Advisor Homer Smith knew that moving upmarket and serving wealthier clients would be a smart business move. But rather than simply trying to attract any and all clients with significant assets, he and his team at Konvergent Wealth Partners in Gig Harbor, Washington, made a crucial decision to focus on one affluent niche: successful business owners.
Smith’s move was driven in part by empirical research done by CEG Worldwide, which revealed two key findings:
• Advisors who focus on a niche generate more success, on average, than advisors who cast a wide net.
• Successful entrepreneurs represent a top niche for advisors with the right value proposition.
Clearly, Smith saw how to put himself in the line of money. To learn how he could bring tremendous value to this group, he turned to CEG Worldwide’s coaching program—where he discovered how to build a virtual family office service model designed to help entrepreneurs enhance the value of their practices, grow their personal wealth and take care of the people in their lives they care about most.
Of course, knowing how to serve a client base is one thing—but attracting those clients to your doorstep and convincing them to work with you is another. To that end, Smith began building relationships with the “centers of influence” professionals who are so often the primary advisors to entrepreneurs: CPAs and attorneys.
His approach here flipped the usual script. Instead of hyping his firm and its investment process and making the conversations all about him, Smith highlighted how working together to serve mutual clients could generate much greater success for the COIs themselves. “It's always focused on them and their business and what are their goals as a professional—do they want to add more value to their top clients?,” says Smith. “Being able to show them how we can help them do that and help them increase their own income is very compelling.”
This three-pronged strategy—selecting the right niche, delivering a great experience to that market and partnering with top professionals/referral sources—has certainly enabled Konvergent to achieve its goal of moving upmarket. “If you had asked me two years ago what level of client I’d expect to work with, I would have said a business owner worth maybe $10 million or more. Today, it’s more like $50 million and above,” he says. “This year alone we expect to see a 50% increase in AUM—and our pipeline is massive in terms of the right types of clients for us.”
Smith offers the following advice to his peers looking to attract and serve high-net-worth clients:
1. Pick a niche. Focusing on the needs of a select market can be a much better approach than trying to be all things to all people. Best of all, there are a wide array of niche markets where advisors can find underserved affluent individuals and families. For Smith, the right niche was entrepreneurs. For other advisors, it could be dentists, C-level executives in a particular industry or any number of other options.
2. Focus on advanced planning. When Smith shows COIs and prospects how he can add value to their lives, the topic of investing takes a backseat. Instead, he focuses on the true hot-button concerns for the extremely wealthy—such as tax mitigation, succession planning, wealth transfer and other advanced financial concerns. By demonstrating how he can help people address these issues, he is seen as both highly skilled and different from the plethora of advisors trying to win these clients’ business.
Smith elaborates: “We’ll start by talking about issues around current and future income and estate tax liabilities. When they see how the wealth they can create and keep by addressing that compares to the wealth they might have by getting better investment returns, they very quickly recognize the value of advanced planning.”
3. With COIs, it’s quality over quantity. You don’t need to partner with 10 CPAs or attorneys who are “just OK.” Better to build rock-solid relationships with a handful of professional COIs who are an ideal fit for your business—meaning they want to grow, they understand your value proposition and they work with the ideal clients you most want to serve. “If they're not really going to be the type of professional that has the right types of clients or is really interested in growth, be ready to move on,” advises Smith.
4. Give it time. Smith notes that he’s interviewed scores of COIs in search of ones that are a great match. What’s more, referrals from those COIs might come instantly—and then the work that entrepreneurs need done could take months. “It all comes together and works, but it’s not an overnight win,” he says. “So get started working with COIs and stick with it!”
John J. Bowen Jr. is CEO of CEG Worldwide and CEG Insights.