This is a transcript from the Marketing for Advisors Podcast. To listen, please visit mfapodcast.com and every episode is easily available and free to listen.
Don Anders: Hello, this is Don Anders and welcome to marketing for financial advisors. Very excited about this episode, I have a longtime friend of me, Daniel Rey. He focuses business very similar to how we started out and we still focus on with public sector employees. I just want to pick his brain, have a conversation about what it's like to work with a niche market to focus on one area and what that can provide to those people, but also what can provide to your firm and cost of marketing, those types of things. So thank you for joining us, Daniel.
Daniel Rey: I'm glad to be here. This has been we're about two decades in the making, right?
Don Anders: Yep. We've been friends since we were teenagers and I got in the business and then Daniel got in the business. It's been great.
Daniel Rey: We used to walk the same streets the window that I'm looking outside right now from your office and talking to you. We used to talk about one day having an office just like the one you have right now here, that our kids going to the school that they are going to right now. It's neat to see it become a reality. So thanks for letting me be a part of it.
Don Anders: Yeah. Hard work. Well, good. So just want to talk about, and tell me about your practice. I know you're more focused on, a lot of times people try to be everything to everyone and try to just do general events to what we call g-pop, general population. Tell me more about your practice, what you focus on in the daily basis, what your marketing will typically look like, because most people they'll do a seminar or they'll do a radio show, they'll have some leads and they go from there. So for you, since you work with public employees, what does an average week look like from an appointment standpoint to a marketing standpoint?
Daniel Rey: Well, first off this network of advisors that we have, and that we chat with, the more insight I have into other folks' practices, the more I realize how different our approach is. And one of the key differences is when individuals do a public seminar, they're getting people from all walks of life, whether they were CEO of a company, inherited money, or worked at a tech firm.
When you work in a niche marketplace, 90% of the people that you meet with have very similar concerns, needs situations and benefits. So rather than approaching it as an advisory firm or a planner standpoint, we're really coming at it and focusing on their benefits that pertain to their retirement and showing them how everything fits into that picture. And when you think about the public sector, yes they all fall within the same category, whether they're an educator or a police officer or firefighter, but they're all at different points of their life. So you can go in to, let's just say a school, for example, and there might be 200 people that you have access to work with. A large percentage of that will be folks that are probably in their twenties, just starting off. And then others are in later stages of their life, and each one demands it or requires a different area of focus.
Don Anders: Do you work with people in their twenties and also people later on, or do you focus on just when they're about to retire?
Daniel Rey: When I started off, I think like everyone else, I worked with anyone and anyone who was willing to listen to what I had to say. And it was really neat because you end up getting a diversified book of business because we plan on being in this long-term. So we want to have clients down the road and working with folks who are just starting off ensures that.
Don Anders: And also and when you first started doing 403bs same as me, which is similar to a Medicare policy where you sign them up, you get paid a residual as long as they keep it and that's it. And then eventually they'll need to retire. They'll need other services, they'll need life insurance. So it doesn't pay a lot for those younger people, but it pays a nice residual for a long time and they need the help. So what a lot of people don't realize that they think, "Well, I have a pension and social security, I'm fine." No, you need to have other money saved up for retirement. So it's really nice to be able to help somebody in on that as well. So you used to work and do everyone. Now do you focus mainly on people about to retire from that system?
Daniel Rey: Yeah. So for me, it's really focusing on people who are in the critical years of retirement planning. The earlier you are, maybe you're focusing on debt, maybe you're focusing on the family, but there becomes a certain point in your life where if you don't start planning at that time or within that range, things can get very difficult moving forward. I love solving the bigger problem. So I wouldn't necessarily turn anyone away. My focus is on those folks who are really determined to have a sound retirement plan in place, but this gives you that the ability to do that.
And when I think about why I started, the concept or notion of having that residual income was a big factor. To have to go to work to get paid is a very difficult thing to do once you fully understand and grasp that concept. So getting my career off the ground, working with everyone, helping them establish something that they absolutely needed. I mean, really most folks that they just retired with their pension alone, it wouldn't be enough to sustain their lifestyle. So they had no other choice, but to start putting money away.
Don Anders: So now that you work with those people who are more geared towards retirement, so you do seminars, but more towards them. Do you go in and talk with the employers? Do you do speeches at the unions? What's your typical way that you'll get a client?
