Some advisors talk a good game about attracting corporate executive clients. With more than $1 billion in assets, San Francisco's Tim Kochis walks the walk, too.

Hoping to double his firm's assets to $2 billion in the next three years, Tim Kochis may have forgotten more about the corporate executive market than most other investment advisors know. Today, a whopping 80% of San Francisco-based Kochis Fitz's 288 clients are corporate executives, many of them from Fortune 500 companies.

Now Kochis Fitz stands poised to double its assets in the next three to four years. Not bad for a firm founded in 1991. "I like executives because they're decisive and their issues are interesting. They understand risk and deal with it every day in their careers. It doesn't hurt that they have good income and that in many cases, the corporation is paying or subsidizing their planning bill," says the veteran advisor.

Of course, the corporate market can be demanding, too. Advisor credentials are important to corporate decision makers who name advisors to their companies' preferred list of advisors. Kochis and his firm have the type of longevity and staying power that executives like. Kochis, who helms his firm as CEO, was trained as an attorney and brings more than three decades of planning experience to the table, most notably his six-year-stint as Deloitte & Touche's national director of personal financial planning and five years as national planning director at Bank of America.

Although some successful advisors are exclusively absorbed by the day-to-day challenges of running their own business, the 58-year-old Kochis has made significant contributions to his profession at large. He is a co-founder of the University of California at Berkeley's Personal Financial Planning Program, where he has also taught. He is a board member of the newly established Financial Planning Standards Board, which seeks to create worldwide professional practice standards in addition to overseeing the global CFP certification program. The role is a fitting one for the past president of the CFP Board of Standards who helped supervise the creation of the current CFP exam,.

A decorated Vietnam veteran, Kochis took the best-paying job he could find after law school, which turned out to be planning for corporate executives. "I didn't have any longstanding desire to be a planner or work with this market," Kochis admits candidly, "but I discovered I liked it and was pretty good at it. This was my first job and I never quit. Along the way I discovered why it's such an attractive market."

What Kochis Fitz also has discovered is the built-in efficiencies from working with a corporation's top executives that can't be duplicated when you work with individual investors. "The market is really good for developing our business and our people," says Linda J. Fitz, who co-founded the firm with Kochis in the midst of the 1991 recession. "When we do corporate work, we're getting a contract with a company to work with their top 15 to 20 executives, and they have all the same employee benefits," she explains.

These engagements typically have certain economies that Kochis Fitz can leverage. "We get to train our people efficiently by having them work on the same issues, the same restricted stock plan and the same deferred compensation plan for a number of executives," Fitz says. "This gives them the time to master the nuances of the plans and concentrate on the analytical qualities that are so important to good financial planning. They're not having to reinvent the wheel with each executive."

At the same time, Kochis and other principals at the firm realized several years ago that the efficiencies of the corporate market have other benefits, too. "Working with the same group of executives gives us the proficiency and productivity we need to price our engagements more competitively than we would if we were seeing individual investors," says Fitz. "Frankly, that means our prices are lower."

With nearly a billion dollars under management, these efficiencies have also helped the firm get bigger and much more discriminating in terms of the type of clients it sees. Principals at the firm decided several years ago to raise the minimum assets requirement for clients to $3 million. It is actually targeting investors with $10 million. "We are seeing richer folks, and that's a strategic decision by Tim and the rest of us," Fitz says.

To ensure that the strategic goal of doubling assets is met, Kochis and the firm's executive team have also undertaken a fairly aggressive marketing program, at least as far as advisory firms go. They've hired a marketing director who is systematically contacting all Fortune 500 and Fortune 1000 firms in the San Francisco Bay area with letters and invitations to find out more about "who we are and what we do for executives," Fitz notes.

Those executives who are already clients of the firm are being subtly tapped for referrals to key decision makers and boards members at other targeted companies. The marketing director also zeros in on money in motion at companies, which includes merger and acquisition and other corporate activities that would indicate that executives need a wealth manager.

"We're getting better at asking for referrals and zeroing in on those who can make qualified referrals," says Kochis.

Why The Corporate Market Is So Desirable

In a candid Q&A with Financial Advisor Magazine, Tim Kochis discusses the economic and financial benefits that make corporate executives good clients and good for business. He also talks frankly about the kind of staff, expertise and operations it takes to serve this market well, and how he plans to use these efficiencies to double assets-without doubling staff.

FA Magazine: You've been working with corporate executives for more than three decades. Why do you like this clientele so much? Is it a lucrative market?

Kochis: It's pretty lucrative in the following sense: We don't have trouble charging healthy planning and asset management fees (Kochis Fitz's planning fees average between $10,000 to $20,000 per client, while the firm's AUM fee is calculated on a sliding scale basis, starting at 1% of assets. Clients also typically are charged a $5,000 annual maintenance fee, starting in the second year). The reason why we charge separately for planning is because these clients expect a high level of planning.

We justify the fee two ways. It takes a lot of time to do planning right, and if we didn't charge the fee, we might not devote the time. And because there is a revenue stream attached to planning, we devote a lot of time to hiring and training the right people to deliver state-of-the-art services. Also, most corporate clients are still working and have significant income and assets.

FA Magazine: So there is less fee resistance?

Kochis: Yes, because in most cases the fees are paid or subsidized by their corporations.

