Bringing In The Knuckleball Pitcher: The Case For Differentiation

Arthur Ambarik, CEO, Perigon
Arthur Ambarik, CEO, Perigon

Affinity Teams That Service Target Sectors Can Showcase An Advisor’s Ability To Fulfill Niche Client Needs

Unlike most sports, there’s no clock in baseball. It’s about a unique moment – two down, the bottom of the ninth, a full count with a left-handed pitcher and right-handed batter with a slight wind blowing from left to right field – and the right strategy to address the situation.

Today, we face a similar situation within the wealth management industry – if a bit less exciting. The game’s rules are the same across every market, and access to best-in-class tools is nearly universal.

Firms offering holistic financial planning services may have once appeared as innovative as the infield shift (which is now banned) but that’s now considered table stakes for growth. While creating affinity teams to service targeted sectors is not new, the practice is gaining attention from firms that want to showcase their expertise and understanding of individuals with specific needs.

I asked leaders of some of our affinity practices at Perigon Wealth Management to understand why it might be the right time to call in our industry’s version of a knuckleball pitcher to foster growth and serve niche audiences.

Ambarik: Within the next few years, a significant percentage of American wealth will change hands, with women taking on a more prominent role in financial decision-making than at any other time in history. You have been working in this space for some time. Why did you build this practice in this way?

Mary Ballin, Wealth Manager, Perigon Wealth Management

Mary Ballin: I can vividly remember times early in my career when I was part of a team providing financial advice to couples and the wife was disengaged or left out of the conversation. I witnessed wives who were in the dark about finances when their husbands died.

When I decided to establish a niche practice, I thought about the financial advice my mother imparted to me and the advice I wanted to share with my daughter – be financially independent regardless of marital status. This foundational belief led me to be a staunch advocate for financial literacy among women – which is good advice regardless of shifts in wealth or major trends in the industry.

Focusing on women in transition just made sense to me. I pursued a Certified Divorce Financial Analyst (CDFA) designation to provide more expertise to this group of clients. Every year, I strive to learn more about the evolving financial needs of women in transition to best serve this growing market. It’s both a business and social imperative.

Ambarik: As an advisor based in Silicon Valley, was it a given that your practice would serve young tech professionals? And how do you advise clients who might be banking on a future premise of wealth?

Danny McAuliffe, Financial Advisor, Perigon Wealth Management

Danny McAuliffe: I didn’t set out to have an affinity practice, but as you noted, being an advisor based in the San Francisco Bay Area meant meeting a higher portion of clients working in the tech sector. Many were younger workers at pre-IPO firms, hoping for a liquidity event in the future. And, while there was no guarantee of how much wealth, if any, would be generated, these clients wanted to have plans to meet financial goals. This general situation requires specific skills that I’ve been able to accumulate over the years.

However, there is no one-size-fits-all solution, even if the clients are in the same industry, are of similar ages and have similar financial goals. Each client’s time horizon is nebulous, and liquidity may not materialize. Some financial advisors will only work with clients who have a certain threshold of household assets, my approach is to work with all clients in hopes of attaining their own personal threshold of wealth. I think that mission has helped me grow my practice.

AmbarikCatering to a specific group sounds like it could be rewarding but also limiting in terms of growth especially if the clientele is subject to market cycles or other industry challenges. How do you avoid these potential pitfalls?

Jeremy Paul, President & Partner, Perigon Wealth Management

Jeremy Paul: My practice serves a tight-knit music community. That has both reward and risk. A stellar reputation for service can lead to a steady stream of referrals and business growth. At the same time, one bad client experience can topple everything.

Sometimes, the challenges are beyond the advisor’s control. Artists, songwriters and producers at times change their business managers. Each business manager has their own relationships, making this business vulnerable if I do not have or cannot quickly establish a relationship with the new team of advisors.

The key is always to have a plan and network of relationships that account for these potential challenges. While more acute for a practice like mine, every financial advisor faces these risks and should take steps to mitigate them.

Ambarik: What are the downsides to affinity practice? Do you ever feel limited by your specialization?

Bill Rackley, Private Wealth Advisor, Perigon Wealth Management

Bill Rackley: Although I think specialization is the best, advisors might feel restricted by an affinity practice. Any highly specialized strategy could limit an advisor’s availability to work with clients outside the scope of the practice. This could limit any collaborative or cross-referral opportunities that could be otherwise beneficial. However, I’ve found these risks are easily outweighed by the ability to deliver high-touch, personalized and integrated wealth management solutions. That’s the best way to help clients with complicated and specialized needs reach their financial goals.

Personally, I think a streamlined affinity practice is wonderful, and I’ve enjoyed strategizing with individuals who are growing their assets alongside their unique compensation arrangements. The specialization is what makes us a better partner to have in that space.

Arthur Ambarik is CEO of Perigon Wealth Management, an independent wealth management firm.

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