As financial advisors, we hear advice from industry consultants encouraging us to “move up market,” to abandon the working-class American and cultivate relationships with the affluent. As a financial advisor in Atlanta, I had considered this advice and decided to prove a profitable business could be built by serving every-day employees. And this business model has worked.
By industry standards, I feel I’ve been successful in that my company now manages more than $150 million in assets, primarily for middle-class Americans. What’s more, I got to this point in 6 short years. I hear stories all the time about peers who work for 10, 12 or more years, promoting themselves as wealth managers and investment advisors for the affluent, who seem to plateau at the $70 million or $80 million mark. So what am I doing differently to get to the $150 million mark?
I’ve found a way to profitably serve people while they are still working by providing advice on their 401(k) and other employer-sponsored retirement programs. Probably the most beneficial result is that by securing these clients today, I earn their trust and become the advisor of choice when they retire and need help managing their lump sum distributions. This, for me, has proven to be the ultimate niche marketing strategy.
Leveraging the methodology
My strategy was to select one major company and work with its employees to promote my company’s services. The company I chose to penetrate was BellSouth, now AT&T, which also happens to be the second largest employer in Georgia. I knew I had to take a unique approach to this company because I wasn’t the only advisor trying to get in. My approach to the employees was not through the regular human resources channels (although you could certainly try that route).
Instead, I went directly to the employees themselves. It all started with an informal conversation about the company benefits of a Bell South employee who came to our office on a service call. From that conversation, I began to strategize how to offer my services to the company’s employees–without going through normal corporate channels.
I started by going to facilities where the service trucks returned each day. As the drivers arrived, I simply invited them to a seminar at a local hotel. Many of you likely hold such seminars; this is just an unusual way of reaching prospective attendees.
After a few conversations, it was apparent that most of the employees needed help understanding their benefits package and welcomed advice regarding the options in the 401(k) plan. More than 90% did not have a clue how to properly diversify their portfolio or in what funds they should invest. Educating employees on the basics of their plans, not financial planning, became the topic of the seminars.
It was not long before my database began to expand, and I was quite busy conducting educational classes. I soon became known as a professional who understood how to help employees of this large corporation.
I specifically targeted employees in their 50s who would be retiring within 7 to 10 years. As I built a database consisting of these clients, I found myself busy regularly serving people moving into retirement. Because BellSouth has a pension and 401(k), my average investment amount when one of the firm’s employees retired was approximately $400,000.
Becoming successful within this niche required more than building relationships with service truck drivers; I also had to communicate one-on-one with employees. The methods of outreach used–telephone calls, e-mails and direct mail–showed employees I was interested in offering value to them personally, rather than just being part of a company-sponsored plan.
Once I made initial contact with an employee, I conducted personal interviews to determine the individual’s needs. After a few interviews, I could identify common employee concerns.
That helped me to create a process unique to BellSouth that was easy to understand and consistent with the BellSouth plan. This program, which I subsequently branded for the benefit of other advisors, encompasses workshops, one-on-one meetings, our web site, brochures, letters of introduction and other marketing tools.
My experience with BellSouth taught me that one doesn’t need to target affluent clients to build a substantial financial planning practice. Serving middle America is a great way to accumulate assets under management. Also, providing advice on employees’ 401(k) plans will inevitably lead to other planning needs and product placement opportunities, even before there is a substantial amount of money to manage due to rollovers.
Americans need help with their largest savings account: their 401(k)-type savings plan. Offering a value proposition that makes sense while someone is still working is a great way to build relationships. Our business as financial advisors is built on trusting relationships.
I have now built a significant database of trusting clients who will have future assets to invest. The process is simple: offer plan participants professional, affordable advice while they are still employees and wait for the assets to start rolling in.
Rick L. Kent, ChFC, CFP, AIF, is founder of The Merit Retirement Advantage, Alpharetta, Ga. You can contact him at