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If you are looking for new clients, you need to know the following:
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Marital status
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Age
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Income
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Occupation
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Net worth
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Hobbies
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Risk tolerance
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Rate of return objective
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Family status
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Invest
able assets or estate planning needs. Target marketing is key to your
business plan.
Can I find a married retired couple with approximately $50,000 of income,
a net worth of $800,000 to $1 million who like to golf, spend time with
their children and grandchildren , who don’t mind some moderate level of
risk and a conservative rate of return. Also they have investable assets
of $600,000 and estate planning needs.
Well, guess what, that is an
example of a target client. Now where do you find them? How do you market
to them. What brings them together? These are the start of target
marketing that you need to think about and ask yourself. We could write
another book on target marketing, but as advisors this is what we need to
do in our business plans.
We can also dissect each component of the profile. It is not necessary to
have married people but they are easier to find. Their age can help you
target easier. Income is not necessarily important if you are dealing with
retirees or business owners, but net worth is essential in all segments
regardless of income. Net worth needs to be determined. Hobbies help you
find out how your target group networks together. Risk tolerance helps you
design your money management programs, since you may not want highly
aggressive or speculative investors if that is not your model.
This also
goes for rate of return objective. If you are targeting retirees looking
for a high rate of return and low risk, this may not be achievable. This
helps target the education level of investors in the group. Family status
is very important since you must find out from clients who they love.
Simply put, money is love. If they don’t love someone and they are driven
by greed, this may not fit your personal beliefs and understanding of
clients. Finally, if all of their net worth is tied up in real estate and
they have no estate planning needs, then they may not need your help. All
components help identify what your ideal client should look like.
Strategy: Many financial advisors are running two distinct models. First,
the advisor who only deals in the high net worth, high touch type of
practice. Second, the advisor who looks after all types of clients and
delivers a baseline level of service to all and a premium level of service
for top clients.
Both models have one critical element to building. The advisor is faced
with declining time as the business grows. So how do you grow your
business each year and provide an increasing demand for more service. The
short answer here is to target larger clients each year. In three to five
years your client base will be dramatically different and you will be
forced to get more sophisticated and not only will you improve your
services, but your will earn more and have a higher asset base by changing
your target upward each year. For example, set a minimum client account
size if you are in the money management business and a target premium if
your in the insurance business.
Year 1 - Minimum $250,000 Assets
Year 2 - Minimum $350,000 Assets
Year 3 - Minimum $500,000 Assets
Year 4 - Minimum $750,000 Assets
Year 5 - Minimum $1,000,000 Assets
Most advisors have never increased their target client ever. So how do you
expect to improve, challenge yourself and make more money. Remember, the
definition of insanity is doing the same thing over and over and expecting
a different result. When is the last time that you increased your minimum
account size ?
Grant’s Tip: Profit margins are shrinking, and service demands and
costs are increasing. Welcome to the world of a growing financial advisory
practice. Advisors continue to take on unprofitable and time or service
demanding clients. Why do we do this to ourselves, only to hope that they
eventually leave you. With ideal client profiling you also need to ask a
few tough questions up front to make sure that you want this client. For
example:
-- Mr. and Mrs. Client. Money is important to you, however, I take four to
six weeks holidays a year. In that time my team can service your needs,
but I will be unable to reach during these times. Are you comfortable with
that?
If the answer is no , then you may have a person demanding of high
maintenance, maybe you should open the door right now, give them a mint or
candy and send them across the street to your competition.
-- Mr. And Mrs. Client. How often do you expect us to sit down face to
face and review your portfolio or retirement plan ?
If the answer is at least six or eight times per year, and you cannot
deliver on that, then give them your competition’s business card and offer
them a candy on the way out.
You can create your own service questions to help you choose the clients
right for you. An easy way to do this is think of your top three clients,
ones that you really enjoy working with. Then imagine if you had twenty
more of them. Would you not have your best year ever if that happened?
The
challenge of increasing your minimum account size is that you will have
clients that you might have outgrown. There are two schools of thought on
this one. Some say fire your bottom 10% of your book each year. Others say
service them with your team or hire people to service them.
Regardless of
what you make sure that you segment them first. The way to segment clients
are not into A,B,C clients ( which is the old way) but to put them into a
grid based on the following:
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Assets under administration
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Client potential
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Referrals generated / referability
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Profitability
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Servicing time
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Nice people
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Want your help and trust you
The next thing you must think about is your time and your target number of
clients. How many clients can you truly service in a sophisticated high
touch relationship? For example if you feel you can service 150 clients at
an average asset base of $500,000 then your book of business target is $75
million for yourself. Then your service team will pick up the rest say $25
million. Your total book of business will be $100 million. Develop your
targets around a realistic numbers of clients you can personally handle.
If you are working in a team the numbers may be different, but each person
only has so much time.
Potential Results: Bigger fish = more fish per pound. Make sure they don’t
have too many bones with their last advisor.
Simple Rule: An advisors income is direct proportion to the income and
assets of their clientele.
Copyright 2003 By: Jay Conrad Levinson and Grant W. Hicks, C.I.M.,FCSI - Co-author of "Guerrilla
Marketing For Financial Advisors
", Trafford Publishing 2003.
You may use these articles in your
marketing, newsletters and web sites as long as you retain the copyright
information at the bottom, including the link to our web
site and inform us where it is being used as well as sending us a copy of
the publication.
Always check with
your compliance office and or branch manager before implementing any
marketing idea. The information does not constitute a recommendation for
the sale or purchase of any securities or insurance. |
