Mother-daughter teams are a rarity in the financial advisory world, and even rarer when the daughter is the boss. But so it goes at Source Financial Advisors in New York City, a firm founded in 2012. Despite its tender age, this isn’t a newbie endeavor, because the Smiths––Michelle (the daughter) and Corrine (the mom)––both have more than three decades of experience in the business and the company’s asset base is roughly $470 million and growing. In fact, in 2013 it expanded its AUM by more than 200%.

Source is Michelle’s baby, though, a firm founded to accommodate her growing practice specializing in handling divorces for high-net-worth clients. This isn’t a forte she stumbled upon. Rather, she set out early to become a specialist in a particular field, identified divorce as a potentially lucrative market, and worked the beat by cultivating centers of influence to become a go-to expert in this area. Today, she’s a sought-after speaker at conferences on how to handle clients going through divorce.

Smith has worked her way through the profession first in the wirehouse space, then as a breakaway broker, and later as a breakaway independent with her own firm. And in the process she’s sharpened the focus on her chosen niche.

The way she sees it, the generalist in the financial advice game is soooo yesterday. “Creating this divorce specialty more than a decade ago was the real game-changer that enabled me to truly become a business,” says Smith, 50. “I’m not just a good producer with a good philosophy and financial planning story. Now I have a business with a specialty I’m an expert in.”

And now she’s taking her specialist template to other financial advisors. In October, Source launched a coaching program called Anatomy of a Specialist, where Smith personally will teach a select number of advisors how to find the specialist within and how to monetize that.

“Anyone can specialize,” she says. “But it’s an intense, intricate process that Anatomy of a Specialist walks you through on how to identify certain character traits such as what your infrastructure looks like and what you might need. It helps an advisor set out a two-year plan that can double their business.”

Smith is a whirlwind of motion, from handling her busy practice to carving out time for her new coaching program to training for a marathon when she never before ran in her life. Her ultimate goal for Source is to grow the firm and make it a house of specialists by adding a small number of advisors who have a particular niche.

“We want to hire three to five individuals or quality teams of experts,” Smith says. “We want to take our footprint and help these advisors with a great practice to double their business by specializing.”

Quotron Quandary
Smith got into the business as an intern while she was a marketing major at Radford University in Virginia. She interned with her mother, who at the time was a broker at Merrill Lynch working in the Colgate-Palmolive Building on Park Avenue in Manhattan.

“Not a bad internship, right? Park Avenue, Merrill Lynch, New York … it was awesome,” she says. “It was an eye-opening experience, and I quickly saw it was a combination of everything I loved––it’s a person business, a relationship business, a numbers business. After that, I just knew I was going to follow her into the business.”

And she did just that by landing her first job after college with Merrill Lynch, but at another office in New York. “I didn’t want to be in the same office as my mom because I wanted to see if I was good at it and not embarrass her if I wasn’t,” she says laughing.

Two years later, Smith and her mother teamed up at Merrill and they’ve been together ever since.

Corrine Smith was a bit of a pioneer in the very male-dominated brokerage industry of the 1970s. “It was a Mad Men world, so I had to focus myself on my own responsibilities and my own ambition and motivation, but the things going on around me were so unfair,” says Corrine, 72. “But it’s the way things were at that time, so you needed to find a strategy to work within it.”

For example, Corrine says, in the late ’70s at Merrill Lynch everyone had to share a Quotron machine––a sort of rudimentary precursor to the Bloomberg Box––to get stock quotes. “When I went to turn it to get a quote on a stock, the guy next to me would swing it back toward him and look at me like I did a horrible thing. I had to wait till he was busy with something or went to the men’s room to use the machine.”

Corrine previously was a teacher and had started a couple of businesses, and she chose to enter this field and was determined to make it work. “As I started to see how the business works, I realized there was a holistic view that wasn’t male-oriented,” she says. “They were hawking stocks to anyone and everyone, and nobody thought about suitability. That never made sense to me. I knew I wanted a broader approach of having a relationship with clients. It’s now what people do, but back then women weren’t respected for that approach.

