Special Treatment
The universe of financial advisers has within it a number of measures for determining success. In many instances, the success measures of a financial adviser will be in concert with the philosophy of a parent organization or a broker/dealer—and in some cases not.
“Success” for the financial adviser community is constantly defined by “others” (employers, regulators, legislators, etc.). However, personal success for you as an adviser might be reflected by your own goals for your team or firm, i.e., only accepting clients that fit a specific model.
Over the years, I have learned there is a consistent trait that runs through the small segment of advisers who have been recognized as high achievers: specialization. When you consider the limited pool of financial advisers who have been recognized as top-decile performers, you cannot help but notice that each of these individuals is focused on just a few aspects of their business, which in turn supports their entire model for success.
The Need
As the U.S. Congress and regulatory organizations continue to “tinker” with the private retirement system, there is no shortage of opportunities for specialization. The Pension Protection Act (PPA) alone has opened the door for investment specialists in qualified default investment alternatives (QDIAs), investment fiduciaries, target-date investing, and fiduciary advisers. Pre-PPA opportunities still exist in the areas of employee education, plan design, exchange-traded funds (ETFs), retirement income planning, executive compensation—and the list goes on.
Specialization can serve as your entrée to many plan sponsors that you might never meet otherwise. For most financial advisers, the topic or area where you choose to specialize will not be your sole business focus. Ideally, the topic that you choose as your area of specialization and the knowledge that you bring to the topic should position you as the local expert in your city or region for questions or seminars. Your goal should be to become the most knowledgeable individual in your state, or even a nationally recognized resource within your specific area of specialization. This will cause plan sponsors, vendors, and segmented service providers to seek your wisdom and guidance on the topic. Although being known as the expert will lay the groundwork for future opportunities, it is important that you manage the extent to which you offer your services to nonclients. Whether that means a cap on time spent, or a fee, is up to you.
The Opportunity
One of the best methods that I have observed for making specialization work within a financial advisory practice is by choosing initially to share your knowledge with anyone who is seeking it. Help those who seek your guidance. That word will spread. Help plan sponsors. You will not land every plan sponsor you help as a new client. By possessing the expertise of a specialist, you do not need every prospect to become your client.
Be careful, however, because, as the sought-after specialist, you may need to be more selective with your time. Your decisions may become “Who do I have time to see?” or “Who will I accept as a client?”
Vitally important to the success of your journey toward specialization is that you seek complementary strategic partners who will benefit from your knowledge and the specialized expertise that you have to offer them. Make your strategic partners successful and your success is in close proximity.
Plan sponsors, eligible employees, and plan participants need assistance. Develop your expertise and become the go-to person for all who are seeking such targeted information.
Steff C. Chalk is Founder and President of CHALK 401(k) Advisory Board, with a client list that includes corporations, nonprofits, and governmental units. A judge for the PLANSPONSOR Retirement Plan Adviser of the Year award, and a faculty member of the PLANSPONSOR Institute, he is also the co-author of How to Build a Successful 401(k) and Retirement Plan Advisory Business.