Marketing

The benefits of having a niche and an advisory board, with Ray Evans

19 MIN PODCAST

In an industry where everyone is looking for a client niche, Ray Evans of Pegasus Capital Management in Kansas City, Kansas, may have found one where others weren’t looking. He and his team of six associates manage just over $470 million, working with clients in the construction industry. 

 

Evans has much to say, so we broke this interview into two parts. In this episode, you’ll hear all about Evan’s niche focus in construction, which happened almost by accident but has led to a large clientele of small-business owners. 

 

We'll also dig into Evans’ advisory board, a group of fellow business leaders who meet quarterly to counsel Evans and each other. He’ll explain how he set it up, and how you can gain the benefits of an advisory board in your own practice.

The benefits of having a niche and an advisory board, with Ray Evans

 

Will McKenna: Ray Evans, thanks for joining the PracticeLab podcast. 

 

Ray Evans: Will, it's great to be here. Thank you. 

 

Will McKenna: Thanks for joining — a lot to dig into. Why don't we just start, though, with an overview of your practice? Why don't you paint a picture of your business as it stands today? 

 

Ray Evans: Our team of six predominantly is a wealth management team. We have 401(k) business, but we pretty much concentrate on private business owners and also have a little bit of a concentration in the construction industry and some of the ancillary industries associated with that. So a couple of maybe unusual niches that have evolved from that. But three advisors, three staff members and really a great group. 

 

Will McKenna: That's a great overview. And I want to dig into a couple of those topics. Let's start with some of the niches that you're serving. You talked about business owners. How did you get started there? And then tell us about that. 

 

Ray Evans: I'd love to say it was this super-strategic plan that I put together years ago, but that's not quite accurate. I was very lucky in the ‘80s, during our cold-calling days, developing two really good relationships, two really good clients, in 1985, through cold-calling, that, you know, took a liking to me and were very kind regarding introductions. One of them was someone who was associated with a trade group in the state of Missouri. So they were able to involve me in a variety of different investment committee-type activities within that organization. And still, I'm actually involved as the investment advisor to that group. 

 

Through the years, as that investment committee has changed, it's been a natural extension to go get to know some of the other people on the investment committee and ultimately, hopefully, build up a little credibility and trust to where you can call on them and have a decent story to tell. So that's really kind of how that evolved. And with that came architects and engineers and some other folks. So it was by almost total accident. But that was a very good thing for us to work on. 

 

Will McKenna: Isn't that great? I mean, isn't that funny that sometimes things happen that way, or probably most often happen that way? We'd all like to think our lives have a grand design. But oftentimes, you bump into opportunity, and it sounds like you were able to take advantage of it. 

 

So you started with these two relationships in kind of your early days, it sounds like. How did that then evolve? You know, give us a little bit of the journey. And then maybe we can talk about kind of the trade group and what that brings in terms of networking, and so on.

 

Ray Evans: Again, almost by accident. And really want to stress, it wasn't this meteoric climb, either. It was very slow and steady. One of those two individuals and who ultimately became a great friend and is a great friend is an architect. And so we got to know more people at their firm. And then I had some peers. Kansas City is the home of a number of firms who are very active in the stadium and athletic facility world, and so knew a few guys in that venue. And so it was, again, a helpful thing to get introduced in that world a little bit. And through the years that sort of evolved. 

 

Again, from the contractor standpoint, really just a wonderful group of people. I mean, they're typically small business — I say small business, they're pretty big businesses — but these are business owners who typically have an ease about them that makes it easy to visit with them and their decision-makers. And so you kind of get to know early on whether you're making progress or not. And then they're usually great about introducing you. And I kind of learned early on, I was terrible and still am not great at asking for referrals. But with that group, you can kind of sit there and say, “Hey, could I potentially get an introduction to Will McKenna?” And they're like, “Sure.” So that's an easy group to get along with.