Daniel Rey: So that's really special because a lot of what we speak about is marketing. And while most people in our industry are doing dinner seminars or doing radio and TV, we partner with the schools or different employers. And we get a five minute introduction. So briefly touch on how their benefits work and why it might make sense for them to sit down and chat with us, and we may provide some refreshments for them. But within about 15 to 20 minutes, you can walk in and out with 10, 20, 50, a hundred leads of people who are requesting information from you. And you meet them at their place of work.
Don Anders: And what people don't realize is that employers, they actually have a responsibility, a fiduciary responsibility to their employees. So they're supposed to provide resources. They're supposed to actually let people come in and educate them. And so that's really smart how you're going to the source and saying, "Hey, I'll be this educational source. Just give us some attention." Which really that's all marketing is. Sometimes people get this weird thing about marketing, where they think it's evil, or they think it's trying to trick people into buying something that they don't need. What marketing really is just getting attention from people. Now, can it be used for evil? Absolutely. But that's pretty much everything.
So you're getting the attention from the people. That's great. So that sounds like it's pretty low cost. You're not paying $12,000 for a dinner seminar. You're just maybe buying some cookies or something and-
Daniel Rey: It may cost $100-200 to feed a room. Whether it be through pizza or just doing said cookies, refreshments.
Don Anders: When we used to do it we'd always call all the pizza places because we've just started and I'd say, "Hey, do you have any discounts for schools?" And believe it or not, Domino's would have $3, $4 pizzas for schools. I'm like, "Hey, I'm taking it to the school." And so we would get 10 pizzas. It cost us $40, which is awesome.
Daniel Rey: What do you think about what we do as well, when these employers invite you to come on, their goal for us is to help as many of their employees save for retirement, and retire well. Having access to these employers and their employees, you're encouraged to go out there and to promote your business, because if you're not doing it, you think about someone who maybe they don't pay attention to the ads on TV and on the radio. And they never do anything. You might've had that ability to help them change the course of their financial future indefinitely. So having access to this world and, and responsibly marketing, that goes a long way for your clients or your prospects for that matter.
Don Anders: That's great. So you do that, you get access to them. You go in. You do the staff meetings, you get the leads. I'm assuming from there, you do the typical you call them, email them, see if they want to meet, which is great. So your marketing budget, and I already know this, is a lot cheaper than what most advisors are, which is great. Now, one concern that somebody might have, and I've two points here, because I do niche marketing as well. But one point that somebody might have is if you just deal with teachers and firefighters and police officers, they don't have as much money. And so I want to work with bigger clients.
One of the things that I have found, and you can see if you agree with this is while that might be true because they have a pension and because they have social security, pretty much everything else is investible and is going to be with you for a long time. And then they're going to be very loyal. So when somebody else comes in and they say, "Oh yeah, I have a $2 million client." Well, the problem is when you need to take that $2 million and turn it to income and savings and everything else, you're not really dealing with that full $2 million. And you're dealing with a teacher or a firefighter or a police officer that has $300,000, pretty much all of it is investible. And all of it's going to stay with you for a decent time. Would you agree with that?
Daniel Rey: Absolutely. And what's also a big difference here is the fact that the money that we work with is predominantly qualified, pre-tax money. So not only will you work with it that initial time, but at some point, as we're aware, SECURE Act is a hot topic right now. The required minimum distributions come into play. So if they do nothing else and they start taking the money out, most of our clients got comfortable with living on their social security and a pension alone, they're conservative, they're savers. So they want to reinvest that money. Or if we're doing our job, we're getting ahead of it and maybe considering Roth conversions as a part of their financial puzzle.
Don Anders: What people don't realize is teachers, they're very conservative savers. They'd stay at the same school for 30-35 years, but they also, their plan is called a tax-sheltered annuity, a 403b is also a tax-sheltered annuity. So what I've found is that they're very conservative, but they're okay with using annuities, which I personally like as an investment vehicle for a lot of retirees because it provides some safety, not exclusively, but somewhat. And so they're already used to that word and that market as well, which is nice.
Daniel Rey: They don't just have assets to that 403b. One of the special aspects of the teacher and what they can do is they're considered a government employee, which gives them access to a 457 plan. Some people refer to it as a "deferred comp". So these days, you can put upwards of $50,000 a year away towards retirement, so…
Don Anders: Between the two plans?
