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.