Financial advisors Jonathan Green and Alan Rubin have managed to combine the high stakes worlds of thoroughbred horse racing and financial planning, likely to advise clients about when to sell a horse as they are to advise them on what stock to buy.
The co-founders of Targeted Financial Services, an independent RIA based in Holmdel, N.J., have successfully marketed their services to members of the horse racing industry and believe they have a formula for any advisors who want to cater to a niche market.
“You have to know and love the industry you are serving. If you don’t know it, you can’t fake it,” says Green, whose family has long established ties to horse racing. “You have to have a genuine love for your niche market because you are going to spend a lot of time in it.”
At Targeted Financial, Green is the horse expert and Rubin has the financial background. Since the firm was founded in 2000, they have taught each other.
As a youngster, Green helped his parents when they owned DJ Stables in New Jersey. When he graduated from college, he took over some of the clients from the accounting firm his grandfather founded.
He and Rubin met through mutual clients. Green was doing the accounting work and tax planning and Rubin was handling clients’ financial planning. The two clicked and decided to join forces to create Targeted Financial Services. They have been joined by two other partners, Ofer Gabbay and James Payne.
Starting from scratch 14 years ago, Targeted Financial has about 600 clients and $135 million in assets under management. Some of those clients were earned the hard way, with Rubin and Green traveling from one horse farm to another in California, Florida, New Jersey, New York and Kentucky, and talking with anyone in the industry who would listen. Because they knew the business, the horse owners, trainers and jockeys were receptive to their pitch, Rubin says.
Now their business is growing strictly through referrals in the close-knit horse racing industry with no advertising.
“We recognize that this is a unique business. Horse racing is 24/7. Our clients are never off work and that means we always have to be accessible,” Rubin says.
Most people in the racing industry, like small business owners of all types, are busy thinking about the present and immediate future. Targeted Financial takes over the long-term planning for them.
“Ninety-five percent of the stables are family owned, but they have no idea how the next generation will take over,” Rubin says. “They are thinking about paying the next feed bill or what their horse will do in the next race.”
Therefore, succession planning became a natural part of the investment and planning services offered by Targeted Financial, which charges clients a percentage based on AUM or an hourly fee. Green also developed an expertise in disability insurance because of the high risk of injury that jockeys face.
Rubin and Green spend a lot of time at the tracks, which provides an opportunity for their clients to introduce them to others in the industry. They travel to farms and watch clients’ horses train and they go to horse auctions.
“For our clients, their professionals come to them. If they need a veterinarian, the vet goes to them. They do not have time to come to an office downtown somewhere. Other advisors were trying to break into the market, but they would not go to the farms. There was a disconnect between the advisors and the needs of the clients,” Green says.
Cash flow for people in the horse racing industry is problematic. The stable owners have cash when the horses are winning but they may be cash poor when they have to pay stud fees. Breeders are on the opposite cycle and have cash in hand when the stud fees are paid. And a lot of money changes hands at auctions, where prize horses can sell for millions of dollars.