This is the latest story in the Know Your Niche series. Stories feature advisors who have carved out niches for their firms, detailing how they developed their business, attracted clients and tips for building a niche.
Processing Content
Commercial pilots weren’t Mark Seither’s original niche. But his new focus is taking off.
At Kingsview Partners, Seither partnered with a trust administration firm in California. Much of his work was focused on planning for and protecting the assets of trusts, but the work was limiting.
“It was a lot of organizing taxes, but there’s no tax play on that,” said Seither, who is partner and wealth manager at his firm. “And a lot of the client base was leaving California. My funnel, so to say, was drying up.”
Then a partnership developed that changed that. Seither teamed with Josh Saunders, who was flying for the Navy and would, upon retirement, become a commercial pilot. Together, they saw the planning challenges facing pilots and shifted their focus.
About 30% of the firm’s clients are commercial pilots today, but Seither said about 90% of new clients are flying the friendly skies.
READ MORE: Here’s a financial advisor’s estimated value to clients
“We started really aggressively going after pilots about two years ago,” said Seither, who is now based in Knoxville, Tennessee. “We’re about halfway to our goal of where we want to be pilot-wise before we bring on a junior advisor to take care of the other side of the business that are not pilots.”
Seither said the way pilots are compensated, as well as the risks of being grounded, can make financial planning a challenge. He discussed with Financial Planning how he developed this niche, how his firm serves clients and offered tips for those looking to start their own niches.
This conversation has been lightly edited for length and clarity.
Financial Planning: Your partner is a pilot. Do you fly?
Mark Seither: No, I don’t fly. I would love to. I have contemplated getting my pilot’s license, just so I can be part of the beginning of every meeting where my business partner is talking pilot shop with the clients.
There’s about 15 minutes where everyone’s strategizing their next month’s schedule or talking about how they had to fly into San Diego and the runway is super short.
FP: So you don’t have a direct connection to the niche. How does that affect your ability to draw clients and connect with them?
MS: My business partner flies for Southwest. I know plenty of what they’re going through, and I also see the frustrations that he has. So whenever something comes up with a client that I know he’s gone through, I’m able to still sympathize with them.
And I understand the pilot comp. I understand the pilot world just fine without being a pilot. So after that first phone call where Josh and I chat with them, we just say, “Hey, there’s going to be plenty of times where I’m doing 100% of the meetings because Josh may be out.” They have no hesitation picking up a meeting with me.
FP: What makes the niche satisfying for you?
MS: With most clients, you’ve got to have a wide range of planning tactics. It makes it hard to standardize. And so with pilots, or with any niche, you get to specialize.
I was able to get to a point where, if I knew who someone flew for, and I knew how many years they’ve been flying, I could immediately rattle off: “OK, well, you’re probably making X amount of dollars, you fly 100 trips a month, and you have X amount going into your 401(k).” All those building blocks are going to be generally the same.
As far as meeting prep, it just made it a whole lot easier. Now we get to hone in on the other stuff, right? We’ll jump straight to the tax or the estate planning.
READ MORE: Know Your Niche: Tailoring services to tech executives
FP: How important were your business partner’s connections in getting the niche off the ground?
MS: The first few clients were connections he had, friends he had, and then people he was in class with. And now most of it is word of mouth from our current client base.
A few clients have referred us a solid amount of clients with an extremely high conversion ratio. They’re sitting there in the cockpit with another pilot, right? They all start complaining about the union contract, or this schedule or that, and it usually segues. We hear, “Hey, I just flew with another pilot, and he said that you guys handle this stuff. Can I hop on your calendar next week?”
FP: How does pilot compensation affect planning needs?
MS: Pilots get a 17% or 18% nonelective contribution to their 401(k). They don’t have to put any money in there. And if they’re flying a decent amount, they’re going to have $70,000 put into their accounts without them dropping a dime in there. So what happens when you have RMDs, right? You’re looking at pretty severe RMDs.
The other thing that we look at is their disability that’s available because you can very easily be told you can’t fly anymore. A lot of the airlines have really good disability packages. It’s just about helping pilots understand what you have. We’ve had a few pilots where their blood pressure just wasn’t where it should have been, and they were out for nine months. And so from a planning perspective, we also talked to them pretty heavily about, “Hey, you probably should have three months’ worth of savings, and then the rest you should invest.”
The other thing with pilots is, if Southwest is furloughing pilots, it’s not because they’re the only airline struggling. It’s because they’re all furloughing. We’ve found that pilots tend to want to have a little bit more cash on hand. So let’s make sure your cash is managed well. Let’s make sure your cash is in some high dividend-producing, low-volatility structure to where you’re confident that if you don’t fly for another nine months, your kids are still going to school, and you’re still paying your mortgage.
In tandem with that, a lot of pilots have a lot of downtime. So how do we best use your downtime in some sort of side hustle — whether it’s real estate, a consulting gig or they’ll own an airline hangar. One pilot in particular has this hangar and rents out two spaces. He doesn’t see it as a business. We’ll do tax analysis and show him: “You have to make about $1.60 to take home $1 at your current tax rates. That’s painful. If you start treating what you’re already doing as a business, you’ll be able to save that 60 cents per dollar. You’ll be able to get that hangar door as a write-off. You’ll be able to do those upgrades that you’re already planning on doing.”
READ MORE: Know Your Niche: Advising business owners who want to sell
FP: A lot of a pilot’s wealth accumulates over time. Does that affect how you charge them for your services?
MS: We do a discounted fee model [75 basis points] for the pilots. We essentially looked at where pilots were headed, as long as they were flying with a major airline. We want to be fair. And honestly, it’s a very easy niche for us. We have very low overhead. So we approached it as: “Listen, you’re you’re projected to make X amount of money. We’re OK charging less upfront.” We see the value proposition. This is a very healthy niche, and it’s very lucrative, and so we’re OK sacrificing some in the short term.
FP: What’s your best advice for building a niche practice?
MS: Make sure you can get excited about it. I really like the tax strategy side, some of that more advanced planning that we would do on the legacy side, too, with our high net worth clients. That’s some very exciting planning. I can get excited about that.
Also, and I know some people would disagree with this, but I think you probably should have somewhat of an in. If I didn’t have a business partner who was a commercial pilot, I probably wouldn’t have that niche, even though it’s a great niche. Pilots do want to talk to pilots, and so that’s how we solved that problem. I’ve got a business partner that’s a pilot.
Sometimes I’ll talk to advisors who are like, “Well, I think I want to go after CEOs or highly compensated executives who have a lot of stock options.” So does everyone else. Unless you also were one of those people, they’re probably going to sniff out that you just want to manage their money.
