Starting a new financial planning practice can be a scary yet exciting time. One of the big challenges facing any financial advisor is finding initial clients and building up a business that can financially support itself. As a result, in the beginning, many financial advisors will take anyone who is willing to work with them. Yet the reality is that while this can create some growth at the start, often this can actually impede growth in the future, as a business without any clear focus and target clientele can lead to significant problems with efficiency.
In this guest post, Meg Bartelt of Flow Financial Planning, LLC recounts the evolution of her virtual fee-only financial planning practice, from starting in May of 2016 with a focus on “working mothers in the tech industry” and growing into her current focus on “early to mid-career women who are employees in the tech industry”. Additionally, Meg notes the benefits of starting out with a niche, such as easier design of process and deliverables (as everything can be designed around a single clientele), easier referability (as clients actually know what’s unique about you and who they should send to you), increased confidence (as working with a community of people you know a lot about can help you develop assurance in the value you provide to clients), more enjoyable client relationships (as working with people you know and like will make the work more enjoyable), and more effective professional development (as she can ignore many of the topics that a generalist must focus on, while specifically honing in on topics that are meaningful to her clients)!
Ultimately, every firm has their challenges in the early days and Meg’s firm was no exception, but by focusing on a niche and marketing it aggressively – including sufficient investment in a quality online presence that resonated with her target clientele, efforts building SEO through her blog, networking through the right online communities, and leveraging centers of influence that many advisors traditionally don’t focus on (e.g., resume writers, career coaches, and people who are “hubs” in the tech industry) – Meg was able to reach the tipping point at which her efforts paid off, and now she has an entirely virtual firm on pace to likely break $150k in revenue in just her third year of operation. And Meg has done all of that while bringing on 26 of 31 clients in her niche, and adopting a policy of only accepting clients in her niche going forward, as she has seen the efficiencies gained from growing a firm through niching from the start!
(Michael’s Note: Meg Bartelt, CFP®, MSFP, is the founder of Flow Financial Planning, LLC, a virtual, fee-only financial planning practice that specializes in helping women in tech cultivate financial and professional strength. She lives in Bellingham, WA with her two daughters, a husband, and Julia the Dog. She always carves out time to do yoga, hike, and teach her children big words. Prior to becoming a financial planner, she worked as a technical writer for 10 years in the San Francisco Bay Area. You can find her on LinkedIn, Twitter, at email@example.com, and every Monday morning drinking a double shot short latte at the local coffee shop.)
Two years ago, on the cusp of my 40th birthday, I launched a fee-only, virtual financial-planning firm. I had no clients and no income. What I did have was two small children, a husband who had just quit his cushy job to become a stay-at-home dad, and, importantly, a clear idea of the kind of financial planning I wanted to do and the kind of people I wanted to work with.
This is the story of the last two years, and in particular, how focusing on a niche (from the very beginning) helped me grow my firm. Please know that this is simply my story. I am not a marketing consultant or a business coach. But I got some things right along the way.
Note: I use “niche” and “target market” interchangeably to mean “the community of people with shared challenges, opportunities, and identity, whom my firm caters its everything to.”
The Evolution of My Niche
I officially launched my RIA in the state of Washington on May 9, 2016, and had a niche from the start.
I picked a niche by going through a worksheet from advisor marketing consultant Kristin Harad. It had me focus on strengths and alliances I already had: experience in other professions and industries, my stage of life, my hobbies, my existing communities, etc.
I launched my firm with the niche “working mothers in the tech industry.” I was a working mother. I had started my career in the tech industry. And as you can probably imagine, there are all sorts of challenges and opportunities specific to each part of that niche definition.
For working moms, time is really constrained, so I would offer flexible meeting times, and I would craft a process that emphasized efficiency and brevity. For moms, they’d be concerned about college planning. For a person in tech, they’d have to deal with stock options.
Also, I had a killer tagline: “Because who wants a third job.” Am I right?
How it Changed
Nowadays, my niche is “early to mid-career women who are employees in the tech industry.” Why did it change? Well, it turns out that getting more specific is not necessarily an improvement when defining a niche.
