The $500M RIA that took off by microtargeting clients

There’s targeted marketing, and then there’s what Justin Brownlee has done. 

Processing Content

Brownlee, owner and lead advisor at Brownlee Wealth Management in Fort Worth and Houston, Texas, spent a large portion of his career at Fidelity Investments. Just north of Houston, where Brownlee helped open a Fidelity office in The Woodlands, it wasn’t uncommon for clients to be tied to energy, oil and gas in one way or another.

That meant that without meaning to, Brownlee was learning the intricacies of how to serve clients with particular planning needs and challenges.

“I accidentally found myself in this situation where 80% to 90% of my clients at this large brokerage firm were in oil and gas, and so they all had the same tax situation, estate planning situation. They all had the same benefit structure with their employer,” Brownlee said. “One day I went home and told my wife, ‘I really think I should quit and just start blogging about really specific tax and estate planning issues that are only relevant if you’re at an oil and gas company.'”

That’s what he eventually did. And when Brownlee told his wife he had specific blog topics in mind, he meant very, very specific. One in particular applied to maybe 10 people on the planet, he said, but his post about it led to three or four new clients.

How a former Marine built a veteran niche on LinkedIn

In just six years, those early efforts have grown Brownlee’s RIA into a 70-client, $500 million AUM, fee-only firm. Brownlee talked with Financial Planning about how he built his niche, as well as advice he has for others looking to do the same. 

Read all the Know Your Niche conversations here.

This conversation has been lightly edited for length and clarity.

Financial Planning: It sounds like blogging was foundational for getting your firm and your niche off the ground. What did that look like in the beginning?

Justin Brownlee: Fidelity, like many large hybrid or brokerage houses, doesn’t want their employees blogging, making podcasts, doing any of that. That was just a hard “no” as an employee. But the second that I quit and started my firm, I did. 

The first thing I did was start my website and start blogging. I’d say that 50% of the articles were just trying to hit on great financial advice and financial planning topics that are probably relevant for anyone thinking through financial decision making. But then 50% of the articles were very targeted, and they were so targeted that you probably had no interest in reading them if you were not the intended audience. 

I remember about a year into starting the firm, I wrote one article that had an audience of legitimately nine or 10 people in the entire world — it was just highly targeted for a very small, publicly traded oil and gas company, and we ended up getting three or four clients from that article. 

So really early on, I created very targeted content in the form of a blog, as well as social media posts. Then it morphed into our podcast and YouTube channel today.

FP: When you write a blog post aimed at fewer than a dozen people, how does that work? Did you send that directly to them?

JB: I just posted it on social media, and then I sent it to one person in the company that I knew and who it was relevant for. It just circulated from there. 

That’s the funny thing about content, especially in the first year of business. It’s not as if it went viral. In fact, on LinkedIn, it had very few likes. The engagement was very, very small. But what we found out later is — and this is 2019 — employees were actually printing off some of my content on LinkedIn, and they were passing it around the office.

So if you had an article on why a Roth IRA is so great, that’s not going to happen. But if you write a hyperspecific article, and you’re the only one writing this article, and it’s super relevant to a specific group, well, that group just might find it.

RIAs that don’t invest in marketing aren’t growing organically, study says

FP: How many of your early clients came from this kind of marketing, and how many came from contacts you had made while you were at Fidelity?

JB: You would think that, given my time in Houston before I started the firm, I would have built a large network base that would have just followed me. The issue for me was, I did not want to go to a large wirehouse that had a legal team that would have been willing to back me and defend me. So when I launched a fee-only independent RIA, my single biggest fear was legal action from my old firm. I truly followed my nonsolicit to a T and didn’t test the waters there at all. I was very concerned about that risk because, ultimately, I was the one defending myself, and my old firm had bigger pocketbooks than I did for legal battles. So I really didn’t go after my old clients at all.

Eventually, as the nonsolicit ended, some of them did find me, but I really didn’t seek them out. A lot of my initial clients, it genuinely was, “Hey, I’m writing this blog, and I’m writing very specific articles, and I’m going to trust that the audience will eventually find it and seek me out,” and that really is how we gained traction and how it took off.

FP: What challenges do you have with clients in this niche that you might not have with a more general client base?

JB: Oil and gas is a unique situation, because a ton of the largest oil and gas companies still have net unrealized appreciation in their 401(k)s. They started equity compensation plans decades ago, but unfortunately, they located that equity compensation in the 401(k), so it’s an archaic benefit deal. Nationwide, this is going away, and I think 10 years from now, it’s going to be a relic of the past. By and large, no one’s going to have it, but oil and gas companies still do.

The tax consequences of navigating your NUA [net unrealized appreciation] election correctly when you retire are really large. The lifetime tax consequences could end up being seven figures when you map it with all of your other cashflow and tax items over the next 10, 20 years. For us, this is critical, and that’s something that’s unique in our niche that isn’t found in a lot of other niches. 

