Janet Briaud can point to a number of benefits she's reaped from her decision 16 years ago to focus her advisory business on college professors.
The name recognition she's built up in academia is priceless. It's given her an expertise in an area where few advisors tread.
She also considers professors a delight to work with and even is mulling the possibility of extending her business beyond Texas to seats of learning in places such as California and Massachusetts.
Then there are the practical benefits. Knowing a lot about a small group of people, Briaud says, does wonders for a business. "The economies of scale are enormous," she says. "You're not reinventing the wheel every time you sit down with a client."
There aren't an abundance of advisors who focus on a niche market, but Briaud and others who do say they have no regrets about their decisions to specialize. On the contrary, they say their specialties have given them a strong and particularly loyal base of clients-and a reputation as experts in fields where few other advisors compete. That often leads to a steady stream of referrals.
There are risks to specializing, of course. The limited market leaves less room for error. The effects of competition can be more acute. And if circumstances cause a niche market to collapse, an advisor could be left stranded.
Starting a niche or specialty firm is harder than starting a general practice, but the rewards can be greater, says Mark Tibergien, a consultant with Moss Adams LLP. "It really comes down to effective deployment of resources," he says. "Rather than spreading your business development dollars over 30 different markets, you create much more momentum when you can commit those resources to a specific marketplace or specialty."
And if an advisor has specialized knowledge, the allure of a niche practice can be irresistible. That's partly what happened with Briaud. She spent a year as a physical education teacher at Texas A&M, and she was married to an engineering professor who taught there. At the very least, this gave her a familiarity with many of the optional retirement plans that are unique to college and university professors.
So when Briaud decided to start a career as a financial advisor in 1986, one of the first places she started looking for clients was Texas A&M. One day, she asked if she could hold a seminar at the school, and things started to take off from there.
Soon she was holding seminars on a monthly basis. Then she started writing financial planning articles for a weekly newspaper. Gradually, her clientele grew-and it was comprised mostly of faculty members. "I didn't have a specific mindset that this is what I was going to do exclusively, but I got to be better and better at it," she says.
Subtleties in a college professor's planning that might take the typical advisor days or weeks to realize now are ingrained in Briaud's thinking. The Texas higher education system, for example, gives free health benefits to professors who are 55 years old and have five or more years of experience. But what not everyone realizes is that retirement benefits have to be kept intact to reap the benefit. It's something Briaud keeps in mind whenever a client wants to take money out of an IRA prematurely. "Little details that are critically important, you have to know," she says.
Over time, because of people moving and word of mouth, Briaud's base of clients has spread beyond Texas. Her clientele now comes from about 10 colleges and universities across the country and includes a college president. Her firm, Briaud Financial Planning in Bryan, Texas, has 210 clients-about 60% of them faculty members.
One other benefit Briaud sees in concentrating on a specific group of people is that it gives her a better understanding of what makes them tick. Professors, she says, often see their work and providing for their children's college educations as top priorities. Retirement planning is an issue, she says, but is not a "be all and end all" because most of her clients expect to be involved with their work in one way or another until the day they die.
"It's a very interesting group, with this real fire in their belly about what they do," she says. "I think they are so involved and so busy with their work they just want someone looking at their stuff, making sure it's taken care of."
Master Plan Alliance:
Being An Outsider Helps
Sometimes, the best way to advise a professional is from the outside looking in.
That's the way Suzanne Du Molin and her husband, Jim, have gone about building their business, Master Plan Alliance of Tiburon, Calif. The couple specializes in providing personal and business financial planning exclusively for dentists. After 16 years in business, they have 150 clients from about 30 states.
Even though neither of them went to dental school, they've built their firm on their ability to dissect a dentist's business and create plans to improve the profitability of a client's practice. After Jim does the business plan, Suzanne maps out a way for dentists to achieve their personal financial goals.
"When you work side by side with a dentist, you learn the business pretty quickly," she says. "We understand their business, we understand the challenges they have, and we have solutions."
Like so many advisor specialists, the Du Molins' focus on dentists was partly an accident. It started when Jim Du Molin landed a job 17 years ago with a marketing and management-consulting firm that specialized in advising dentists. After starting his own firm, Du Molin decided to stick with that specialty and add a personal financial planning component.
That's where Suzanne came in. She had been working for five years with an advisory and investment firm, advising high-net-worth individuals, including business executives, entrepreneurs and inheritors.
She joined her husband in the firm, and the couple immediately hit the seminar circuit, giving talks to dentists in various parts of the country about how to profit professionally and personally. The seminars were so successful that the business didn't need to conduct as many as it had been. Now the firm holds financial strategy retreats four times a year for new clients.
The seminars struck a nerve, Suzanne says, because the typical dentist has little training in how to run an efficient business. "We found that it was pretty easy to help them become more profitable," she says. "They get lots of clinical training, but hardly a thought is given to how to operate a business."
The firm's clients make anywhere from $60,000 to $300,000 a year, with some owners of large practices achieving an annual income of more than $500,000. It's not unusual, she says, for her firm to double a dentist's income with a plan that includes everything from marketing strategies, pricing chances, reduction in overhead and staffing-level recommendations.
