As financial advisors move inexorably towards niches and specialization to grow their businesses and differentiate, one of the biggest challenges is simply figuring out which niche to pursue, how to actually get the expertise to pursue it, and what the business model is to serve it well. As the reality is that not all niches fit our “traditional” business models of managing assets for a fee, or implementing financial services products. A case-in-point example is the emerging divorce planning niche, and the unique role that financial advisors can play in the collaborative divorce process.
In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we talk live from the annual conference of the Institute for Divorce Financial Analysts (IDFA), with Justin Reckers, who has built a successful advisory business focused on the divorce niche.
For those who aren’t familiar, the IDFA grants the Certified Divorce Financial Analyst (CDFA) designation, which provides the baseline education necessary to understand the unique financial planning issues involved in divorce planning. Which is helpful not only to better understand the issues a client might face when getting a divorce, but gives the advisor the expertise to become the financial expert in the new world of “collaborative divorce” – a new type of divorce process that is intended to leverage neutral third-party experts, including a financial advisor, to expedite the divorce process without the involvement of a judge or the court system.
In fact, Reckers notes that a major revenue stream of his business is charging financial planning hourly fees – at $325/hour – to serve as a financial advisor “neutral” in collaborative divorce cases, with typical hourly fees totaling up to 10,000 to $12,000 per case, and some ultra-high-net-worth divorce cases where fees can add up to $100,000 or more. A substantial hourly fee specialization opportunity, in a world where most financial advisors struggle just to bill $2,500 of their time to construct a financial plan!
Other business models in the divorce niche include doing expert witness work in divorce cases that do go to court, with the opportunity to ultimately work with the clients in those cases after the divorce has finalized as well. (Just be certain not to solicit clients during the case, which can be a conflict of interest that undermines your credibility as an expert witness!)
In fact, Reckers has had so much success in the divorce niche, that he’s launched a turnkey financial planning platform – Wellspring Divorce Advisors – that teaches those who have obtained the CDFA designation how to actually build a successful advisory business in the niche. And with upwards of 2,000,000 people getting divorced every year, there’s ample room for more growth amongst financial advisors in this particular niche!
But the bottom line is simply to recognize how financial advisor generalists often struggle to get paid for their time, while those who specialize in a niche – such as divorce planning – have the opportunity to get paid for their expertise, at far higher hourly rates, with the opportunity for much deeper client engagements that “just” a standalone financial plan. And unlike many niches – where the only path to expertise is personal experience and a journey of self-education – the opportunity of the divorce niche is perhaps especially appealing, given both designations like the CDFA program from IDFA to learn the requisite expertise, and financial planning platforms like Wellspring Divorce Advisors that teach how to use that expertise to execute the niche business model!
source https://www.kitces.com/blog/collaborative-divorce-niche-cdfa-designation-for-financial-advisors/?utm_source=rss&utm_medium=rss&utm_campaign=collaborative-divorce-niche-cdfa-designation-for-financial-advisors
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