FA Magazine: You've said the corporate market is, in effect, an easier sale. Why is that?

Kochis: You make one sale, and you get a lot of business from it. You only have to sell your firm to the corporate sponsor. You don't have to sell the necessity of wealth management. Corporations are already sold on that. With noncorporate clients, it really is a two-tier sale. But if you're successful with a corporate sponsor, you may be the exclusive provider of wealth management services to executives at the company or make it onto their preferred list. One sale may mean a number of executive clients.

FA Magazine: What have you learned the hard way about this market?

Kochis: One of the things I learned a long time ago is that this is a marketplace that demands very thorough analysis. They don't accept unsupported recommendations. They expect you to do your homework. They'll tell you when something isn't good enough.

The mistake you don't want to make with corporate executives is to fail to understand what you want the client to do. They don't want you to be neutral. They want you to explain their options and why. Their own decision making is what makes them successful, and they want to know that you can make decisions, too. It's not to say that they'll always agree with you, but they sure as hell want to know that you have conviction. That's what they pay you for.

FA Magazine: Are executives changing in terms of their age or sex? Do they have more complex compensation packages and less job security these days?

Kochis: We're seeing all of these things. There are many more executive women than there were 30 years ago. At the same time, and this is probably good for the economy, there is a lot more job mobility among executives. It's the moving around, whether they're being fired or not hitting bonus targets or deciding that the future is bigger and brighter someplace else, that makes for lots of wealth management opportunities for advisors. When it comes to compensation packages, we are seeing more features and more moving parts, so there is more to coordinate.

FA Magazine: As a rule, are corporate executives more demanding as clients?

Kochis: They run the gamut, but they tend to be strong delegators and macro managers. They make decisions and are accustomed to someone else carrying them out. In that regard, they are very good clients.

There are exceptions: Those who don't fit the mold and constantly seem to change their mind and micromanage. But these types of corporate clients are fairly rare. The majority make decisions, are willing to live with the consequences and want someone else to make it happen.

FA Magazine: What drives executive investors? Is it performance?

Kochis: They're not particularly performance-driven. They understand we don't control market performance. All we can do is put them in the best position to take advantage of long-term opportunities. They're pretty sophisticated about this, so they're not as performance-driven as you might expect.

I think we do a very good job educating clients about what to expect. We cement this with a comprehensive planning relationship, not just asset management. Of course, there are executives who demand you hit benchmarks, but I'd say that's less than 10% of our clients.

FA Magazine: What drives relationships in the corporate market?

Kochis: I think it has a lot to do with style when you work with executives. If you come across as being reasonably crisp analytically, decisive, not afraid of taking a stand, and can make clear-cut recommendations, it appeals to this market. If they see these traits, they feel comfortable.

FA Magazine: What services do you need to offer this market?

Kochis: I think we're a little ahead of the curve. We've been offering absolute returns [equity-like returns with fixed-income-like volatility, sometimes with hedge funds] asset management for years now. I think all of our clients appreciate this.

As for corporate executives, we've developed a package of specifically formulated stock-option analytics that we're marketing to corporations. So far, four other corporations have bought it from us. We think this is good marketing. Along the way, when we're making presentations, you get in front of senior people likely to influence the purchase of wealth management services, too.

FA Magazine: What do you need in terms of depth and breadth to really serve the corporate executive market?

Kochis: You can't do it with a one- or two-person shop. You have to have sufficient size to handle multiple executives from the same company at the same time. I don't know what the minimum is, but it's more than two or three people. You can't say, we only deal with estate plans or investment or retirement planning or asset management.

You have to be a comprehensive shop. If you're going to work with the sponsored corporate market, which will pay your fees, you have to be credible and demonstrate durability and that you'll be around in the years to come. If you're thinking of selling your business, don't let corporations know or you won't get their business. These folks want permanence.

FA Magazine: What does staffing look like at your firm and how do you maximize it?

Kochis: We have 25 people, and of those ten are counseling professionals who have CFP or CFA certifications. They also typically have MBAs or JDs [Kochis himself is a CFP with a JD and MBA]. We double- or triple-team clients, giving them two or three people to work with. One is an operations specialist who works with clients and executes their trades. Five of our staff are operations specialists.

This allows us to give our clients multiple professional insight, but also enforces a very strong value we have-that the client belongs to the firm. One way to bring discipline to this idea is to make sure that no one person is the only one a client deals with. It also gives clients multiple contacts. There is never a time they call and someone doesn't know who they are.

FA Magazine: Is it easier or more difficult to get hired by a corporation these days?

Kochis: Maybe I'm jaded by all the years we've been doing this, but I think it's easier because there are fewer and fewer competitors. If companies are looking for an independent firm, we are up there (one of the larger corporate competitors, Ayco, was just acquired by Goldman Sachs). We're in the process of trying to exploit our experience and independence now by writing customized letters to decision makers at Fortune 500 companies in the San Francisco area. We're telling them that if a change in circumstances with their wealth management firm has made them uncomfortable, they should give us a look. We'll come in and talk to them. It's the first direct marketing we've done.

FA Magazine: What do all of these changes mean for the future of Kochis Fitz?

Kochis: I suspect we'll double our current size in three to four years. The systems we have in place with staff means we can do this without doubling staff.