personalization, and providing value-added services beyond traditional financial planning.

The Bottom Line

As investors have access to more choices than ever, the generalist philosophy for financial advisors of serving “anyone with money” is no longer a universally viable business model. Financial advisors are seeking out niches, not just to make their൩ businesses successful but also to advise people and communities previously left underserved.

Building your entire practice on one type of client is no easy task. There is a considerable amount of extra information and vernacular to learn; it also takꦏes more than just time and education to gain the trust of a community you may not have any relationships with. But that is precisely why these clients are underserved and in great need of professional assistance.