 

Will McKenna: I wonder if it's the fact that they themselves are businesspeople and understand, you know, that a lot of their business probably comes from referrals too would be my guess, wouldn’t you think so, right? 

 

Ray Evans: Well, I do. And the construction guys, so much of their world is dealing with, you know, RFPs and bid processes that are very extensive. And so, you know, they themselves are going to a lot of civic events and making sure that they do a good job at networking. So it's a kind of a fun group just to hang around. So I think, to a great degree, that's the nature of their business. So they're OK with that. 

 

Will McKenna: What are the benefits of having a niche like that, and the characteristics that that has brought to the way you guys operate as a firm?

 

Ray Evans: You know, I would say, in general, you sort of realize who you work well with. I think, you know, early on, I made so many mistakes. I was trying super hard to get in with surgeons and getting in with these really precise niches of high net worth folks that perhaps were a) difficult to get to, and b) were not necessarily relatively quick decision-makers in terms of whether they want to work with you or not. 

 

And, you know, construction guys, to me, were an easy group to get along with and have been for a long time. They value relationships. They know a lot of people in town, and from a lot of different, you know … I think the interesting thing about the construction business, you know, some guys are concrete guys, some guys are excavators, some guys do high-rises or whatever it might be. So there's just an awful lot of give and take amongst different facets of that industry. It's not like there's four construction firms in town. 

 

Will McKenna: Gotcha. And you guys seem to focus not only construction, but you said private business owners. What do you offer? What are the … what are the range of services that you offer those folks? 

 

Ray Evans: We're CFPs. And AIFs. So, you know, certainly we offer, we have a very robust planning platform. And we, you know, in the early years, I was very much just an investment guy. And so, as the years evolved, it was pretty clear one of the, to some degree, the investment business was going to be viewed a little bit more as a commodity, whether that's fair or not. So we needed to tie the client to us. So, you know, literally, probably 20-25 years ago, I really needed to sharpen my sword from a planning standpoint. And the young advisor that I've got on my team, who's terrific, and a great future in front of him, he's really strong from a planning standpoint. So as we've integrated more of a team approach, he really runs with it, can illustrate it and really has a great handle on it. So it's a great way to, I think, impress upon somebody that the firm is not dependent on me. We've got a, you know, other talent here that’s really relevant and really important, and he does a great job. 

 

Will McKenna: OK, let's summarize what we've heard so far. Ray talked about four benefits of working with construction business owners. Number one, they're easy to work with. Number two, they're fast decision-makers. Number three, they also depend on referrals in their business, which makes them more likely to send referrals to Ray. And number four, construction is a really big industry, with all kinds of ancillary businesses related to it, from architects and engineers to all the trades within construction. And that provides a long runway for potential growth in Ray’s practice. 

 

Now, let's turn our attention to Ray's advisory board. This is a group of fellow business leaders around Kansas City who not only council Ray but also counsel each other in their quarterly meetings. Let's hear Ray break it down.

 

I know one of the other elements of your business that’s interesting and not everybody does is this idea of having an advisory board. And I'd love to hear what is it, first of all? Why did you set it up? And let's talk about how it works and some of the mechanics of it today. But why did you set this thing up? 

 

Ray Evans: You know, this goes back a long time. My dad is deceased, but back in the ‘90s, he was talking about how guys like himself are really complimented when a younger person asked for help or asked for advice. And you know, I hadn't really framed it like that. And so I was kind of talking to my dad one day, like, “What would you think if I had like a six- or eight-person, you know, advisory board for lack of a better term?” And he goes, “Yeah, I think you'd be surprised who would agree to be on that.” And I was, have been, through the years. And we started with six people, and it was six people for many years. We evolved to ultimately eight people. And now we're 20 people.

 

Our format is a quarterly meeting. It's a lunch meeting from basically noon to 1:30. And three of those meetings a year are either in our office or in a local country club. And then one meeting a year, we go to a rising Kansas City business, typically not a client. But basically, a business that, you know, you're reading a lot about in the paper that is obviously doing great things and is on a growth path. And they're usually eager to host that fourth meeting. And then we'll typically have them give a presentation and talk a bit about, you know, why they're growing and what's going on in their firm. And it's really been fun. 

