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Advisor Coach Walks Walk, Creating Huge Business in Just 18 Months

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With her background as an attorney and serial entrepreneur, Katherine Vessenes has long been noted as a compliance expert and business coach serving financial advisors. The author of three books, including Building Your Multimillion-Dollar Practice, Vessenes enjoyed a solid track record of helping advisory firms expand.

Katherine VessenesBut in June 2011, Vessenes (left) and her husband, Peter, principals of the established Minnesota-based advisory consulting firm Vestment Advisors, did something that is quite rare among coaches: They put their principles into practice by starting their own retail advisory firm.

And the results have surprised even them. Setting up shop in Providence, R.I., a state where they knew just two people—their daughter and son-in-law, not suitable as clients—in just 18 months, the Vessenes achieved a critical mass of more than 100 clients, $750,000 in revenue and a growth rate fueled by unsolicited referrals. Some 30% to 50% of new clients are brought in by happy existing clients, suggesting that the business has rapid growth ahead, as referred prospects are “easy to close and easy to service.”

While still a consultant, Vessenes has been devoting most of her time to her new business these days.

“I’m going to become my No. 1 client,” she told AdvisorOne in a phone interview. “[Her strategy] worked even better than I ever dreamed it would work,” she added, noting her plan to ease back into speeches and workshops over the coming year.

A key strategy Vessenes has long advocated, and now practices professionally—and which she describes as quite rarely followed by advisors—is treating their activities as a business, not as a practice.

“So few people do that,” she says. “They think of [their firm as being] like a wealth manager with helpers. As a result their practices are not worth much—it’s hard to sell them.

“To create a multimillion-dollar business, one needs to impose eight disciplines involving fiscal management, HR, administration or support, strategic planning, technology, sales, marketing and legal-compliance issues,” she says. “That’s when companies become efficient.”

The first five of these are subjects Vessenes’ husband is expert in, the latter three are her bailiwick. And of those three, effective marketing played a starring role in the success of their advisory practice.

“You have to have a marketing system that produces a steady stream of what I call ‘derrieres and chairs;’ it must be predictable. If you put in X dollars, you should expect Y results.”

Another insight is that successful entrepreneurs take a businesslike approach to markets by testing them to see what works. “All marketing is trial and error,” she says, adding that results can vary greatly depending on factors such as place and personality. “Things that work well in Peoria may not work well in Poughkeepsie.”

“The key for us is we found a niche market that really suited us. Out of all the financial advisors—the thousands and thouands we have worked with, I’ve only known two that went out for a niche market.”

That’s a stark claim to make, but Vessenes strongly affirms that many successful advisors in good niche markets got there through luck—they “sort of fell into them,” rather than testing them systematically.

In their Rhode Island-based advisory business, Vessenes tested two or three markets before finding the one that worked: young professionals with doctorate degrees, many of them affiliated with Providence-based Brown University.

“Part of it was they like people that have my education, they like that I’ve written books—that really appeals to them,” says Vessenes, who has a JD and a CFP designation.

Vessenes’ market testing also bucked some conventional wisdom on ideal clients, finding younger clients preferable to older clients who have already accumulated wealth.

“I rarely take a client older than 50,” she says. “That segment is pretty unlikely to move [from their current advisor];younger people don’t have those relationships yet, have a lot of pain and need a lot of help.”

Giving seminars on saving and investing targeted to Brown faculty members (an underserved area, she says), Vessenes knew she was onto something when her first client said she had a friend who was looking for a financial advisor. Vessenes expected the client was about to refer this friend, but then, quite surprisingly said: “I told him you wouldn’t even work with him.”

That confirmed for her the validity of her niche market—that “there is something about being part of this elite group,” she says.

Another advantage she discovered was having a niche that worked in the same building: sooner or later, she says, when colleagues standing at the water cooler run out of things to talk about, the subject of finances come up.

“So when we get a happy client, they will frequently sponsor a party and invite their colleagues and we do an educational event for their colleagues,” Vessenes says.

When it comes to finding a niche market, Vessenes stresses the overriding importance of education and social class—“you need people you can relate to.” Interestingly, she has found that age is not one of those issues. “Most of our clients are far, far younger than I am.”

Vessenes offered a personal illustration of this. A couple of years ago, she tested going after the evangelical Christian market, specifically a Midwestern megachurch she said could have kept her practice busy “for the rest of our lifetimes,” and a market she resonated with spiritually. Yet, spending time in the pews, she concluded she was the only woman in the entire church with a doctorate degree.

“I noticed that the women had a far different background. I had been legal counsel to former president Gerald Ford,” yet she found many of the women were unwilling to make decisions independent of their husbands.

While she admired the character of the church members, she realized it was not a good fit for her personality. She wanted clients who made money the way she made it: through high levels of education and professional success—exactly the niche she is successfully serving in her business’ Ivy League university setting—some 1,400 miles away from her Minnesota base.


Check out How to Grab Fee Revenue You Didn’t Know You Had on AdvisorOne.