As owners of financial planning firms approach retirement, some may decide to sell to an external buyer, while others may plan for an internal succession. Sometimes, this succession plan can include the owner’s child, providing an opportunity to keep the business in the family. At the same time, the business strategies that worked for the original owner might not be suitable or as successful for their successor, which can force the 2nd-generation owner to take a different path to ensure the firm thrives into the future.
In this guest post, Jason Siperstein, President and Wealth Advisor at Eliot Rose Wealth Management, outlines the range of (often unsuccessful) marketing tactics he tried in an effort to boost business after taking over his father’s investment management firm, and the pivot he made to provide comprehensive financial planning services to a niche clientele that has ultimately turned around the fortunes of his business for the better.
Gary Siperstein, Jason’s father, had built a successful investment management firm exclusively focused on managing portfolios of small-cap value stocks. But as market trends changed (with the performance of this asset class falling behind large-cap stocks during the 2010s) and clients entered retirement (often consolidating their investment management with 1 advisor), Eliot Rose started losing clients, eventually becoming unprofitable in 2016, the year Jason became president of the firm. To stem the outflow of clients, the firm tried a number of marketing strategies – from creating an off-brand Facebook page, to using print advertisements, and to buying paid referral services – most of which were unsuccessful. With revenue in a bad place, Jason found ways to cut costs liberally in order to stay afloat, saving the company approximately $200,000 annually by streamlining expenses from technology to salaries (including his own and that of his firm’s 2 long-time employees).
Jason’s next move was to shift the firm away from pure investment management by incorporating comprehensive financial planning for his clients. The firm first implemented an $85/month program for young professionals; this brought in new clients but did not generate revenue commensurate with the time required to service them. Jason then pivoted to offering financial planning services for those nearing or entering retirement, which required the firm to retrain its staff on the ins and outs of retirement planning. This move was more successful, and as prospects started to come in, the firm refined their ideal target client further to individuals within 12 months of retirement, who wanted planning and investment management, and had investible assets greater than $1 million.
Like other firms, the onset of the pandemic led the Rhode Island-based firm to shift to virtual operations, which opened the door to clients from other parts of the country, finding their way through client referrals and internet searches, and even from national publications featuring Jason’s content. With more confidence, the firm increased its planning fee incrementally over a 3-year period from $1,500 to $5,400. The firm is now getting more clients that fit their niche (with 1-2 ‘ideal’ prospects each month) and has increased its AUM from $55 million in 2016 to $115 million today.
Ultimately, the key point is that it is sometimes necessary to reinvent a business in order to thrive as time goes by. In Jason’s case, this meant being open to experimenting and making changes, staying tenacious and holding on to his sense of humor throughout challenging times, finding the right niche, and focusing on serving his firm’s ideal target client, which has turned a once-struggling practice into a thriving business!