Some financial advisors make an effort to serve clients of different races and ethnicities.
Most advisors don't market to clients of other racial and ethnic groups because they think an inordinate amount of time would be needed to overcome inherent mistrust. But what if the criterion most clients use in selecting an advisor has more to do with competency and caring than with color or ethnic community?
Sammie Gatti hesitates to characterize her clients, mostly
African-American women, as in any way "different." "It's simply a
matter of a woman financial advisor dealing with other women who don't
have a financial background," says this blond Southerner with
Navigation Financial (www.navigationfinancial.com) in Dallas. "People
assume there's a huge barrier to working with clients of another race,
but we're the ones who put up that barrier in our own minds."
Percy Bolton, 57, an African-American advisor in Pasadena, Calif., says his client mix today is 45% white, 35% black, 10% Latin and 10% Asian. "When I was starting out, I expected to own the black market," says Bolton. Ultimately, he says, he just went where the market took him.
Wendell Fuller, 41, an African-American advisor working for Michael
Joyce & Associates, P.C., with offices in Bethlehem, Pa., and
Richmond, Va., is an employee, not an owner like Gatti and Bolton, so
his situation is a bit different. "Michael brings in mostly white
clients, and I am what we call in our firm the 'financial strategist'
for many of them," says Fuller.
What we see in each of these planners' practices is a two-part phenomenon. First, they didn't start out with the intention of making inroads with clients of a different racial profile ... that just happened along the way. And second, their ease in working with these diverse populations gives other planners lessons for approaching clients of different ethnicities and races.
Gatti started her planning career in 1995 after selling commercial real estate for 17 years. In her part of the world, Texas Instruments, AT&T and UPS are the big employers. "My first client, who I now refer to as my 'godmother,' was soon to retire from being a supervisor in a fabrication plant at TI for 40 years. Other ladies where my client worked would come to her and say, 'We know you're getting ready to retire ... what should we do?' And she would refer them to me."
It wasn't too many years before Gatti's client base of African-American women grew from a handful to over 300, all on the strength of referrals. "Any woman who likes a service provider," says Gatti, "can't say enough to her friends about the good experiences she's had."
Bolton, the oldest in a family of 11 children, was working on a doctorate at UCLA in 1979 when he discovered and fell in love with the field of financial planning, gravitating to a fee-only practice after a few years of insurance selling and commission-based planning.
Why didn't Bolton end up owning the black market, as he'd initially expected to? "I learned that to tap the market of wealthy blacks, including athletes and entertainers, one must entertain, one must go to sports events and all-star games and one must hang out and party with agents. Plus, I was competing with major firms, the firms agents are drawn to because they can leverage those relationships and get greater benefits for themselves. It's a tough market." Bolton says he just didn't have the "sizzle" his competitors had. "I had a hard time competing with brand names in the black market, whereas I've learned that white clients pick you on talent."
So what he found in the Los Angeles area were socially conscious white liberals, many of them East Coast transplants. There was the occasion where a white prospect would come into his office not knowing he was black and, after a preliminary discussion, would fail to hire Bolton. "I could sense their discomfort. Maybe they didn't come back because they thought I wasn't capable."
More often than not, though, these liberal white clients didn't
pre-judge, which has led to their occupying almost half of Bolton's
service capacity today. And the black clients he does have he says have
come mostly from referrals and sometimes speaking engagements or
mentions in publications.
"My turning point came with my addition to the Worth magazine list in 1997. My white clients grew in number because they read the magazine." He knows that because they would often bring a copy of Worth with them to his office. "Blacks are not always well-read, so [Worth] is not how they would tend to select a financial advisor. Furthermore, I just wasn't well known in the black community, where it's more who you work for, like Merrill Lynch or Smith Barney, than who you are as a person."
As for Fuller, he parlayed an electrical engineering degree from the
University of Memphis in his home state of Tennessee into a job with a
young software company that granted him stock options. "When the
company was purchased, I needed advice on exercising my options and,
after my experience as a client with Michael Joyce's firm, I joined him
in 2001." Fuller had no formal training in financial planning but had
great communication skills and a knack for and interest in investing.
He's now a CFP candidate.
Fuller's situation is different from Gatti's and Bolton's because he's not on the front line as a rainmaker for his firm. "Michael [Joyce] is the only rainmaker, though the rest of us play an indirect role. I'm in many prospect meetings with Michael because we make planning a team effort and also because Michael intends to transfer the client to me as the client's chief financial strategist."
Does race ever get in the way? "No. White clients find the firm by way of Michael's reputation and the many accolades our firm receives, and I think they will then trust anyone in the firm assigned to work with them."
What do these advisors do that makes them so appealing to clients of
other races and ethnicities? It's not really as exotic as you might
"My clients like that I explain difficult concepts very simply," says Gatti. Because she specializes in helping her clients with their retirement decision and, later, managing the money and distributions they need to live on, Gatti has devised a 28-step procedure to get someone off a payroll and onto a retirement distribution program. "I work through all 28 steps with them, answering their questions and doing much of the work for them," she says. Which explains why she maintains a four-person staff. "Staying on top of my ladies' distributions is labor-intensive. They get paychecks just as if they were still going to work." Gatti and her staff check all distributions to make sure they're on time and in the right amounts.
What emerges is a picture of a planner with a niche. Gatti works with women, helps them make critical preretirement decisions and then makes sure they don't outlive their assets while she provides them with a regular income stream. She's qualified by virtue of her being a woman who understands other women's needs, by her having developed proprietary business systems to do what she does competently and efficiently and by her caring and personable nature. Race doesn't even enter into the picture. "The greatest compliment I've ever been paid is that I'm color blind," she says.
Nor is Bolton's work particularly out of the ordinary. "Sixty-five percent of my clients are high-net-worth individuals who have been with me 15 years or longer. When they first came to me, they were close to retirement, so I had to develop an expertise in wealth distribution." In other words, Bolton performs a service similar to Gatti's.
Lately, he's been moving in a different direction, though. "I'm not
trying to get a lot more individual clients, but doing more on the
institutional side with 401(k) plans, middle-market clients and,
ultimately, I want to build a firm where we become teachers of
financial advisors new to the marketplace," says Bolton.
Like Gatti and Bolton, Fuller doesn't go out of his way to treat whites any differently than he would any other clients. "My clients just want someone to assist them in their financial matters," he says. Fuller does find relationship-building tough at times, though, because he's not particularly fond of sports. "When men are trying to get to know one another, sports is often a connecting point. I don't mean it's a stereotype, like 'all black men are into sports;' it's a male thing. So if we don't connect on sports, we just move on to the next topic until we find a connection."
Gatti, Bolton and Fuller have built substantial bases of clients racially different than themselves because ours is a referral business. Maybe their initial client contacts were largely happenstance, but those that followed were earned from happy clients putting out the good word to friends, and with sheer ability and the desire to treat all clients the same.
David J. Drucker, M.B.A., CFP, an independent financial advisor since 1981, now writes, speaks and consults with other advisors as president of Drucker Knowledge Systems.