Women in transition

Building a practice around life-changing events

Mar 13, 2013 @ 9:14 am

By Andrew Osterland

Jennifer Failla was learning the ropes as a Merrill Lynch & Co. Inc. adviser in 2006, she felt that she was missing something. She had clients, but she didn't have a sense of direction — a path to follow by which she could expand her practice.

Then Ms. Failla spent some time shadowing an adviser who concentrated his practice on doctors and decided that she, too, needed to focus her efforts.

“I wanted to be an expert in something,” Ms. Failla said. “I needed some way to differentiate myself.”

Ms. Failla spent time researching trusts and estates and looked into the financial issues that female executives face, but nothing “grabbed” her. It wasn't until she starting interviewing divorce attorneys that she felt that she had found her calling.

As the owner of a registered investment advisory firm, Planning Through Divorce LLC, Ms. Failla now focuses on women heading into a divorce or those recently out of a divorce. All her new business comes from referrals from existing clients and divorce attorneys with whom she has developed relationships.

In the ultracompetitive world of financial advice, developing a niche can be crucial to building a sustainable practice. The benefits of a narrower focus can accrue both to the revenue — niche businesses tend to grow faster than general practices — and expense sides of the practice.

“I think it's imperative for financial advisers to establish a niche,” said Tim Welch, president of advisory consultant Nexus Strategy LLC.

“By definition, most advisers are local businesses confined to a geographic location,” he said. “They have to differentiate themselves to make a go of it.”

When an adviser is working for a similar set of clients, he or she is able to standardize operations better. With clients facing similar obstacles and having similar objectives, advisers can develop specialized knowledge that they can use across their books of business.

Financial plans and investment proposals are simplified, and with clients facing the same key issues, advisers can provide more-effective service.

“The real risk is not having a niche,” Mr. Welch said. “An adviser who is a jack-of-all-trades is a master of none, and that leads to inefficiency.”

In terms of the market for serving female clients, “women” is not a niche. Advisers need to narrow their focus to specific groups of women, said Heather Ettinger, managing partner at Fairport Asset Management LLC.

“Data show that the financial industry is one of the worst in terms of meeting women's needs,” she said. “Advisers try to clump women all together. I made the mistake of catering to all women initially, but if you're going to attract female clients, they need to know what problems you're going to solve for them.”

Ms. Ettinger has focused her efforts on female executives. She has steeped herself in the intricacies of executive benefit plans and their tax implications, and has evolved into a go-to resource for her clients beyond just their investment and financial planning needs. She also helps with career development by organizing lunches and seminars that allow professional women to network.

“We help our clients connect with other executive women who can help with their careers,” she said.

Female executives also tend to have more family issues to deal with than their male counterparts. Ms. Ettinger said about 30% of single female executives are supporting another family member in the next generation. And many are part of the so-called sandwich generation — people taking care of both children and parents.

“Women are more multidimensional than men,” Ms. Ettinger said. “They're juggling more balls at any point in time.”

Although women might naturally have a better understanding of the needs and stresses faced by other women, male advisers can serve niches of female clients effectively.

Raymond James & Associates Inc. financial adviser Jason Llewellyn said when he worked as a certified public accountant in the investment practice of a national firm, he frequently worked through divorce situations and realized that women were in need of help.

“Men are more likely to have their advisers and insurance agents,” he said. “I realized there was an opportunity to act as a [chief financial officer] for women in difficult situations.”

Mr. Llewellyn has since become a certified divorce financial analyst, and he and his partner, Dave Hajek, now specialize in women in, or recently out of, divorce proceedings.

Divorced women are probably the largest and most lucrative niche to concentrate on in the female market. There were an estimated 15.7 million divorced women in the U.S. at the end of 2011, according to the 2011 American Community Survey. Not including California and five other states, there were an estimated 877,000 divorces in the U.S. last year, according to the National Vital Statistics Reports produced by the Centers for Disease Control and Prevention.

With the U.S. divorce rate now above 50%, the flow of potential clients keeps renewing itself.

Widows are another large niche of clients in similarly difficult circumstances. In 2011, there were 11.9 million widows, compared with 3.1 million widowers, according to the American Community Survey. With the baby boomers aging, those numbers will increase over time.

The development of a niche doesn't happen overnight, however, and there's a risk that too narrow a focus could limit growth opportunities for an adviser.

“You can't just wake up one morning and say, 'I'm going to specialize in female executives — or female doctors,'” said John Anderson, head of practice management solutions at SEI Advisor Network, which provides a range of services for a network of financial advisers. “You have to do your homework to understand the obstacles your clients are facing and how to narrow down the lines of clients you work with best.”

While advisers developing their niche can always take on clients outside an area of intended focus, the ultimate goal is to specialize — which is usually tough at the outset.

“You have to be patient and you have to be able to sustain yourself, because it doesn't work out overnight,” said Sylvia Guinan, an adviser with Wells Fargo Advisors.

She started as a generalist at Smith Barney and began to focus on advising woman executives. Her practice now encompasses a broader category of “women in transition.” That can include female executives contemplating — or in the midst of — a career change, but it also includes divorced women and widows.

Ms. Guinan has had to master learning curves for her different groups of clients and to cultivate relationships with divorce attorneys, psychologists and divorce coaches as sources of referrals, but she said the effort has been worth it.

“I'm helping people through difficult times in their lives and it's very rewarding,” she said. “You just have to be willing to take the risk of saying, 'I work with women in transition.' If you give a clear, concise picture of what you do, it's easier for people to determine if someone might fit with your practice.”

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