Financial advisers who want to build their business by developing a niche can start by raising their public profile by blogging, writing articles, going on local news shows and making friends with trade publication reporters.
That advice comes from Paul Brunswick, a senior managing principal at consulting and coaching firm CEG Worldwide LLC, speaking last Monday at Raymond James Financial Services Inc.'s national conference in Orlando, Fla.
“We are building and enhancing our position to draw people to us,” he said. “Going on TV or writing articles creates a funnel to get people to be attracted to you.”
Building a niche can help protect advisers against the increasing fickleness of wealthy investors, Mr. Brunswick said.
CEG has tracked investor sentiment for many years, and its surveys have found that in a typical year, about 3% to 5% of clients would say they were considering switching advisers.
In the past few years, however, that percentage has grown to almost 80%, Mr. Brunswick said.
Wealthy investors are also more likely to spread their assets among two or three advisers.
Developing a niche helps build up a business with clients who are more loyal and is a good way to increase average account size gradually.
Mr. Brunswick provided some tips on how to do this.
For starters, advisers should consider looking at their own communities for concentrated areas of wealth that they might be able to serve. Executives with corporations that are undergoing big changes, such as a merger or layoffs, might be a good niche, as are professionals in a field with unique financial issues.
In addition, advisers should get to know relevant centers of influence and read trade publications covering the industry or profession they want to serve, Mr. Brunswick said.
“Subscribe to the newsletters of the niche's associations, examine trade publications and learn the jargon,” he said. “Look at your competitor's websites, and Google potential clients.”
Dividends seen at risk
Political pundit Andy Friedman, principal of The Washington Update, thinks that taxes will be higher next year.
That scenario, he said, means that financial advisers should reevaluate their clients who are concentrated in one stock or who own a lot of dividend-paying stocks.
If Congress doesn't act, tax rates on dividend income will nearly triple, which will affect dividend-paying stocks in a variety of ways, Mr. Friedman told the audience at the Raymond James conference last Tuesday.
For dividend stocks that also offer the chance of sizable capital appreciation, a tripling of the tax rate will lead the issuing companies to stop hiking the payouts.
Instead, Mr. Friedman said those businesses “will keep that money to buy back stock so shareholders get capital gains [instead],” he said.
For companies that are bought primarily for the dividends, “the value of that stock will likely decline,” Mr. Friedman said.
If he is correct, this could make life that much more difficult for advisers, many of whom have been struggling to find streams of income for clients. If companies shrink or suspend their dividends, advisers and their clients will have to look elsewhere for yield.
With interest rates this low, that won't be an easy task.
Fallen adviser tells his story
The “Scared Straight” approach has helped scores of at-risk kids avoid life-changing mistakes.
Patrick Kuhse, a former financial planner and regional vice president for a major financial services company, offered his own version of the program at the Raymond James conference.
Mr. Kuhse, who spent time in jail for financial fraud, offered his story to advisers as a cautionary tale.
He said that his slide first started when a friend won elective office in Oklahoma. That friend asked Mr. Kuhse to manage some bond investments — in return for a kickback on his inflated commission.
When the FBI uncovered the fraud, Mr. Kuhse fled with his family to Costa Rica. They lived in the country for several years, but the on-the-lam financial adviser was eventually captured by Interpol.
Mr. Kuhse said that he spent a month amid horrible conditions in a Costa Rican prison before being extradited. After time in a U.S. prison, he managed to repair his family and started a new career as a speaker.
Critical errors in thinking are the start of every crime, Mr. Kuhse said, urging advisers to be wary of them.
At the top of the list: a sense of entitlement and an oversize ego.
Mr. Kuhse cautioned advisers about making seemingly unimportant decisions that could put them on the wrong path.
It is very easy for advisers to rationalize illegal behavior and not take responsibility for their actions, he said.
“We live in an instant-gratification society,” Mr. Kuhse said.
“I was a hamster on the wheel,” he said. “I always wanted more.”
Mr. Kuhse warned the audience about following his example and said that his goal is to reach the one person who might need his message.
His family's suffering was his greatest regret, he said.
“Income is never the definition of us,” Mr. Kuhse said. “All we take with us when we are done are choices and relationships.”
lkuykendall@investmentnews.com
