Narrow your appeal and choose the clients you want to serve

Founder of largest independent advisory firm in the U.S. tells Canadian advisors not to follow his growth strategy

Narrow your appeal and choose the clients you want to serve

The man behind the largest RIA firm in the United States has told advisors not to follow his strategy and do the opposite in order to create a growing, successful practice.

Thirty-six years ago, Ric Edelman founded Edelman Financial Engines, which now manages $250 billion in assets for 1.3 million clients. It’s at the top of the popularity pyramid for registered investment advisors, with people drawn to the fee-based advice model as they navigate this increasingly complex world.

Edelman built his business by engaging the mass media. He has hosted his own radio show for almost 30 years, written 10 best-selling books, hosted TV shows and organized thousands of seminars. But he told WP that advisors should not follow this path and that rather than be a broadcaster they should be a “narrowcaster” by choosing the clients they want to serve and becoming an expert in that field. That might be executives, school teachers, retirees, widows or plumbers, for example.

Edelman said: “My brother had surgery on his thumb not long ago by a surgeon who only operates on thumbs. Not hands, only thumbs! If you've got a problem with your thumb, he’s the guy to go to.

“I know advisors who will only serve airline pilots. There's an advisor I know who only serves employees of Marriott Corporation and his office is across the street from their headquarters. He knows their employee benefits inside and out, and their stock option programs and executive benefits. He’s highly successful because there are plenty of Marriott employees.”

While his company has been hugely successful, like the rest of us it had to adapt to the reality of the pandemic. Financially speaking, Edelman said the market crash in March was “scary” and the loss of life horrific. Those who were doing well going into the pandemic economically are doing better now but those who were struggling are doing even worse today. “It’s a tale of two cities," he said.

He added: “We had to change the way we do business. We had to work from home, we had to go online, and we had to make sure that we were able to continue serving our clients. Successful, large, well-established firms like ours were able to do this pretty easily and seamlessly.

“It raised challenges for sole practitioners who didn't have the technology or the foundation to be able to deliver and it reinforces the importance of why you should be working with a large established firm, who has the resources to help you deal with the kind of dynamic environment the pandemic proved can happen without warning and at any time.”