“I still handle clients the same way for years, and some of my clients have been with me more than 30 years,” she adds.

Going Solo
Together, the Smiths went from Merrill Lynch to Paine Webber to Wachovia. In 2006, Michelle and her friend, Alexandra Lebenthal, scion of the legendary bond house Lebenthal & Co., which was eventually taken over by Merrill in 2005, decided to break away from the wirehouse world and co-founded an independent wealth management firm called Alexandra & James (named after the first names of Lebenthal and her father).

Eventually, Smith’s growing desire to build a practice around her divorce specialty didn’t quite mesh with the program, and that resulted in what she describes as a friendly spinout from A&J. “Alexandra and I sat down and said we want to do a couple of different things,” she explains. “I wanted to specialize in specialties and divorce, and it wasn’t a fit for them. It was great building that business with her; otherwise, I wouldn’t have had the confidence to spin out in 2006 from Wachovia on my own. So I learned a lot from my partnership with her. Then I was really ready in the summer of 2012 to get out and build a firm for specialties.”

Lebenthal, for her part, went on to reacquire the rights to the Lebenthal name from Merrill for her diversified financial services firm. Smith says the company is Source’s manager of choice for muni bonds.

When Michelle founded Source, she brought over with her a handful of Alexandra & James employees, including her mother. And she got a lot of help from Dynasty Financial Partners and its integrated wealth management platform services for independent advisors.

“Dynasty is an RIA swat team,” Smith says. “They did this whole transition map of things to do by certain dates. They can help with branding; they’re very much responsible for helping me come up with the name Source for my firm. We spent a half day talking about the client base and what really matched, and they came up with four concepts. We all looked at it and said ‘Source––you’re the source for divorce and people going through financial transitions.’ They helped us pick the best custodian and recording engine for us, and gave us options to help us pick the best practices for our firm.”

Growth Niche
In some ways, Smith’s divorce specialization is no accident. “I’m sure Sigmund Freud would’ve had a field day with it,” she says. “I come from a long line of divorces in my family. My folks got divorced when I was 3. My great-grandmother got divorced in the ’50s. I’ve been divorced twice. The client base that was attracted to me early in my career were women, and I ended up with a disproportionate share of divorced clients. I had a divorce lawyer as a client who’s now one of the top divorce lawyers in the country. It was this confluence of things that got me set out in specializing in this.”

Smith notes that divorce is a $50 billion industry, and that much of her practice involves handling the highest-net-worth divorces in New York, Connecticut and California. “My number one referral source are top divorce lawyers nationwide,” she says. “I do a ton of speaking at the symposiums and conferences for the American Academy of Matrimonial Lawyers, and I get a lot of referrals from my speaking engagements or client referrals.”

Smith says a lot of people tell her they want to do what she does in the divorce field. She sets them straight on the realities of serving this segment. “It’s a growth niche business, but you’ve got to be comfortable with rage, conflict, with people fighting in your office; with not being able to control a lot of pieces of the process with the work changing quickly; with court deadlines; with being able to sit in settlement negotiations with both lawyers. I sometimes really have to be careful to not take it home with me after a long day of divorce meetings.

“It can be hard, but I have a really good skill set for it because I’m a natural mediator,” she continues. “You see people at their worst. People share very personal stuff with me they probably haven’t shared with other people. If I didn’t have the personality and skill set that I have to deal with this, I wouldn’t be good at it no matter how good a business opportunity it is.”

When she decided to focus on this niche, Smith set out to study it closely. Speaking at a Financial Advisor/Private Wealth Family Office conference in late September, she recalled how she would often take Fridays off to attend divorce proceedings to glean what types of testimony and fact patterns exerted the greatest influence over ultimate outcomes. In many cases, the key asset would be a privately held family business and the key witnesses would be valuation experts who were often CPAs.