 

The meeting itself, I try to make sure that we don't spend too much time on my stuff. So we usually start with numbers and go through that and talk about and frame that versus our goals for the year. And then we talk about, you know, challenges and things that are going on in the business, but I try to make that about half the meeting. Because what I want to do is go around, and everybody's got two minutes to tell us what they think they're seeing either as a consumer or with their own business. And that's by far the most valuable part is getting them talking about what they see and what they think they're seeing. And so we've done this now for, since the ‘90s. So 27 years. And we’ve evolved the group obviously and changed the number through the years. I made sure that it's not all clients. It's about half clients and about half that are not clients. And I've only got a couple people from the industry at any one time, because I really kind of want to hear from the tool and die guys and these other guys, how they do what they do, and what they think they're seeing. So we get a ton of value out of it. And then typically, after each meeting, over the course of the year, I'll have one one-on-one with each advisory board member and go into a lot of detail. And I find that they are much more likely to give me feedback and give me advice in that one-on-one setting than they are in the big group. 

 

Will McKenna: That's great. And it's funny; I was looking at your advisory board on your website. And I would encourage our audience to check that out as well. And we'll link to your website in the show notes. But an interesting mix what I thought of business owners, among other things. How do you find those folks? How do you approach them? Give us a peek behind the curtain of recruiting folks on to that. 

 

Ray Evans: Actually a lot of it comes from other things I'm associated with. There was a period of time where I was on the board of a local high school for several years. And there were really about three or four guys that were really tremendous leaders and really great strategic thinkers on that group. And so I got a couple of those guys. They weren't clients, never became clients. 

 

And again, a quarterly commitment for 90 minutes is, you're not typically asking for something that's really onerous. And those guys were very helpful. And so that's an example. A lot of people are just folks that are, you know, in different walks of life, and I know that I think will enjoy it. And I think the whole key is it can't be just about me, because that gets old pretty fast. And so the whole idea that there's a lot of interaction between them, it makes that fun. And so certainly, it's been a great source of introductions. And, you know, hopefully we from there take it to a good point. But yeah, it's been great. 

 

Will McKenna: We think about some of the audience of this podcast who might not yet have an advisory board and be thinking about setting one up. I wonder if you could think back to when you were first setting this up? Literally, did you write a letter to these guys? Did you find another person to introduce you? How did you, kind of, make those first steps before you were perhaps as well established as you are today? 

 

Ray Evans: To be honest, that first group was predominantly buddies or clients who I just valued their opinion. And I knew they knew me well enough to sort of shoot straight. And, you know, I would gather with those in my 20s and 30s. And we would sit there and talk Royals baseball and Chiefs football, that kind of stuff. But we didn't talk really in-depth regarding work. And so it sort of was an opportunity to grab guys and say, “Let's take this on a little different level and talk about, you know, things that we think we're seeing.” 

 

And I think, too, in my 30s guys were peeling off from Procter and Gamble, and guys were peeling off from Kimberly Clark and starting to do maybe their own deal or a little bit smaller deal where they were getting excited. So you had the opportunity to maybe share growth strategies or HR issues that you weren't very comfortable with. So that was helpful. 

 

Will McKenna: That's great. Let's broaden that out and talk about what marketing looks like. And to what extent are you doing marketing beyond the referrals that seem to happen through your niche and your board? What does marketing look like for you guys? 

 

Ray Evans: So it's evolved quite a bit. Certainly we don't have the mass marketing that we used to do. You know, used to cold-call, used to do seminars, did all of that kind of stuff as we were building the business. Much more targeted now. We have gotten much better through the years at developing an annual marketing calendar. And with that comes different levels of communication with different clients based on how you segment them. And we do it fairly simply, we have an a, an A-, B- and a C-type client, and they get certain levels of communication and get invited to certain events. 

