Speaking at an industry conference earlier this month, Mark Tibergien stated, “Firms that have a niche or technical specialty are the ones growing in our industry and driving the business forward.” Mr. Tibergien, as is usually the case, has his fingers squarely on the pulse of the industry and I couldn’t agree with him more, as I have been touting the need for RIAs to define their ideal client for more years than I care to count. As I’ve previously written, “Knowing the type of client you are looking to serve will allow you to design the best products and services needed by them.” And beyond determining a firm’s service offering, I’ve also argued that an RIA cannot optimize its back office until it fully understands the type of client they are trying to serve.
In Episode 28 of our COO Roundtable podcast, I discussed the power of client persona with Nikolee Turner and Tony Parkin of Schwab’s Business Consulting & Education division, and how it could and should define your firm’s structure. We dig deep into this subject with Vestia Personal Wealth Advisors, an RIA that specializes in serving physicians, in the latest episode of the podcast. Launched in 2018 with approximately $200 million of AUM, Vestia is now approaching $600 million. Recently appointed CEO Lauren Oschman says, “We can definitely back up what you’re saying about the growth, or the power of growth, that can come with having a niche. I think that’s a huge credit as to just why we’ve been able to grow so quickly, especially as a new firm.”
When Vestia sits down with a prospective client, the conversation isn’t, “We think we can choose investments better than your current advisor.” Instead, they have designed several “technical specialties” (as Mark Tibergien would call them) outside of investment management that appeal directly to physicians. Lauren explains that “[Physicians] are looking to buy and sell a house—we’re running the numbers, of course, but then we also reach out to banks that we know have specialized physician mortgage products, figuring out what’s going to be the best one for them, and then presenting that solution.” She continues, “There has been new guidance on student loan forgiveness lately—that’s a huge thing because physicians have a lot of student loans. We know exactly what programs physicians qualify for and exactly what to do, many times before they have even seen the headlines.” Lauren explains that Vestia strives to anticipate their clients’ needs and present solutions long before the client knows they’ll need them. It’s much easier for them to accomplish that goal by having a deep understanding of the unique complications and intricacies of their daily lives as physicians.
If serving physicians isn’t nichey enough for you, Vestia also provides specialized service to female physicians, with a specific focus on how this client group is best served. Lauren explains, “We have a refined process that specifically connects with female physicians. We’ve gotten a lot of new business from that because female physicians aren’t used to being specifically spoken to, especially not in a financial conversation, so we’ve gotten a lot of traction with that.”
Imagine a physician visiting an RIA’s website and reading, “We provide holistic financial planning to those with more than $3 million of investable assets” (a group which many physicians probably fall into), and then visiting Vestia’s website that reads, “As a physician, your life is busy and complicated. We make financial planning easy and manageable so you can focus on the things that matter most to you.” Which RIA is the physician more excited to reach out to? And when they finally do contact Vestia, they are spoken to about physician-specific mortgage products and physician-specific student loan forgiveness, as opposed to another RIA speaking in broad strokes about risk tolerance and asset allocation. Who is more likely to get hired?
To Mark Tibergien’s point about those with a niche driving the business forward, Nikolee Turner cited statistics from Schwab’s benchmarking studies when she joined the podcast, “One of our favorite benchmarking data points around the power of that ideal client persona and getting really clear on who you’re trying to serve is that firms that have a documented ideal client persona add 28% more clients annually, which represents 45% more assets (than those firms without a defined ideal client).” Lauren Oschman concluded our conversation on the topic by stating, “I think the benefit of a niche, beyond just marketing, is that it’s really helped us design our process, our pricing structure, and our service model because we know exactly who it is that we are trying to serve. We can be crystal clear about what we have to deliver to support that group, and then we can build all of our processes and KPIs around that.”
I’m not saying that RIAs need to choose a new niche out of thin air and start marketing to that specific client persona tomorrow. Instead, I suggest that firms go through a client segmentation exercise. I believe most RIAs will find that they have been gravitating toward a specific type of client for many years but have yet to build a marketing plan or service offering around the unique solutions needed by that group of clients. Once the analysis is complete, most RIAs arrive at an epiphany along the lines of, “I didn’t realize how many airline executives we have been serving” or “I can’t believe we’re serving this many musicians” or whatever client niche they have slowly gravitated toward. I’m suggesting you push harder into that niche and stop trying to market to the broader masses. If you don’t believe me, or Nikolee Turner, or Lauren Oschman, at least be wise enough to take the advice from the great Mark Tibergien!
Matt Sonnen is founder and CEO of PFI Advisors, as well as the creator of the digital consulting platform, The COO Society, which educates RIA owners and operations professionals how to build more impactful and profitable enterprises. He is also the host of the popular COO Roundtable podcast. Follow him on Twitter at @mattsonnen_pfi