Michelangelo said, "I saw the angel in the marble and carved until I set him free." Like Michelangelo and his angel, some advisors can see their client profile in a blank Word document and type until the profile is set free to gather referrals. Others look at the same blank document and get writer's block--or worse yet, get it wrong altogether.
Consider the following two examples. Imagine talking to an attorney about developing a cross-referral arrangement and hearing the following descriptions from the attorney: "Glad you asked about the kind of client I serve. I work with clients paying $20,000 or more in fees."
Now, think about this one: "Glad you asked about the kind of client I serve. I help business owners structure exit plans for their businesses. Business owners want to feel confident that they will not need to return and rescue the business from poor management. I usually work with transactions in the $500,000 to $5 million range."
Most people select an attorney based on the attorney's knowledge of a specific area of the law. That could be estate planning, business succession or family law, for example. Fees may be a factor once competence has been established, but they are not the first qualification.
Like that first attorney, some financial advisors describe their prospective clients only in terms of assets under management. While AUM provides a measure of the complexity of the client's situation as well as fees they pay, a more detailed client profile--like the second attorney's--will increase referrals. That description provides details about the attorney's capabilities and skills. It shows the benefits that clients receive when working with that attorney. It describes the size and complexity of situations that the attorney has encountered. And finally, the description helps the listener identify suitable prospects.
Clarity can help your task. For example, like many newspapers, the Minneapolis Star Tribune lists executive changes weekly. If my client profile calls for "clients with $1,000,000 in investable assets," I will not see many opportunities in this list. However, if my client profile calls for "executives with concentrated stock positions working for 3M," I will regularly see names in that list that I can target.
An accountant who knows I focus on clients with concentrated stock positions may feel more comfortable referring those prospects to me than they would if I had a general practice. A human resources leader at 3M who knows I have a solid understanding of the company's benefits and that I work with several company leaders might answer my questions or even provide a referral.
Many people respond better to structure. With a detailed client profile, you are providing that structure which helps them think of prospective clients. And knowing your target market--where you can find prospective clients--will allow you to identify specific prospects.
A detailed client profile can also provide a focus for your marketing efforts and for structuring your client service. It's difficult to find a networking site for clients with $1 million in investable assets. It is easier to find a place to network with a senior executive at 3M who needs help with a concentrated stock position.
One of my clients was able to get a company's new senior vice president to explore a relationship. In their first conversation, the prospect complained about dozens of advisors who had sent him emails asking for his business. He selected my client because another executive had recommended him. Little did the prospect know that my client had asked for the recommendation. He knew that a direct contact would be much less effective than a referral from a peer.
Affluent clients want a connection to a potential new financial advisor. The connection might be a referral from a client or center of influence. It might be sharing involvement in a professional association or interest group. You will see these potential connections more easily by creating a profile of clients you prefer to serve. Once you have identified a prospect by name, you can find ways to meet him or her through a colleague or an organization.
With a specific client in mind, you can also more easily define the client service and advice processes that will meet their needs. Your client, Bill (the senior executive at3M), will have expectations that differ from those of Susan, the owner of a printing company. Bill might need to deal with concentrated stock positions, while Susan might be looking for help structuring a buy/sell agreement or planning her succession strategy. By picturing your ideal client as one of your current clients, you can tailor your services to their needs.
Constructing a profile
Before you construct your client profile, you will want to complete a couple of preliminary steps: Assess the profitability of your clients and assess your ability to meet prospective clients in the market.
Client profitability is a critical component of your client profile. Segment your clients into three or four groups and determine the average gross revenue for each. With this information, create a client service process that allows each of the segments to be profitable.
In assessing your ability to meet prospective clients in the market, you are determining if you can acquire enough clients from the market to meet your needs. You are also determining whether the prospects are accessible. For example, some associations do not allow vendors access to their membership, while other associations welcome vendors.
Once you have determined client profitability and a target market, you can define your client profile; you can reveal your angel in the marble. Now you and your centers of influence can readily identify specific individuals who meet your client profile.
A clear and detailed profile might include three or four of the following characteristics:
Personality: For many advisors this characteristic is one of the most important. "Advisor receptive" is often the first client characteristic advisors mention. Fortunately, most clients are advisor receptive--especially to advisors who share their perspective.
In Now, Discover Your Strengths, Marcus Buckingham and Donald Clifton say an "Activator" asks, "When can we start?" A "Deliberative," however, will "walk with care." An Activator client with a Deliberative advisor is a recipe for disaster. An advisor who understands the personalities that blend well can attract a more receptive client base.
Advice Needs: It is tough to keep up with all aspects of financial planning. Although middle income clients often can be served with broad knowledge of financial planning, advisors who specialize and delve deeply into specific issues are better able to serve wealthy clients. Identify the planning issues important to your clients and cultivate a thorough understanding of those issues.
Demographics: Facts like age, sex, marital status, investment assets, income, occupation and number of children provide clues about the client's needs and service preferences as well as your relationship with the client. Married advisors sometimes have a difficult time relating to single clients. Often advisors want to qualify clients based on investment assets or income to enhance profitability or assure a certain level of complexity.
Financial Perspectives and Philosophy: Clients sometimes have expectations about the advice solutions. The most effective relationships develop when these perspectives are aligned. Some advisors have a strong tax background; others put little emphasis on taxes. Some advisors strongly favor active investment management; others emphasize passive management. Some advisors spend a lot of time understanding cash flow; others expect their clients to take responsibility for their budget.
Values: Many advisors seek clients who share their enthusiasm for philanthropy. Others seek clients who prize thrift. Sharing ethnic, religious or cultural values may be attractive to both clients and advisors.
Interests: One advisor I know really loves to hunt and fish. He has taken many clients on week-long fishing trips. One of my clients staged a Fantasy Football draft event for his clients. Another brought a leading golfer to town to play with his clients and prospects. Several local advisors have sponsored client events to promote financial literacy.
When clients share your interests, it can strengthen your relationship. Think how enjoyable it is for that avid fisherman to talk fishing and relive their shared outdoor adventures for years to come. What interests could you share with your clients?
If you are one of the advisors who look at a blank Word document and get writers' block, start with client characteristics that you do not want. Once you have a complete description of what you don't want in a client, list words that mean the opposite of those characteristics. You may find a clearer definition of what you do want is in these opposites.
A detailed client profile can set your contacts free to imagine more prospects to refer. And it can serve you as that angel--setting your practice free to soar to new heights. Carve the marble that hides your angel.
John Comer, CFP and principal at Comer Consulting, LLC, (www.jcomerconsulting.com) helps financial advisors acquire clients and communicate their distinctiveness.