 

We, as I referenced earlier, we've got several teams together under one roof. And that's worked out great from a marketing perspective, because we have monthly events. The first six months of this year, they're all virtual, which is interesting. And they're typically over the lunch hour. But we try to make some of it work, some of it fun. An example, in a month, we have two sports reporters from the Kansas City paper, the “Kansas City Star,” who have done this for several years. They always do it in March. College basketball is a big thing around here, so we have our March Madness luncheon. And so that's a lot of fun. They're very interesting. And occasionally they'll have guests, and so that's obviously well attended. So we try to do something virtually every month. We typically will take June, July and August, and maybe make that pretty light. Typically nine to 10 events a year. 

 

And then we do a lot of smaller stuff too with, you know, several couples, things like that. We've been much more targeted than we used to be. And I think for a mature practice, that's probably a smart thing to do. And it's helped us.

 

Will McKenna: That's great. And when you say targeted, does that mean these events are a mix of clients? Or they're also, you know, prospects or targets in there that you're trying to bring into the fold? How does that break down for you? 

 

Ray Evans: Yeah, that's a great point. So, for example, I'll just use the “Kansas City Star” guys that we referenced. So that's, you know, it's a pretty light commercial for the firm when you're at that event. But people really know who the writers are, and they want to talk about, you know, Kansas University basketball, which is usually pretty stout. 

 

And so you'll get a lot of people who I've got targeted, and I'll make sure that they get an invite. Or I'll personally invite them and say, you know, “This would be a fun deal. And you'll have lunch.” And these guys are great, and we love to have them. It's just a great opportunity to get people there. And certainly the virtual events aren't as fun or as effective. But, you know, we'll keep offering them and keep going. And we're actually kind of surprised at the turnout that we're having for the virtual events. We’ll usually Grubhub them lunch for the virtual events. So we'll send them a gift card. And it's not, again, quite the same as being in the same room and maybe having a rubber-chicken meal. But it is still an opportunity to gather with people and, you know, show them that you're interested.

 

Will McKenna: OK, so that wraps up part one of our conversation with Ray Evans. Be sure to tune into part two, where we talk about Ray's broader affiliation with six teams in his office, and the benefits of setting up an ensemble practice. 

 

Special thanks to Ray Evans for coming on the show. And thanks also to my colleague Jason Young for connecting me with Ray. 

 

If you liked what you heard today, please hit the “Subscribe” button and consider leaving a rating and review since that helps other advisors find the program. 

 

PracticeLab is brought to you by Capital Group. You can find all our episodes at practicelab.com. I hope you enjoyed what you heard today, and I look forward to joining you on the next episode of the PracticeLab podcast.

Capital Client Group, Inc.

 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.

 

Any reference to a company, product or service does not constitute endorsement or recommendation for purchase and should not be considered investment advice.

 

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

 

This podcast is intended for U.S.-based financial advisor audiences.

Finding an accidental niche

 

“I'd love to say it was this super-strategic plan that I put together years ago, but that's not quite accurate,” Evans says of his focus on working with small-business owners and specifically with contractors and clients in construction. “It was by almost total accident.” 

 

It began decades ago, with two strong client relationships: “One of them was someone who was associated with a trade group in the state of Missouri. So they were able to involve me in a variety of different investment committee-type activities within that organization.” Evans has continued to serve on this committee through the years, getting to know contractors, architects and engineers in the group. The other important relationship was with an architect, who has helped Evans get to know more people in stadium and athletic facility construction. These connections provided introductions to contractors and related business owners.  

 

“In general, you sort of realize who you work well with,” Evans says. “Early on, I made so many mistakes. I was trying super hard to get in with surgeons and these really precise niches of high net worth folks that perhaps were a) difficult to get to, and b) were not necessarily relatively quick decision-makers in terms of whether they want to work with you or not.”

