A recent study by the Financial Planning Association examined current and future trends for financial advisors related to growing and managing their practices. One of the focus areas analyzed was the effectiveness of creating ideal client profile definitions.
The study found that firms with a formal ideal client definition have greater success in attracting clients that meet specific criteria and they are less likely to accept clients who are not profitable for the firm. Firms without a clear definition tend to accept clients that don’t meet entry point minimums and, in general, are not suitable for the firm. Knowing the characteristics of the clients you serve best will provide a strategy to:
- Facilitate improved client segmentation methods
- Focus time on clients who generate the most revenue for your firm
- Pinpoint future or additional assets and revenue opportunities
- Increase cerebral satisfaction
- Gain appropriate introductions and referrals
Complete this exercise to identify the attributes of your best clients and gain clarity of your ideal client.
- A broad description of our ideal client is:
- Tip: Include life stage, age, gender, family status, occupation, and industry.
- Our ideal clients are located in:
- Tip: Rather than focusing on large geographic areas, target on a defined radius.
ASSETS UNDER MANAGEMENT/POTENTIAL AUM/REVENUE/ POTENTIAL REVENUE
- The minimum amount of assets required to work with our firm and the minimum fee we will charge is:
- The specific financial challenges that our firm can effectively provide solutions are:
- Tip: Be specific. Hone in on definitive challenges facing your clients. You need to move away from providing generic information to clients by showing you are in-tune with their personal trials.
- The personality types I best identify with, connect with, and enjoy being around are:
- Tip: Advisors often overlook the tendencies of clients they enjoy working with most. Honor your unique personality, values, and passions by looking for clients who share commonality with you.
COMMUNITY INFLUENCE/ORGANIZATION AFFILIATIONS
- The organizations of people I am involved with or would like to be involved with are:
- Tip: Think about the organizations you are involved with or would like to be involved with. What groups of people participate in events that promote growth and development for your community?
- The specific strategies and tactics we will use to attract and acquire ideal clients are:
- Tip: Consider multiple strategies; strategic alliances, client referrals, educational sessions, client events, etc.
Once you have completed the exercise above, you can list the attributes that define your ideal client.
Here is a possible scenario:
- In their 50’s
- Professionals approaching retirement, working in the health industry
- Reside within a 100 mile radius of our firm
- Shared core values: spiritual, family, exercise
- Enjoys outdoor activity, traveling; specifically traveling to tropical locations
- Common pain points are planning for retirement, determining how much money will be enough
Now, highlight the attributes of your ideal client:
Share this definition with your team, clients, centers of influence, and potential prospects to promote and aid your firm in populating your client base with more clients that you serve best.
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