John Bowen

Profile Your Ideal Client First

Eight key attributes to help you zero in.

August 4, 2008
by John Bowen, Jr.

An important step in working with fewer, more profitable clients is to define your target market niche — that one community of clients for whom you can add the most value. But as many CPAs and other financial professionals have learned, you need to go further than just identifying your target market niche. You also need to add a key filter to help you work with only the most enjoyable, most profitable clients within your niche. These are your ideal clients those who will be the foundation of your success. Focusing on these ideal clients will help you maximize profits, simplify your practice and serve your clients better.

As you craft your ideal client profile, consider these eight critical client characteristics:

  1. General description. Who are the ideal clients you want to target within your market niche? Describe clients in terms of their stage of life whether working or retired, their industry and occupation, and their specific company and job (if they're still working). Include marital status and education level, as well as age range and any other relevant demographics.
  2. Geographic location. Many advisors spread themselves too thin by distributing limited resources over multiple locations. Most successful advisors (by net income) stay focused on one particular geographic location market per principal.
  3. Amount of investable assets. While you clearly want to move up market, you must define exactly what the next level is in terms of investable assets you can handle. One useful rule of thumb is the “Rule of 5.” Take the top 20 percent of your clients and calculate their average investable assets. Multiply by five. The result should be your target.

    For example, if the top 20 percent of your clients have on average $500,000 to invest, then your ideal client will have investable assets of $2,500,000 ($500,000 × 5).
  4. Minimum assets under management and minimum fee. CEG Worldwide research points to the success of high-minimum strategies in generating higher income. More than 34 percent of surveyed advisors earning at least $150,000 had asset minimums of at least one million dollars, versus just 9.2 percent of advisors earning less than $150,000. For advisors targeting the affluent, minimum required assets under management should be one million dollars.

    You should also consider instituting a minimum fee. If your fee is one percent, then your minimum annual management fee for a one million dollars client would be $10,000. Should you decide to take a client with less than one million dollars, he or she would still be subject to the minimum $10,000 fee.
  5. Financial challenges. Determine the specific financial challenges that you (or your strategic partners) can effectively address. Examples include asset allocation of large retirement rollovers, managing concentrated stock holdings, increasing tax efficiency of investments and generational transfer of wealth asset protection.
  6. Source of acquisition. The optimal way to acquire ideal clients may include referrals, strategic alliances, credibility marketing, group presentations and other acquisition methodologies. Choose your best approach.
  7. High-net-worth personality, compatibility and profitability. Many advisors find they work better with one particular high-net-worth personality over others. Just as important, they find they should avoid other personality types.
  8. Personal enjoyment. Advisors often overlook the simple fact that they should enjoy the people they work with. An important part of your ability to provide clients with world-class service will be your skill in building close personal relationships. If you don’t enjoy them as people, this just won’t happen.

So there you have it, eight easy ways on how to go about profiling your client and streamlining your path down the road to success.

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John J. Bowen, Jr. is the Founder and CEO of CEG Worldwide, LLC, a leading research, publishing and consulting firm serving independent financial advisors, CPAs, insurance representatives and registered investment advisors. Download the latest research from CEG Worldwide or learn more about our coaching programs for financial advisors.