Photo taken on location: Tiverton, ON

Better late than never. It’s a phrase Jim Sanderson knows well. He’s been an advisor for 28 years, but only started focusing his practice on business owners in the sand, gravel and road-building industries five years ago.

He jokes it took too long to connect his more recent career with his first job as a geologist, which he left after three and a half years. “I was about to get married, and most geologists I knew were divorced,” says the ScotiaMcLeod advisor. “You’re out in the field a lot.”

So he switched careers. He had an interest in finance and decided to take the Canadian Securities Course while on a drilling operation in Northern Ontario. He passed and moved to Toronto, joining the marketing department of Wood Gundy in 1985. In 1986, he became an advisor with the same firm. Nine years later he joined ScotiaMcLeod.

Sanderson continued to follow mining developments and attended the Prospectors and Developers Association of Canada (PDAC) conference each year, but never used the event to seek clients.

Then, seven years ago, he took a course with coaching firm CEG Worldwide, which delved into how advisors could specialize in particular client types. Over the next two years, Sanderson researched industries, such as film and entertainment, until he realized the aggregate industry would make a great fit, since he already knew so much about it.

Based on that realization, he started interviewing aggregate industry stakeholders to assess the number of potential clients, their concerns and their average net worths. Those interviews confirmed his hunch.

He spent the next five years building that niche up to 20% of his book, and wants that number to rise. He initially spent $10,000 on the CEG course, and has since spent an additional $13,000 per year on niche-specific efforts (see “Costs to attend,” below). “From an investment standpoint, I’m probably even,” he says. “And going forward, I’ll be in the black.”

This year has been fruitful. After a recent conference, he set up a meeting with a business owner he first encountered 10 years ago. He says it takes time for fellow attendees to become clients. “It’s not like you’re seeing them each year,” he says. The benefit comes from “being there consistently and [having] people recognize you.” He also attends other events aimed at his niche.

Here’s how he makes it work.

Costs to attend

ScotiaMcLeod advisor Jim Sanderson’s full conference and marketing budget is between $20,000 and $25,000 per year, which includes CE courses and financial events. He also runs seminars that both niche and non-niche clients attend. His recurring niche-specific efforts cost about $13,000 annually. Here’s how it breaks down:

Association-related costs, 2014
Ontario Road Builders’ Association (ORBA) membership$2,000
ORBA annual meeting$1,000
Ontario Sand, Stone & Gravel Association (OSSGA) membership$2,000
OSSGA annual meeting$1,000
Booth rental at OSSGA meeting$1,200
Travel and hotel to attend OSSGA meeting in Ottawa$1,000
Hand warmers given out at OSSGA meeting$500 for 300
Sub-total$8,700
Advertising
Half-page ad in Rock to Road magazine, plus banner ad on the magazine’s website$4,000/year
(four issues/year)

“I don’t know if it converts [into client dollars],” he admits.

TOTAL$12,700

Lay of the land

Sanderson belongs to the Ontario Road Builders’ Association (ORBA) and the Ontario Sand, Stone & Gravel Association (OSSGA). Membership lets him attend annual meetings, which are multi-day events drawing 300 owners and shareholders (about 50% are members of both associations). For efficiency’s sake, he combines attendance with client meetings in the same area. His meeting schedule puts him out of the office about 30 business days per year.

Sometimes, after introducing himself, he’s asked, “Why are you here?” He replies, “I was a geologist before I got into the business. I worked in the quaternary section of the Ontario Geological Survey, which is all about gravel and rocks. So I understand what you’re working with, and what it means. But there’s a lot I don’t know, and that’s why I come.”

He purchases a booth at the OSSGA meeting, and this year, gave out hand warmers printed with his contact information. “It’s hard to track who picks them up,” he says. He spends most of his time away from the booth networking or attending educational sessions (he tries to go to all of them; there were about 15 this year). Topics include site rehabilitation and new legislation. This year’s keynote was given by retired astronaut Chris Hadfield.

Having the booth means “you can always refer back to it.” At OSSGA conferences, attendees conduct minimal business, so he doesn’t prospect actively. He adds that many owners—primarily male—bring their spouses.

“The wives tend to be 50% owners,” he says, and work in the back office if they’re not operating machinery. In many cases, owners’ children are also involved.

Recognizing that, he’s given succession and retirement planning sessions at the OSSGA and ORBA conferences. He doesn’t purchase a booth at the ORBA meeting (he notes they’re less organized, so he doesn’t see as much value). Still, he finds the ORBA talks particularly useful because seating is arranged in tables of eight or 10. “I sit at a different table every time. Usually I know someone at each table because I’ve been going for a while.” That person usually introduces him to his seatmates.

Sanderson doesn’t have much competition. “There are a lot of insurance people, but no people from the investment side. Most other exhibitors are operations guys selling [rock] crushers.”

Prospecting process

The soft sell works best. “I only want to help people I can help. Once, I did an audit of a person’s portfolio, and I told him, ‘There’s nothing wrong here; you’re fine.’ ” Sanderson told him to stay with his current advisor.

“I prefer doing the referral route,” he adds. “That has started to work better since a lot of people in the industry know I’m in the [wealth management] business. Now they aren’t afraid to ask questions about investing.”

But for people he meets cold, “I would give my business card. That often leads them to ask, ‘So what do you do with ScotiaMcLeod?’ ” He then tells them he helps people in the aggregate industry create and distribute wealth, and explains his past life.

If they continue chatting, he asks questions like, “Tell me about your business. How are things for you?” He adds, “I don’t force what I do onto other people. I’d rather find out what it is they do.”

At this year’s OSSGA conference, a prospect came to his booth. “This person had read one of my articles in Rock to Road magazine [see “Establishing expertise,” this page]. That sparked the initial conversation.” Sanderson set up an appointment after the conference so they could have a deeper conversation. He prefers post-conference meetings because he can talk to both spouses if the prospect is married.

After the convention, he writes a full-fledged letter to everyone he’s met. “Then I follow up with a phone call to schedule a brief meeting to see if I can offer a second opinion,” he says. “I just want them to know that I know their industry better than anyone else in our business.”

He adds it’s difficult to tell how many clients have come from attending conferences, but he’s broken even between new client assets and marketing spend. The remaining 80% of his book is made up of executives, business owners in other industries, doctors, dentists and retirees.

aggregate industry

What clients need

Sanderson says attending conferences tips him to client concerns. For instance, to get a licence for a new gravel pit, “the average cost is $1 million to get it processed, because of lawyer fees and having engineers’ reports of species at risk,” he says. “It’s about $1,000 a page. And they’ll show you stacks of pages.”

As for investment needs, Sanderson finds aggregate business owners “can be quite myopic” because “they’re very patriotic.” As a result, “a lot of times they’re strictly invested in Canada,” and are often concentrated within their own industry.

To help them diversify, “I use enhanced index funds and ETFs. It gives them exposure to areas they’ve never had before,” he says. He also helps them structure such investments so they can be held in corporate accounts and holdcos.

And he tells owners who concentrate their capital in their companies that it’s “like owning one stock. You need to spread risk out.” Having outside investments “makes it so when you want to retire, you can do so without having to worry about selling your company.” He adds many owners have trouble finding successors and buyers, so another source of equity gives them time and flexibility.

“They think, ‘I’m going to sell my company, take the money and ride off into the sunset.’ It doesn’t always happen that way. Everyone wants to sell under their own conditions, and that takes planning.”

For Sanderson, building a niche has been a long road. “It takes three to five years,” he says. “The blind faith can get frustrating, but I know where I’m going makes sense.”

Melissa Shin is editorial director of Advisor Group.