There are different types of competitive advantages such as cost, product or service differentiation, brand recognition, and many more.

        One of the greatest ways of building a competitive advantage is by defining your niche. Clients and prospects vary dramatically from their behavior, beliefs, and demographics. While they are different from each other, you need to find a niche that’s attractive and a good match with your individual strengths.

        This happens a lot with financial service providers. When asking them who is your targeted market or niche, the common response is High Net Worth individuals. However, this may seem that it’s narrowed down, there are still sectors that have specific niches within them.

        High Net Worth (HNW) individuals are very diverse because they don’t always share the same goals, values, and investment approaches. These people can be divided into certain categories: by the amount of their investable asset, by their age, cultural difference.

        Let’s separate high net worth individuals into three classes on the basis of their asset under management: ultra-high-net-worth (above $10 million), medium-to-large (between $1 and $10 million), and small-to-medium (under $1 million). Ultra-high-net-worth individuals are more likely to be interested in alternative investment and passion investment compared to medium-to-large and small-to-medium. Also, they tend to have more than one advisor and they look for an advisor who is an expert in one particular field. However, if in your target audience, these classes are identical or do not differentiate in their behaviors then it’s useless. The purpose of segmentation is to differentiate them in their goals, values, and investment approaches.

        Another way to sort High Net Worth individuals is by age. The Phoenix Wealth Survey shows that younger HNW investors are more concerned about keeping their wealth than baby boomers are. This means that they would be more careful when it comes to investing compared to older generations.

        Cultural difference is also one of the big segments of HNW individuals because it influences their behavior. For example, HNW investors from Asia tend to have less experience with wealth management where Middle Easterners are more concerned with religious laws when it comes to investment.

        If you specialize in a particular culture and understand their norms, you have a competitive advantage and they are more likely to do business with you because you are an expert in their culture and understand their norms.

        By drilling down from the HNW sector into a niche, you are leveraging your strengths and communicating your points of differentiation, adding value for your clients, and maximizing your chances of getting the client. Focusing on a niche helps you to build a competitive advantage and maximize your chances of getting clients that match your individual strengths.