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Practice Management > Building Your Business

Wealth Is Not a Niche

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In the height of conference season, I have the opportunity to engage with hundreds of advisors on a variety of topics. This year, many are expressing concern over how to grow their number of clients, revenue and assets faster than clients’ withdrawal rates.

Is your firm ready to grow? Advisors with a preponderance of older clients may find this question an urgent concern. Take the time to examine your operation. One of the following challenges may be inhibiting your firm’s growth:

  • Lack of capacity

  • Lack of business development talent

  • Lack of a conscious marketing strategy


The best way to measure capacity is to determine whether you can serve all of your clients consistently, with a comparable level of attention and service across your client spectrum. If you discover a significant variation in the client experience you provide, your firm may be at full capacity — or worse.

Most advisors occasionally feel overwhelmed by conflicting demands on their valuable time. Those experiencing chronic pain in this area should consider several possible remedies:

  • Narrow your focus by concentrating on a certain type of client, such as business owners in transition or medical professionals. Focusing on areas of expertise provides a great opportunity to standardize your processes and customize your advice.

  • Increase your capacity through a combination of more efficient workflow and additional staff. Advisors don’t have to touch every document or take every call themselves.

  • Change your service experience to a less hands-on offering. Advisors tend to reject the first two choices, making this remedy necessary. Think of ways to reduce your time with each client in order to free up time to grow your top line.

As advisory firms reach maturity, only 5% of revenue tends to come from new business. Advisors need new clients to build lasting businesses with transferable value (see “The Pricing Paradox”).

Firm leaders frequently hide behind the “I’m too busy” shield as an excuse not to engage with clients, centers of influence or prospects. These advisors are focusing on the wrong areas. Ironically, a lack of capacity on the part of the advisor also gives prospective clients a legitimate reason to avoid pursuing the relationship.

Business Development

In addition to being too busy, founding advisors often complain that nobody in their firm can sell, so they are the only ones bringing in new clients. This could be true, especially if the younger advisors have never been trained or exposed to the business development process. One should be careful not to ascribe this shortcoming to generational differences, a lack of entrepreneurship or laziness.

With the exception of those who enter the business as brokers or wholesalers, most advisors don’t hit the ground with sales skills. Remember, too, that business development in the new world is not the same as when many advisory founders started out.

For the most part, business development has become less transactional and less tied to a specific product idea. In the past some of the most reserved people were among the most successful advisors. The best business developers today use a strong referral network of clients, centers of influence and friends. Just imagine the possibilities for drawing new clients if you add an extrovert’s networking skills to the credibility of an expert advisor.

More introverted advisors need to develop a comfortable process for engaging people. When I was a partner in Moss Adams, a large accounting firm, I was very impressed by the way auditors and tax partners succeeded in attracting business. While most accountants are not natural business developers, they used more nuanced techniques to build their contacts, convey their value and make themselves available to do business. Key to their success: being known as a reliable source of insight and expertise.

Success depends on how potential clients perceive your skills and availability. Advisors complain that many sources for referrals think they are too busy to take in more business. How and why is this message being conveyed? Do you have an answer to the question, “Why do clients come to you and why do they stay?”

Recently, I attended a dinner where I was seated near a husband and wife who had accumulated a fair degree of wealth but had no real knowledge of how to manage its complexity. They expressed to me their desire to hire a professional. Also sitting at our table was an advisor whom I knew to be competent. I teed him up for the conversation. “John,” I said, “you work with a lot of people who are good savers and are interested in hiring someone to help them manage their financial lives. How would you explain your approach to Bob and Gloria?”

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What followed was the most unintelligible response I have heard in a long time. John drifted into industry jargon, insulted other advisors for doing things differently and failed to look directly at the couple as he answered my question. Their grimace told me he blew it.

Think about situations where you have an opportunity to connect. Are you prepared? Is your message clear? Do you know how to translate the encounter into a meaningful conversation later? Next, how do you teach younger associates to do the same?

Conscious Marketing

Perhaps the most important tactic for gaining new clients is positioning the advisory firm clearly in the minds of your clients, your prospects, your centers of influence and your professional peers.

When others describe you or your firm, what do they say? What would you like them to say? Do you ever ask prospects why they came to you? Do you document these responses?

Effective marketing means that your firm is recognized for what you do and why you do it. As you build your referral network, develop clear language that represents your firm well; not a full-on spiel but a succinct description of what makes you unique or compelling or trustworthy.

In order to create effective language, advisors must be clear on their mission. Unfortunately, when I ask advisors to describe their optimal client, they usually respond with how much the person has in assets.

While an economic filter is not bad, it’s important to know that wealth does not constitute a niche market. That’s like saying, “I only serve people with money.” Those who obtain assets through divorce, an estate, a lottery win, a stock option plan or the sale of a business each have different attitudes and approaches.

The size of a client’s wallet does not constitute a niche. A niche can be defined based on shared values, challenges, needs and objectives. Examples of definable communities include business owners in transition or citizens living abroad. Such categories share many interests and needs. We can refine these communities from a strategic standpoint, but the key is to recognize that if we can define our optimal client, we can define our client service experience and an approach to these markets that connects with them on an emotional level as well as a financial level.

Advisory firms contemplating growth must be clear about whom they serve and why, how they create capacity to manage new clients and how they develop their people to not only recognize opportunity, but consciously seek out the business.

— Read “RIAs and the Pricing Paradox” on ThinkAdvisor.