Although “working moms in tech” is more specific than “women in tech,” there wasn’t much synergy between “working mom” and “in tech.” Sure, the Venn Diagram looks wonderfully targeted with that overlap of “working mom” and “in tech.” But when I started looking specifically at that overlap, I couldn’t find issues that were unique to “working moms in tech.” They were either “working mom” issues or “in tech” issues.
My first clue was that I had trouble figuring out blog posts to write that spoke to that overlap audience. My second clue is that my first several clients weren’t in that niche. They were, for the most part, simply women in tech.
So, I changed my niche to “women in tech” within the first six months, and since then, I have further refined it to “early to mid-career women who are employees in the tech industry” (although I still just say “women in tech” in most social situations). This community has:
- A shared identity (hell, they have their own hashtag: #womenintech)
- A shared set of professional challenges (hoo boy) unique to them, and
- A shared set of opportunities in their industry.
How it Solidified
I now only accept clients who are in my target market. (Okay, I make a few exceptions for people I really like.) Why am I so picky?
In the aftermath of the passage of the 2017 tax law, I heard a lot of colleagues asking “How are you advising your small-business clients on the 20% deduction on pass-through income?” And I realized I hadn’t thought about that, nor many of the other items in the new tax law. I felt overwhelmed and inadequate.
It then dawned on me, “You know, Meg. Dear overwhelmed, stressed-out Meg. If all your clients were women early-to-mid career in tech, then you’d only need to deeply understand a tiny fraction of the new tax law!” The same logic applies to any financial-planning topic. I only have to understand it to the extent that it affects my niche.
Call it lazy. Call it shrewd. But that’s how I decided to focus only on my niche. It narrowed the scope of what I needed to know, and made it easier to become an expert in the things that matter to my niche.
Benefits of a Niche
When I started working with a business coach in late 2017 (Master of The Right Question, Elizabeth Jetton), one of the first things we clarified was my firm’s purpose. Having a niche was essential to creating a meaningful, helpful purpose.
My firm’s purpose is:
Educate and empower women in tech. Help cultivate career success in a challenging industry. Translate career opportunities into financial strength and, further, personal choice.
A purpose isn’t the same as a niche or target market. But clearly they’re all related. I know there are a million ways to get clarity on the who, what, and why of your business. The notion of purpose works for me.
I have it written in bright green on the giant whiteboard in my office. And I literally turn my head and look at it and read it when I have a big decision to make.
Being able to return to that purpose has made my business simpler and more effective in many ways. If something doesn’t serve my purpose, I don’t do it. Seriously, This Is Awesome. Everyone should have such a powerful filter.
Here are some ways that a clear niche and a clear purpose have made running my business easier, more enjoyable, and more effective:
Easier Design of Process and Deliverables
I design my process and deliverables to work well with the women-in-tech community.
- Emphasize relationship over transaction. You know those stereotypes of women liking to be more conversational, and to establish understanding and trust and relationship? So true! I spend a lot of time just talking with my clients, letting the conversation kinda go where it wants.
- Use modern, well-designed technology. I get happy comments about my use of Zoom for video conferencing (“my company just switched to Zoom. I love it!”). Some clients, unbidden, wax complimentary about my RightCapital financial planning software (“It’s so clean and the interface is so intuitive!”). Almost all of them coo over my use of mindmaps in meetings (“I love that you use mindmaps. This is so cool.”)
- Focus on career development resources. I’m not a career coach or counselor and don’t pretend to be, but I regularly ask about client’s career aspirations and what they’re doing to grow their careers. I have cultivated relationships with career coaches and resume writers and many members of the women-in-tech community, so I have those resources for my clients.
- Pay attention to software security. I come from the software-security side of the tech industry, and I frequently get questions about the security of my tech tools. I not only review all the security measures and policies of the software I use, but I also list the software and their security measures directly on my website.
- Give polished deliverables. When you have several clients who are UX designers, you know you’d better up your game in the design department. This includes my website, all the way to my actual financial planning document (which I paid my designer to Make Lovely).
