Cathy Curtis of Curtis Financial Planning, Alan Moore of XY Planning Network, and Don Phillips of Morningstar joined Morningstar’s Christine Benz, who highlighted issues in independent investment advisory practices today, from targeting and advising niche in order to effectively differentiate from the competition to attracting and serving more diverse clients at Morningstar Investment Conference 2020 Digital. Here are some interesting takeaways from this conversation.
How does working remotely impact advisory business?
Alan Moore: The new era of working is going to benefit advisers and clients. Advisers will be more willing to work with clients who are spread across geographically. The need to have an office and meetings clients will prevail. There will be some companies that will close their offices but that will be a minority. Advisers will have a much more flexible and remote workforce. They will be able to hire people who don’t live in the nearby area.
Don Phillips: In-person meetings are essential as they create a bonding. Meeting in person is essential in establishing your business. That said, the trend of interacting online between the client and the adviser will continue due to the convenience it offers to both advisers as well as clients. Advisers can have more frequent online meetings with clients as compared to earlier when one had to travel and wade through traffic.
What are the benefits of having a niche model?
Alan Moore: There is an adviser in Seattle who works with women who work in Pre-IPO start-up technology companies. She was a techie and journalist before becoming a financial adviser. So she knows about stock options, employee compensation plans, and so on. She also knows what it means to be a woman in the technology field. It is a male-dominated industry where women are trying to find a voice. She not only helps in financial planning but also helps her clients in career negotiation. She has 60-70 clients. She understands her clients and their unique circumstances and can speak their language. So if a techie from this background talks to a generic financial adviser the client knows that the adviser is not speaking their language. On the other hand, if the techie meets an adviser focused on that niche, the chances of conversion are higher.
Does following a niche make your firm smaller and not able to scale up?
Cathy Curtis: I focus on independent and single breadwinner women. My brand appeals to them. With the help of my messaging and outreach, I have been able to create a niche around those clients and deliver bespoke service. When I started my practice, I was like other advisers who would just onboard any client. When I decided to shift my focus to women, I re-branded my marketing and communication to appeal to women and the practice took off. I have been focusing on this niche for 12 years now. I would recommend every adviser who is coming into this business to focus on a niche.
My clients include widows, divorcees, and women who inherit money, among others. They want a financial planner as they do not have a spouse. They want to talk through their finances, discuss ideas and so many other issues. Some elder women are discussing with me whether to move to retirement homes, affluent people who want to buy a second home, etc. There are many issues they want to discuss with a planner and I fill that role.
Any downside to financial planners focused on niche?
Don Phillip: Investing is about the art of matching investment with the investor. The more you know the investor and add value, the better you will be at that equation. A financial adviser has to be a generalist when it comes to knowing the types of investments and their pros and cons. They have to know about everything. But on the client-side, you have to focus on one thing – serving the needs of that client.
Is investment advice become a commodity and losing value?
Don Phillip: It is very difficult to get good investment ideas today. They are few and far between. So it is really hard to add value there. On the other hand, it is extremely easy to add value in areas like tax-saving and estate planning. Further, advisers can add value by moving towards Environmental, Social and Governance, or ESG, and finding investments that are in sync with the client’s values.
Cathy Curtis: I’m working towards offering ESG as my core offering. For advisers, the narrower their niche is better. Women are more inclined or expressing their desire towards ESG investing than men. So it is important for me to offer that.
