A few years ago, I completed the excellent 12-month coaching program “Building a World Class Wealth Management Business” with John Bowen at CEG Worldwide and I was left with the task of finding my niche.
It’s difficult for younger advisers to accept that they really don’t want everyone as a client. If you can fog a mirror, you’ll do, right? But it turns out that the most successful advisors around the world really do serve a narrow niche where they can demonstrate that they have an above average level of knowledge of the challenges faced by that particular community and, in particular, can empathize and personally relate to their clients.
What’s my niche?
Looking in the mirror one morning I pondered the question; “what’s my niche” when it hit me. Having moved from England to Ireland I had become what is known in International circles as an “ex-patriate,” a person who lives outside their native country.
Once that initial flash of inspiration hit, the rest, as they say, was easy.
The population of the Republic of Ireland is around 4.7M people and according to the last census, about one in five of them is a Foreign National.
Narrowing it down still further, about 100,000 are British and about another 10,000 are US Citizens.
As a former student of Penn State University (we are) and having spent 15 years as an Independent Financial Adviser in the UK my natural niche became US and British Nationals living in the Republic of Ireland.
More than 100,000 potential clients isn’t a bad prospect list. Of course, in practice, that’s too big so we also applied a minimum account size of €500,000 ($560,000)
The effect of having an account minimum was that, in practice, this restriction meant that smaller accounts would self-deselect resulting in our average account size now running at around €1.1M ($1.23M)
As I was already qualified as a Chartered Financial Planner in the UK, on completion of my Certified Financial Planner (CFP) designation I undertook a study tour of the USA and met with Mark Hebner’s IFA.com in California and Plan Corp and Buckingham Asset Management In St Louis Missouri.
This gave us the confidence that we could manage the intricacies of migration into and out of Ireland from and to both the UK and USA.
Why is identifying your niche as a financial advisor so important?
Providing a very narrow and defined service to a very narrow and defined niche means that you can identify where you can add the most value and also where your competitive advantage lies relative to the competition.
We have found that mass-affluent clients (net worth in the $2m to $5m) range are not particularly well served by the dominant providers (private banks, accountancy firms and stockbrokers) and we have had considerable success at winning clients from established Swiss and US Banks who simply could not provide the personalized service and integrated tax and investment planning.
For example, one client had moved his family from the UK to Ireland and one child who was born in the USA was a US citizen. We were able to create a plan which combined sophisticated tax planning for the client and his wife to manage their exposure to personal taxes during their lifetimes, but also to integrate an Estate Plan for the next generation.
Whilst the banks had implemented elements of this plan, they had not done so in a comprehensive or systematic manner, for example leaving some assets in Sterling when the client moved to Ireland leaving a mismatch between assets and liabilities which were now in Euro. Simply moving the low-risk cash and fixed interest investments from Sterling to Euros considerably reduced risk in the client’s portfolio.
We did a similar exercise for clients who were US citizens living in Ireland. Their US adviser, in common with most advisers in the USA, had a bias to US markets and the US Dollar. However, since the clients had moved permanently to Ireland and the domestic currency is the Euro, it is necessary to increase the exposure to International Equities and in particular to hedge the currency exposure of cash and fixed interest to Euro since holding US$ actually increases the risk profile of the portfolio.
Good financial planning doesn’t need to be complex in order to be effective.
As our business has grown, we have found that we are less-well placed to directly serve the needs of our niche, since as noted earlier, at over 100,000 potential clients, it’s just too large.
So, we are currently refining the niche still further and we are now serving the clients of other advisers who may have clients in our specialist niche and who therefore have a particular need for consultancy advice. In effect, our business has evolved from providing direct advice to consumers to providing consultancy services to other advisers.
If you have a client who is a Foreign National living in Ireland or thinking of moving to Ireland or moving from Ireland to the USA or the UK, please get in touch, we may be able to assist.
Marc Westlake CFP, TEP, APFS, EFP, QFA
Global Wealth is a specialist adviser serving the needs of Financial Advisers who have clients in the Republic of Ireland who are US or British Citizens