- Embrace the iterative process. If you’re involved in software nowadays, you know about Agile development (minimum viable product followed by endless, iterative improvements) versus the old waterfall model (get it all planned out ahead of time, and then execute in one giant effort). I often describe my process in these terms, and it helps my clients understand and appreciate the value of the constantly evolving process of financial planning and of my service.
Getting referrals in, as well as referring out to other financial planners, has become delightfully simple as I’ve gotten more focused on my niche.
Referrals from colleagues: In my professional network (XY Planning Network), I am known as the planner who works with women in tech. So, I get the occasional referral from other advisors who, say, may be talking with a 35-year-old woman struggling with her incentive stock options.
Referrals from clients and centers of influence: Soon after I launched, I spent 20 minutes on the phone helping out the younger sister of a woman in tech I’d “met” in an online forum. Turns out this woman is a women-in-tech hub, and has since referred two well-qualified prospects to me, even though she’s not a client herself.
Furthermore, my last 4 client and COI referrals have all been in my niche. (For context, I’ve only had 7 referrals total since the beginning on 2018, as of mid-June.) Just yesterday I spoke with a prospective client referred to me by one of my best clients. This prospective client is a mid-career woman in tech, and she said “yes” before the phone call was out (before she even knew the exact fee, in fact). When I asked her how she decided to work with me, she noted the high opinion that two close friends had of me. (Those two friends were the above-mentioned client, and a former prospective client who decided not to work with me because of cost, but still liked my style.)
Referrals out: I have become more comfortable telling prospective client outside my niche “I don’t think I’d be a good fit for you. But you know who might be?” And then I send them to my colleagues (that is, other advisors besides me) who would be a good fit. Everyone’s happy, and the profession scores one in the “Trustworthy Not Money Grubbing” column.
I didn’t get my CFPⓇ certification until December 2016, seven months after I launched my firm. In the past, whenever I daydreamed about starting my own firm, my lack of CFP marks was prohibitive, psychologically. (Even though I’ve been in the industry for about eight years now, gaining three years full-time experience by working part-time because I had two young kids at home is a looooong road.)
As soon as I decided on my niche, a community of people I knew so much about, both personally and technically, I knew I could help them, CFP certification or not. As just one example, understanding the ins and outs of company stock options distinguishes me from most financial planners. And that’s something I knew from the beginning.
More Enjoyable Client Relationships
I have clients outside my niche. And I certainly like these people and enjoy these relationships.
But I know women in tech. I understand them. I used to be them. And that makes my conversations with them and working relationships so enjoyable.
They’re also enjoyable because I miss parts of the tech world. Not enough to want to work in it again, but through my clients I still get to experience some of the parts I really like. Like keeping abreast of new technology or cultural trends. Not to mention having a good reason to take trips to my old stomping grounds in San Francisco, or visiting Seattle a few times a year to see clients.
And because I think I might be allergic to formality, I revel in working with people who are cool with my jeans+fleece wardrobe, occasional cursing, and irreverent pop-culture comments.
Less, But More-Effective Professional Development
“Will this particular financial topic affect a woman working as an employee in the tech industry? No? Then screw it.”
That is how I decide whether I need to spend my time learning about a particular financial planning topic. I cannot tell you how much time and angst it saves me. (I literally can’t because I don’t know, but I suspect it’s a lot.)
Topics I spend my time learning:
- Effective communication
- All things stock compensation
- Two-step Roth contributions
- Negotiation techniques (to guide my clients)
- Career development
- Strategies for reducing concentrated holdings of (company) stock
- Variations on 401(k)s
- Spending exercises
- Behavioral finance
Things I don’t spend much time learning:
- Social Security Strategies
- Medicare Planning
- Intricate estate planning strategies
- How startup co-founders should split equity
- Executive-compensation plans
Working with Non-Niche Clients
Until quite recently, I took all comers as clients. My marketing was effective enough that many of them were in my niche, but not all of them were.
My one “ace in the hole” was that I’m an alumna of Wellesley College, whose all-women alumnae network is, how shall I say it, the bomb. I participate regularly in Facebook conversations with that community, and got many non-niche clients there.
