With her background as an attorney and serial entrepreneur, Katherine Vessenes has long been noted as a compliance expert and business coach serving financial advisors. The author of three books, including Building Your Multimillion-Dollar Practice, Vessenes enjoyed a solid track record of helping advisory firms expand.
But in June 2011, Vessenes (left) and her husband, Peter, principals of the established Minnesota-based advisory consulting firm Vestment Advisors, did something that is quite rare among coaches: They put their principles into practice by starting their own retail advisory firm.
And the results have surprised even them. Setting up shop in Providence, R.I., a state where they knew just two people—their daughter and son-in-law, not suitable as clients—in just 18 months, the Vessenes achieved a critical mass of more than 100 clients, $750,000 in revenue and a growth rate fueled by unsolicited referrals. Some 30% to 50% of new clients are brought in by happy existing clients, suggesting that the business has rapid growth ahead, as referred prospects are "easy to close and easy to service."
While still a consultant, Vessenes has been devoting most of her time to her new business these days.
"I'm going to become my No. 1 client," she told AdvisorOne in a phone interview. "[Her strategy] worked even better than I ever dreamed it would work," she added, noting her plan to ease back into speeches and workshops over the coming year.
A key strategy Vessenes has long advocated, and now practices professionally—and which she describes as quite rarely followed by advisors—is treating their activities as a business, not as a practice.
"So few people do that," she says. "They think of [their firm as being] like a wealth manager with helpers. As a result their practices are not worth much—it's hard to sell them.
"To create a multimillion-dollar business, one needs to impose eight disciplines involving fiscal management, HR, administration or support, strategic planning, technology, sales, marketing and legal-compliance issues," she says. "That's when companies become efficient."
The first five of these are subjects Vessenes' husband is expert in, the latter three are her bailiwick. And of those three, effective marketing played a starring role in the success of their advisory practice.
"You have to have a marketing system that produces a steady stream of what I call 'derrieres and chairs;' it must be predictable. If you put in X dollars, you should expect Y results."
Another insight is that successful entrepreneurs take a businesslike approach to markets by testing them to see what works. "All marketing is trial and error," she says, adding that results can vary greatly depending on factors such as place and personality. "Things that work well in Peoria may not work well in Poughkeepsie."
"The key for us is we found a niche market that really suited us. Out of all the financial advisors—the thousands and thouands we have worked with, I've only known two that went out for a niche market."
That's a stark claim to make, but Vessenes strongly affirms that many successful advisors in good niche markets got there through luck—they "sort of fell into them," rather than testing them systematically.
In their Rhode Island-based advisory business, Vessenes tested two or three markets before finding the one that worked: young professionals with doctorate degrees, many of them affiliated with Providence-based Brown University.
