“Clients can smell a lack of capability,” Finke said. “They can tell you don’t know what you are talking about. And as soon as you let that slip, then no one is going to recommend a client to you.” Why? Because other professionals who recommend you are also putting their own reputations on the line.
Finke added that younger advisors usually cast a wide net and take on every opportunity they can, but in many cases it’s better, he said, that they acknowledge what they don’t know and focus on what they are good at, “and then you can get those referrals as opposed to just being in the right place at the right time,” he said.
Another panelist, Terry Parham Jr., a co-founder of the year-old firm Innovative Wealth Building, noted that he heavily subscribes to content from the American College and other external sources like financial planner Michael Kitces and other successful advisors. “I think I have five designations and a few more to go,” he said, noting that the knowledge he has gained has helped him find the most value in his firm, which he said specializes in retirement income planning, primarily for business owners.
His firm is based in Los Angeles, and Parham noted, “It seems like every person in L.A. either [acts] part-time, has a small business or is a musician on weekends. So, we are developing some specialized expertise there.” But Parham, who serves as chief financial officer for the four-person firm, which also has an office in California, Md., said referrals have become a big part of his business. He noted that the firm’s CEO, Warren Brooks, has worked in the same area in Maryland for more than 20 years and “has created a sort of gravity where if someone becomes a client, they refer their sister, brother and cousin. So, we have this continual wave of referrals,” he said.
The firm also sponsors events such as client appreciation day and monthly educational webinars, and its social media team pushes out a healthy dose of educational content, including one-minute videos. “It’s a whole team effort for serving our clients and just serving the greater population with financial information,” Parham said. “It’s been an exciting journey so far,” he added, noting that the firm has gone from zero assets under management to more than $300 million.
Parham, who has been in the industry for 10 years, said he saw the value of specialization early in his career when he cultivated relationships with active-duty military clients. “I found ways to visually get them involved in the learning process and to help inspire them to move forward, and that’s when my income and my success quadrupled,” he said.
“The firms that deliver the most value are the ones that drill deep,” he said, noting that specialists, whether they are doctors, dentists or other professionals, “typically end up making more money and providing more value than the generalist.”
Finke agreed. The financial planning industry, he said, is a relatively young profession compared to others like medicine and law. “So I think what you are seeing is, as this profession matures, there’s an increasing movement to resemble some of these other more mature professions where you see more specializations,” he said. “Retirement planning seems to be a big growth field for specialization in financial planning, potentially because of demographics.”