As I have gotten busier (one might even say “overwhelmed” if one were being uncharitable) in my firm, I want to continue to provide great value to my clients, but with less time and effort. How do I do that? Have clients who share all the same concerns. I only have to know one set of information to provide great value to all of them!
While you’re busy trying to figure out how the new pass-through 20% income deduction works for small business owners under the new tax law, I am blithely ignoring it and focusing only on what matters in my niche, which includes the higher AMT exemption, 83(i) election, how high-income earners in CA and NY are screwed by the $10k limit on state income and property tax, and how we can use company stock and annual “bunching” to get more tax benefits for charitable contributions.
As it turns out, in April, three clients told me they no longer needed my services. This would usually suck for an advisor with only about 30 clients. But it pleased me oddly much. To be clear, they are all lovely people whom I’d helped to a greater or lesser extent. But none of them were in my niche. Eventually I would have wanted to transition them to another advisor so I could have a more distilled client list. Now I don’t have to go through that uncomfortable process!
And I do seem to be developing, quite unwittingly, a second niche of 40-ish-year-old single women lawyers. Not in tech, to be sure, but personality wise, I love these women.
Marketing with a Niche
From the beginning, I was focused on women in the tech industry, and there simply isn’t a hot tech market in Bellingham, WA, where I live. So, I had to run a virtual practice. Combine that with working with women in the tech industry, and I knew I had to have a strong online game.
To that end, I spend a lot of effort, time, and/or money on a few things: my website, my blog, and online communities (primarily Facebook). My marketing “plan,” as it were, involves many other things, but they are all secondary.
As I believe Katie Brewer, another planner who runs a virtual practice, once commented, “my website is my office.” (I’m probably paraphrasing.)
I nickel-and-dimed every other aspect of launching my firm, but I spent good money and a lot of effort and thought on my website. I have gotten a lot of compliments from fellow advisors, prospects, and clients. And, well, my website pretty much rocks. No false modesty here. Another thanks to my amazing designer, her process, and her skill. (The work I got from my designer, Karin, would now cost $5,800. You get a website, a thorough and helpful process of establishing brand identity, a bunch of marketing collateral, etc. Her website describes it in detail.)
I am a big fan of content marketing. Because I enjoy writing and consider myself good at it (nod your heads obligingly, please), I had a weekly blog from the beginning.
My blogging has definitely improved since the first post. I gradually found my voice and a rhythm over the course of many blog posts. One thing that hasn’t changed is that I have tried to write articles of particular interest to my niche. My first blog post was entitled “When $200,000 is just middle class” and talks about living in a really high cost-of-living area, which all of my clients do.
As my firm has gotten older, my niche has evolved and gotten more specific, and I’ve had more exposure to clients and prospects and the women-in-tech community in general. With that exposure comes a better understanding of what questions and concerns they have. So, writing the blog has gotten easier, because I simply answer the questions or address the concerns that I hear about so often.
I really have no idea how big the audience for my blog is. One of my you-could-call-it weaknesses is that I’m not good with metrics. But I consider my blog to be useful in perhaps a nontraditional way. I don’t really expect anyone to simply find my blog posts randomly (though that’s starting to happen more and more; just google “early exercise stock options” and be prepared to be impressed! I know I was).
Instead, when I see questions being asked—in Facebook groups, by a prospect—I “push” out a blog post I’ve already written about that topic. So, while tons of people might not read the blog post, at least I know that some of the people reading it are exactly the right audience.
In the last six months or so, I’ve also started recording a 5-minute video every month, with the idea that some people prefer videos to blogs. It definitely attracted different attention, and it’s fun to do. (Behold, it is not a snazzy product.)
I spend several hours a week writing a blog, and I’ve missed only a few weeks in two years.
The Right Online Communities
I do not have the option of having “1000 cups of coffee” to get my name out there. So, how else can I get in front of potential clients?
I find where they live online.
Thankfully, the women-in-tech community and identity has really exploded in the last few years, and I have, luckily, been able to piggyback on that growth.