 

Contractors are easy to get along with and work with, and they tend to be fast decision-makers, he says. “You kind of get to know early on whether you're making progress,” he says. They’re also fun to hang out with. 

 

“And they value relationships.” Evans admits he is not great at asking for referrals. But because contractors also depend on referrals in their business, they make it easy. “They're usually great about introducing you,” he says.

 

Finally, because construction is a big industry with many other related businesses, a focus on contractors provides a lot of room for growth.

 

Evans also credits his growth to the robust planning platform that has evolved with his firm over 25 years. “In the early years, I was very much just an investment guy,” he says. “I really needed to sharpen my sword from a planning standpoint.” Today, he has the CFP and Accredited Investment Fiduciary designations, and takes an integrated team approach to planning. “The younger planner I work with is really strong from a planning standpoint. He really runs with it, can illustrate it and has that handled,” Evans says. “It's a great way to impress upon [clients] that the firm is not dependent on me. We've got other talent here.”

How to build an advisory board

 

Another thing that Evans built into his practice is an advisory board, made up of business owners who meet quarterly to discuss ideas. It was advice from his father that gave him the idea. “He was talking about how guys like himself are really complimented when a younger person asked for help or asked for advice.” Evans recognized the potential of harnessing the wisdom of local business leaders to help grow his own business. 

 

It started in the ‘90s with six people, an assortment of corporate-world buddies and clients whose opinions he valued. “I knew they knew me well enough to shoot straight,” Evans says. The goal was to talk about ideas, but he admits that they initially spent more time talking about Royals baseball or Chiefs football than business. 

 

As Evans’ firm matured, so did the board, growing to eight members in the first few years, and to about 20 today. Members come from different walks of life. About half are clients. Connections in local corporations offer advice about areas such as technology, human resources or innovation. Evans even found some strategic-thinking members while serving on the board of a local high school. But there are few financial professionals in the bunch. “I've only got a couple people from the industry at any one time,” Evans says. “Because I really kind of want to hear from the tool and die guys and these other guys, how they do what they do, and what they think they're seeing.” 

 

The format is typically a 90-minute lunch in the office or a local country club, he says. Once a year, the lunch is held at a rising Kansas City business. “Basically, a business that, you know, you're reading a lot about in the paper, that’s obviously doing great things and is on a growth path.” The group invites them to host the meeting and do a presentation on the company and why it’s growing. Businesses are usually eager to host and get the ear of established local professionals, Evans says.

 

Within the meeting itself, Evans spends about half the time discussing his firm’s performance numbers and goals for the year, including any challenges in the business. “I try to make sure that we don't spend too much time on my stuff,” he says. Instead, he gives each member of the group a few minutes to share trends they are seeing as business owners or consumers. “That's by far the most valuable part.” 

 

During the course of the year, Evans has a one-on-one conversation with each board member, which allows him to cover more ground on business specifics. “I find that they are much more likely to give me feedback and advice in that one-on-one setting than they are in the big group.”

An evolving marketing strategy

 

The marketing strategy at Evans’ firm is also evolving. “We used to cold-call, we used to do seminars and all of that kind of stuff as we were building the business. We are much more targeted now,” he says. The firm has an annual marketing calendar, with different levels of communication based on client segmentation. “We do it fairly simply. We have an A-, B- and a C-type client, and they get certain levels of communication and get invited to certain events.” 

 

Even during the pandemic, the firm continues to host monthly lunch-hour events. “We try to make some of it work, some of it fun,” he says. For example, they invite local sports reporters in March for a March Madness college basketball-themed event. 

 

“We're actually kind of surprised at the turnout that we're having for the virtual events,” he says. “We’ll usually Grubhub them lunch … send them a gift card. It's not quite the same as being in the same room and maybe having a rubber-chicken meal. But it is still an opportunity to gather with people and show them that you're interested.”

 

Find part two of our conversation, Better practice management and productivity, with Ray Evans, for more on how he uses business planning, technology and standard operating procedures to scale his practice and save valuable time.

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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.