But many advisors have a tough time seeing the forest for the trees.
Certified financial planner Michael Kitces, a partner at Pinnacle Advisory Group and publisher of the financial planning blog "Nerd's Eye View," said advisors reject the idea of niches because there is a perception that they need to cast a wider, more generalized net to capture more clients.
However, Kitces said, if you keep stretching out that net, the holes will be bigger and the fish will swim through.
"You may cover more space, but you don't get more fish," he said, noting that the solution is to make the net smaller. "While you might have a shot at fewer fish, every one you catch is yours to keep."
Read MorePicking an advisor is serious business
Six years ago certified financial planner Michael Walther decided to narrow his net.
Walther began his career as an advisor for high-net-worth clients, but at the end of the day, he wasn't satisfied. "When you're working with the 1 percent of the 1 percent, the sense of satisfaction you get isn't as great as working with clients with whom we can have a greater impact," he said.
One day his wife asked him a question: "If you could do anything, what would it be?"
Walther's answer? Provide financial advice for special-needs families.