I joined my alumnae group’s Facebook page for women in tech. I also happened upon a new group called Tech Ladies®. When I joined their Facebook group in mid-2016, there were maybe 500 members. Now there are about 30,000. In addition to the usual Facebook conversations, they also allow me to give webinars to their membership.
I actively participate in these forums. I know there are metrics like “Provide value eight times for every one time you make an ask.” I haven’t bothered to keep track of that because all I do is answer people’s questions helpfully. Eventually some of them find their way to my blog, my newsletter, my website, my free consultations. Because there is a lot of interest in the women-in-tech community about financial issues, from investing to negotiation to equity to 401(k)s.
Centers of Influence
I don’t waste my time trying to cultivate relationships with every estate planning attorney, accountant, and insurance agent I deal with.
I do, however, make an effort to get to know professionals who I think could actually refer prospects to me, or who might be a helpful resource for my clients. I focus on these COIs:
- Accountants who specialize in the tech industry
- Resume writers
- Career coaches
- Attorneys who specialize in prenups
- Attorneys who specialize in stock compensation
- People who are “hubs” in their profession: they are really well connected and while they might not be my client, they know people who would be a good fit.
Through my membership in XY Planning Network, I was given the opportunity to write for Kiplinger. I have not gotten many clients or much interest as a direct result of Kiplinger, but I think it gives me credibility and it sure helps my SEO (which is pretty good).
I did respond to some HARO-like (Help a Reporter Out) requests for a while, to build web presence and credibility. But as I got busier and had developed some exposure and clients, I got increasingly hard-nosed about only answering questions for a story if the story was well targeted at my target audience. I have no interest in participating in “how to improve your credit score!” or “how much should you save by the age of 30?” articles. They’re a dime a dozen, and my target audience doesn’t find anything special about them.
To more specifically target my niche, I sought out publishing for Women 2.0, a self-described “global brand for women in tech, working to create a society where gender parity, diversity and inclusion are the norm.” Sounds like a good fit for me!
Thanks to a fellow Wellesley alumna, I got my first speaking engagement at Microsoft, to a women’s group. I wouldn’t say it was horrible, but it was definitely not good.
Since then things have improved. I hit the motherlode when I applied to speak at the 2017 Grace Hopper Celebration of Women in Computing, at the suggestion of a former engineering manager of mine. GHC is the largest conference of women technologists in the world. 18,000 people attended last year. And I think I was the only speaker talking about finances (private-company stock options, if you’re interested).
Thanks to that engagement, I ended up this year accepted to speak at GHC again, but this time on a panel with Christine Benz of Morningstar, the CEO of Ellevate Network Kristy Wallace, and two muckety-muck female managers at Oranj and Personal Capital. The Panel is “Money is Power: How Technology Can Make You A Better Investor.” May I just say, whoo!
And Then Eventually, the Marketing Tipping Point
Earlier this year I got a slew of well-qualified prospects from an article Ron Lieber wrote in the New York Times. Go ahead and search this article for the word “another.” Go ahead, there’s only one use. There it is!
… another specializes in helping women who work in technology companies that have not yet gone public.
If you follow that “another” link…voila! My website. I’m still getting prospects who reference that article.
I didn’t even know about this article until a colleague pointed me to it. Mr. Lieber hadn’t reached out to me. But clearly he was somehow aware of my specialty, and I have to believe it’s because of my active social media presence. This article told me that I’d been doing the content marketing, social media thing long enough and well enough that other people are now doing my marketing for me.
The Downside Of A (Virtual) Niche
I suspect it’s easier to get clients initially if you can do face-to-face networking. It’s easier to trust someone after meeting them once in person, than it is after meeting them once online.
So, eight months into my firm, I had just five clients and not a lot of prospects. It was dark days. (Figuratively and literally, as it was January, and I live in the Pacific Northwest.)
Although I cannot know why I didn’t grow faster, I assume it was because I have a virtual practice, not because I have a niche. If I lived in Seattle or San Francisco, I would have been tripping over women in tech every day.