Daniel Rey: Between the two plans.
Don Anders: So they're saving a lot. So if anyone's interested, I personally think that niche markets are a great avenue. My recommendation to people is to list down maybe three or four companies, doesn't have to be schools. We do Lockheed Martin seminars and we do Disney seminars. But A, you have to actually know what their plan involves. B, my recommendation is always to put something together that is for them. So when you go and you meet with the teachers or firefighters or anything, you know about their plans, so you can give them information specifically for them, which is good.
The other thing that we've talked about is if anyone has maybe sub-advisors or people that has some extra time or need some to get into some schools or whatever else, you might want to consider, if they're just sitting around the office, we have our sub-advisors, I know Daniel's as well. We'll say, "Hey, instead of sitting around, go into the schools and talk to people. Go drop off some coffee and donuts. Go shake the hands of a principal and see if they need a staff meeting." If you are going to do that niche, just know that almost every school district throughout the United States, most of them will have approved vendors. So if you're going to do that, you really need to be an approved vendor.
And if you're interested in having your sub-advisors do something along those lines and be a vendor, Daniel, he actually didn't even want me to mention this, but I'm going to do anyways because I think it's a great resource for you guys. He has access to payroll slots throughout the country, and that website is at financialjourney.com. It's not for everyone. I think that it's really for people who are struggling, who need more leads, who don't have enough to do. I think it's a good resource. Or if you're really, let's say you have a really good in, or you've worked with a lot of people that are part of a school board, that might be a good solution as well. So once again, not trying to pitch it, but if you're interested in that, that could be a really good resource for you as well, so-
Daniel Rey: If I could do parting thoughts for you, one, just with anything we do, we want to be experts and we want to be great at it. And we're all athletes here or previously at one time in our lives we were athletes. And you might've heard, it's hard to be a weekend warrior. Sometimes people try to figure it out when they show up to the appointment or when they meet with someone and people can read right through that. Sincerity is a big thing and being genuine.
And the next thing is that these people, the people that we're talking about, public servants, they work so hard. It's one of those markets where they're overworked and clearly underpaid and under serviced. So, you and I were just talking about this over breakfast, how rewarding it is to work with those individuals, but do what's right. Do it at all times. And "integrity" is probably the most overused word in our industry, but really put their interests first and they could be a incredible source of referrals.
Don Anders: Well, at this point, what percentage would you say of your new clients that become a new client in a given year, what percentage are referrals?
Daniel Rey: I would say the majority is. It's hard to put a number on them.
Don Anders: 60-70%.
Daniel Rey: 60%.
Don Anders: And that's pretty consistent with people because these are tight-knit communities. So once you get in and you do the right thing and you show that you know what you're talking about, and by the way, referrals are by far the best marketing tool. We have this podcast is Marketing For Financial Advisors. The best marketing tool is referrals. Problem is, it's not something that you can just do with brute force and you can't really grow that way, you can't really rely on it because it comes or it doesn't. But from my experience, these niche markets, firefighters, they're just sit around with each other all day long, they have nothing better to do except for talk about their advisor. Teachers they'll mention some, and that's great. And I'll leave with one last point, too.
I do this when I do niche seminars, I always, at the very end, I end with, I have this I'm from playing basketball, this bump on my foot. But it's very rare. It's just a bump. It just hurts sometimes. And I went to a foot surgeon and there's one foot surgeon in Orlando and all he does is this one surgery on this one type of condition that I have. Guess who I want to go to? Do I want to go to the random foot surgeon who's also doing all kinds of surgeries? No, I want to go to the person who focuses on what I have and my issue. And I think a lot of people are going that way, especially with the internet, especially with how much confusing information is out there.
They want to go out to somebody who's specialized in them. So I think what Daniel's done a great job of, and I think everyone should look at is for lack of a better term, what special surgeries can you do? What specialist can you be where if somebody has a problem, they know that you are the guy or gal to go to, to fix it. And if you can do that for two or three little niches, I think that would be a great way to grow your business and not have to spend a ton of marketing. So thank you very much, Daniel. I appreciate it. And look forward to talking to you all again, soon. Appreciate that.