The other specific kind of intricacy is oil and gas companies have a 401(k) match that is several times the nation’s average. They also have a pension. You have this dynamic where you have qualified retirement plans and the employee is putting money into their 401(k), but between 401(k) match, profit sharing and pension contributions, it is not uncommon for that total number of employer contributions to hit 20% per year. So it creates this dynamic where, if you work for an oil and gas company for 40 years, you don’t have to be anywhere close to C-suite to retire with $5 million or $6 million, because the company is literally putting in tens of thousands of dollars every year on top of what you’re putting in.

It means that the assets are a little bit larger, which inherently creates significant planning challenges and opportunities. But it also means that they’ve got a ton of pretax assets with kind of a ticking tax time bomb, eventually, with RMDs and income tax. A lot of times, there’s no Roth or very little taxable dollars as well. 

How firms can use AI to measure ‘relationship alpha’

FP: Those complications make me wonder about estate planning. Does that factor in, do you think, more often than for other RIAs?  

JB: It certainly does, and part of that is because NUA is just a really strange deal. I would venture to guess most CFPs don’t even know this because, frankly, they don’t need to know this. In UA shares, after you elect in UA, it’s one of the only assets in our entire tax code that does not get a step up in basis upon passing. It’s just this weird intricacy where you need to understand that within your estate plan, and you’re probably going to make different decisions when you’re 60, 70, 80, with that asset relative to another asset that does get a step up in basis and having an outsize portion of your balance sheet in pretax retirement accounts. That carries a lot of estate planning implications. 

So estate planning is so critical in our niche. We have just started to include revocable living trust drafting and other ancillary documents as part of our services. If we’re dealing with clients that have a taxable estate, and let’s say there’s hundreds of millions of dollars, that goes so far beyond revocable living trust planning that it’s not necessarily applicable. But if we’re working with our sweet spot client that has $6 million or $7 million, we are beginning to actually include document drafting as part of our estate planning offering. 

FP: Are there any challenges that these clients pose to you as planners? Anything you didn’t expect?

JB: Absolutely. Our niche skews very heavy “engineer,” and I truly think that a lot of CFPs would not enjoy working in our niche. It is a little bit of an acquired taste. There is an element where a lot of our clients are incredibly analytical. They’re also just very bright. I tell a lot of our clients, “You know, frankly, if you wanted to DIY this and be your own tax planner and do every facet of your own financial planning, you could.” 

It’s fun to have thinking partners as clients, not just people that hand us money and have no idea what’s going on. But I do think there’s an element where, you know, some CFPs may not totally enjoy that.

FP: Since those early days, how have you been able to attract new clients? What’s the prospect funnel look like for you?

JB: Growth of the business has been twofold. Part of it is we just have produced an incredible amount of content. We now have the “Financial Planning for Oil and Gas Professionals” podcast — we are over 100 episodes into that.

There’s also a dynamic where we’re starting to just get more of a following and referral base. When clients work with us, they appreciate that we’re specializing in them, and we exist to serve people exactly like them and solve the problems that they have. 

We also have a unique fee structure. Most investment firms are still charging a percentage of assets. We have a fixed-fee structure. That wasn’t designed just because I don’t like AUM fees or something like that. That was because our niche in particular needs that because of their benefit structure. If you’re dealing with $5 million to $20 million, the 1% fee is just a lot more cumbersome, and our fixed fee has been an enormous growth engine for us because it resonates with clients in a big way.

FP: Is there anything, besides fee structure, that may set you apart from competitors for these kinds of clients?

JB: I would say the fact that we include your tax return as part of our services sets us apart. I think that is big. Clients love having kind of an integrated solution where they’re paying us a fixed fee and we are managing their portfolio, doing their planning, and their tax returns are getting done. We’re also helping them with their estate plan. So I think that holistic, comprehensive service is a big one.

Our clients see that a median client invests about $6 million or $7 million with us. So it’s not a concern of, “Hey, if I’m going to go interview a CFP, am I going to have more money than all of their other clients, and are they going to have experience with people like me, or am I going to be their biggest fish?” Unless you’re a billionaire, you probably don’t want to be your firm’s biggest fish. So I think that has been really helpful for us, that we now just have an incredible track record that tells the public, “Hey, we see situations like yours every day.”

FP: What kind of advice would you give to someone who wants to develop their own niche?

JB: Find a niche that has something specific where you can add value. There really needs to be some specific planning intricacies that are not true for everyone in the world, because you need to be able to make content that adds value specifically to that. 

I really think it’s critical that whatever your niche is, you need to be findable. You need to have an avenue when you’re making this content, and you need to disseminate that content. 

And I do think it’s critical that the median average client from your niche needs to be substantial enough that it can support a growing business.