As witnesses, these professionals were often dry and boring. Smith told conference attendees of various efforts the attorneys would employ to reinforce their testimony in the judge’s mind. Once she saw an attorney pick up his briefcase, hold it over his head, and drop it on the floor to wake the snoring judge out of his slumber.

Today, she’s aided in her divorce practice by a team of four, including an attorney, who work closely with divorce attorneys; help with the forensic accounting of divorce in tracing expenses, bank accounts and funds; and deal with alimony, child support and other separations of assets. They can be hired by one party or both parties. Smith is also a certified divorce mediator and regularly does mediation so people don’t have to go to court.

In essence, this support staff is doing the divorce work at the time of the divorce, while Smith and Jaclyn Cerbone, assistant vice president of wealth management, do the post-divorce wealth management.

Cerbone, 28, was personally recruited by Michelle Smith to join Source from J.P. Morgan Private Bank, where she was a relationship manager for more than 80 clients. Cerbone, who came on board last February, accompanies Smith on most of her client meetings and calls to help her prepare for and follow up on the meetings, and she’s a daily go-to person for clients when Smith is busy with her divorce practice or away at conferences or speaking engagements.

Cerbone and Andrew Stewart, 27, the firm’s managing director of investment strategy, are leading Source’s efforts to connect with Gen Y clients. Using direct focus groups Source ran itself, the firm set out to find out why millennials are sitting on so much cash and how to bring these investors to investment advisors. That resulted in a white paper they released last month that described the millennial mind set and the key things that firms need to do to be competitive in that landscape.

“At the same time, we’re trying to mold our practice to be something that would appeal to millennials based on our research,” Stewart says.

The Long Run
Smith says her divorce specialty has brought her many clients who were wives of CEOs, which can involve issues dealing with pre- or post-IPOs. By default, she says she had to become an expert in such areas as publicly traded concentrated stock and lockup periods for founders’ stock. “If you’re a CEO’s wife, I’m your girl because I’ve seen this movie,” she notes. “The divorce strategy has led itself to a lot of different niches.”

Her belief in the power of specialization is the foundation for the newly launched Anatomy of a Specialist program, which seeks to leverage Smith’s coaching on how to boost an advisor’s practice by becoming a specialist in any particular area. Smith is the lone coach of the program, which will be conducted either in her New York office or via phone. The cost is $5,000 a month, with a three-month minimum.

“This is just formalizing what she’s already been doing. It’s not reinventing the wheel; it’s something that’s tried and true,” says Kristen Niebuhr, Source’s president and chief operating officer, who originally teamed up with Michelle at A&J. “She’s done it enough informally and has had enough people ask her about creating a specialty that we decided there might actually be some meat to this so let’s look at this being a revenue stream for us while educating the industry.

“The coaching centers on trying to find a potential specialty,” Niebuhr adds. “The next step is learning how to monetize that by thinking outside the box to deal with every center of influence. Every accountant and attorney knows they’ll get hit up on by financial advisors. There are better ways to approach them to make them want you to help them. The two main stools are identify your niche, and leverage it.”

Sounds like a busy workload for Smith, but she says she thrives on it. “There’s a difference between frenetic and scattered, or just busy. I’m busy. I’ve got a hundred different things going on, and it gives me energy. And I pick the things I like.”

One of those was training for the New York City Marathon in 2012, an audacious task considering she wasn’t a runner before that. She worked with a trainer for six months, and even though her left knee and hip took a pounding during training, she says she was ready to go. Then Superstorm Sandy came along and put the kibosh on the race.

“The one year I decide to train for a ridiculous race at 48 years old when I never ran in my life, and they canceled it,” she says with bemusement. “So I never did run it. I’ll probably try it again, but it’s a major time commitment. It felt right that year, but hasn’t since then.”

But the experience wasn’t a total loss. “Running is now my primary exercise,” Smith says. “I do three to five miles a few times a week. It’s really therapeutic.”