The firm also has started offering dentists Web sites to market their practices. Once the business plan is in place, projected profits are used to build personal financial plans. "What makes us unique is we link the personal plan to the business plan," Suzanne says.
When it comes to personal investments, the majority of dentists are moderate risk takers, with a smaller percentage leaning toward high and low risk investments, she says. "I find they are pretty much the same as everyone else," she adds.
Keats, Connelly & Associates:
Creating A Barrier To Competitors
Starting an advisory business in a niche market can be easier than people think. But advisor Tom Connelly says there is one vital caveat: You need to make sure it's hard for everyone else to get into it. "I'd look for something where the competition is limited, and there are barriers to entry," he says.
Unlike some advisors who stumbled upon a specialization, Connelly made a conscious decision in 1986 to be unique. In the long run, he figured, that would be the best way to deal with competition.
What he and partner Robert Keats finally hit upon was an advisory business in Phoenix that would cater to Canadians looking to retire in the United States.
It was a battle plan built out of practicality. Keats himself originally was from Canada and has dual citizenship. So he was well acquainted with the maze of tax and immigration laws Canadians need to navigate to make a smooth trek over the border.
It was a key advantage, they figured, since they didn't foresee many other firms trying to get into a business that forces you to deal with two sets of laws in client planning. "There is a considerable barrier to entry because you have two tax codes and immigration issues to deal with," Connelly says. "You can't just hang your shingle outside and say you're doing this."
The strategy worked. The firm, Keats, Connelly & Associates Inc., is a fee-only business that currently has 160 clients and revenues of more than $2 million a year. They've built a reputation among preretirees in western Canada and regularly do seminars in California, Florida and Arizona, the preferred retirement destinations of many Canadians.
Along the way, they have built relationships with attorneys who have an expertise in U.S.-Canadian issues and have hired in-house CPAs who specialize in international tax work. Starting out alone, the partners now have a staff of 18.
Keats, meanwhile, has helped cement the firm's niche by publishing The Border Guide, a book for Canadians getting ready to move south. "From a business perspective, we have a niche in which people think of planning for Canadians, and they think of our firm," Connelly says.
The only competition the firm has had came from a few former employees who went out on their own, snaring a few clients in the process. But Connelly says the firm has yet to lose any large clients to competition.
Another important aspect of the firm, Connelly says, is that it does maintain a general practice along with its specialty. About 40% of the firm's clients are U.S. citizens looking for standard financial planning services.
Maintaining a general practice is vital, he says, in case something causes the specialty to falter. "You have to diversify in case your niche gets Pearl Harbored," he says. "What if there was a depression in Canada or the Canadian dollar is down and many fewer people are coming here? Those are things that can happen. Riding on one narrow track is risky, businesswise."
Christopher Street Financial:
It's What You Know
If Kermit Johns were to give advice to an advisor looking to build a niche-market business, it would only be four words: "Do what you know."
So what did Johns know in 1997, when he and partner Jennifer Hatch bought Christopher Street Financial, an advisory firm specializing in gay and lesbian clients?
First, he knew that there was no less of a need for Christopher Street Financial than when it was founded in 1981. As a gay man, Johns had his own experiences from which to draw, as well as the firm's clientele. "Being a lifelong investor, I've had situations where I was very put off by a representative several times because of sexual preferences," he says. "If I ask my representative from firm XYZ how I make plans for my partner, and I find him glued against the opposite wall of my office, that's the kind of thing I mean."
Attitudes like that were among the reason Johns and Hatch were intrigued by the possibilities of the niche market. At the same time, they haven't lost sight of their main mission: making money for their clients. "We do this because we're good at it," says Johns, who is president of Christopher Street Financial, based in New York.
One advantage Johns and Hatch had was that the firm already had cemented its reputation in the gay and lesbian community before they bought it. The original founder, Robert Casaletto, was also one of the founders of the Empire State Pride Agenda, a gay political group in New York. Johns and Hatch took over the firm after Casaletto's death in 1996.
One of the first changes they made was transitioning the business into a fee-based advisory and wealth management firm from a commission-based broker-dealer. Christopher Street Financial currently has 11 advisors and $200 million in assets under management. About 70% of the firm's clients are gay or lesbian, Johns says.
The area in which the firm most clearly differentiates itself from other firms is in issues dealing with the transfer of assets, Johns says. Because the firm's clients are in most cases living in jurisdictions that don't legally recognize gay and lesbian marriages, the process of making a partner an heir can be difficult, Johns says.
Adding to the complexity of the work is the fact that gay and lesbian couples often combine finances but without the benefits that normally are derived from a legal marriage. "If two people have been together a long time and one is expecting to inherit a pension plan or an IRA plan, there's planning we can do to help preserve the benefits of the partner," he says.
In a more general sense, he says, the firm's focus on gay and lesbian people helps foster trust. "First and foremost, they are working with an individual who is at least on their side," he says. "So they can be very frank and feel confident the advisor has an understanding of what the issues are for them."