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Financial Advisor: How To Answer The Question “Whom Do I Serve?”

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Financial Advisor: How To Answer The Question “Whom Do I Serve?”

September 21, 2015

by Kristen Luke

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Many financial advisory firms come to me looking for a specific problem to be solved: marketing, staffing or profitability, to name a few. My experience is that usually the problem is a symptom of another, more fundamental issue.

To uncover the true cause of the issue, I ask firms who their clients are. Nine times out of 10, I hear one of two answers: (1) pre-retirees or retirees with $1 million or more in investable assets; or (2) high-net-worth individuals. When probed for specifics, I’ll hear “delegators,” “people who aren’t jerks” and “people who want to build relationships.” When I hear answers like these, it’s a red flag that a firm is not clear on who they serve best, and this issue is most likely a fundamental cause of the symptom they are coming to us to fix.

To solve this problem of not clearly defining the clients you work with, I use a Client Profile Worksheet. Using this tool will help you to organize and answer two key questions: Whom are you going to serve, and what are their financial needs and concerns? In other words, what clients do you really want to help?

Step 1: Identify general client profiles

The first step is to identify the types of people with whom your firm enjoys working. The idea is to narrow your client base rather than expand it because narrowing it will make your business more efficient and successful. Firms that are most successful at growing their business are those that have a focused client base, or a niche market, with which they share an affinity. For example, an advisor who previously retired as an executive at a Fortune 500 company may choose to target other executives at that company.

To help you define your client profiles, brainstorm three or four types of clients your firm most wants to target. Reviewing your client base is a good place to start, but you may discover through this exercise that the clients you are currently serving are not the clients you want to serve at all. Take this opportunity to think about the people you want to work with in the future.

If you have a specific niche, such as doctors, think about the different types of profiles of doctors you enjoy helping. For example, your profiles might be (1) doctors who are in residency and/or just starting their careers; (2) doctors who work for medical groups and are in the prime earning years of their career; and (3) doctors who are in private practice.

If you don’t have a specific niche, think about the general profiles of the clients you serve. For example, your profiles might be (1) young, high-earning accumulators who likely have liquidity events in their future (e.g., business, stock options); (2) senior executives looking to maximize executive benefits; and (3) retired executives.

Do not worry about how you will service these clients profitably. The point of this exercise is to identify whom you work best with. Logistics of pricing and servicing are addressed in another tool.

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