At month 10, though, things started to improve, and by the end of year one, I was confident about growing the firm.
First, a few notes on my fee model. In the beginning, I charged $150-$250/mo for purely financial planning, and a low 0.50% for investment management, which was an optional, second service.
In my 2nd year, I changed to a flat annual advisory fee, which covered a unified financial planning and investment management service. The fee started at $4,500/year for a single person and $6,000/year for a couple, with add-ons for complexities common in my target market (stock compensation, rental property, stock concentration, etc.). I do not impose an annual commitment, I do not charge an upfront fee, and I bill my clients monthly. (And for those of you wondering, not a single client has stopped paying before a full year is out.)
As a side note, as soon as I more than doubled my fees, it seemed like the well-qualified-prospect spigot turned on at full blast. It seems like people interpret higher fees as “wow, she’s really worth working with!”
A short list of metrics to support all this “niches are helpful” talk:
- # of clients (June 2018) = 31
- # of clients in niche (June 2018) = 26
- 1st year revenue (May 2016 – April 2017) = $25,901
- 2nd year revenue (May 2017 – April 2018) = $95,582
- Projected 3rd year already-recurring revenue (May 2018 – April 2019): $142k
Some notes on how I calculated my projected revenue: I took all the clients who had signed an agreement as of June 21, 2018 (when I’m writing this), and calculated how much income I’d receive from them during these 12 months. That income could be less than their full fee if they don’t start working/paying until June or after (remember I have a waitlist of a few months). This does not include any projection of as-yet-unsigned income from new clients. Realistically (ideally) my third-year revenue will be significantly higher, as I hope to continue bringing on one new client each month (which could bring third-year revenue to $157k or more).
Where Am I Now?
Things are good now.
- I hired a half-time administrative assistant earlier this year, and a very part-time contract paraplanner last October.
- I’m taking one new client per month, and usually have a waitlist 2-3 months long. I could take on more clients, but I’m growing well, and this pace allows me to enjoy myself more.
- I have a steady drumbeat of qualified prospects (though still more unqualified than I’d like).
- I am no longer living on savings. As I am the only source of (earned) income in the family, this is a major accomplishment. I’m earning something resembling a real salary again!
A niche is not a panacea. My first year sucked. Having to prove myself “online” was a long, hard slog. Growing this business is still stressful and still more work than I can fully handle sometimes.
But, my goodness, is it better than the alternative. I have a pretty clear path with a pretty clear purpose, I can enjoy my life outside of my work, and I’m confident that I can grow this firm into whatever I want from here.
Do I have any regrets about the path I chose for my RIA, pursuing a niche from the start? To abuse the romance of Edith Piaf, je ne regrette rien. I have made plenty of mistakes, though I don’t regret my niche at all. I do wish I’d raised my fees earlier, but I had to have the experience in order to get the competence and confidence to do so. There was no accelerating that process. In the meantime, I haven’t screwed anything up royally. Everything else was a necessary part of the journey, and it prepares me to continue making mistakes, rectifying them eventually, and improving along the way.
When it comes to running a business like mine (in particular, one that operates virtually), my biggest piece of advice is to accept that it takes time to build the (niche) business. Your colleagues with local practices might be signing on clients left and right. I know mine were. You have to find a way to Just. Keep. Going. with content marketing (video? blog? podcast? doesn’t matter, really) and targeted, relevant social media participation. I did, and now, two years later, I have that momentum. I almost think my marketing and prospecting efforts are easier now than it would have been with a local, in-person focus.
In general, I hope any aspiring firm owners out there can appreciate, from the beginning, how hard this journey is going to be. It’s worth the effort, but you need to put into place schedules (I go to a coffee shop every Monday morning), practices (an exercise routine, say), and people (I have a supportive husband, a therapist, a study group, and so on) who can support you along the way. And if you end up crying hopelessly for a week at Month 8, trust me when I say “I feel your pain.”
So what do you think? Have you experienced efficiency benefits from niching from the start? Do you wish you would have developed a niche sooner? What advice would you give to a financial planner launching a new firm? Please share your thoughts in the comments below!