Having a clear definition of your ideal client allows you to make wise decisions about how you spend your time. Just because you can serve a prospective client doesn’t mean you should.
Not sure how to define your ideal client? Think in terms of quantitative and qualitative factors.
When discussing ideal clients, most financial advisors start with the quantitative. And with good reason! At the end of the day, serving the best interest of your clients should be a profitable endeavor. It’s common to use assets under management as a gauge, but you should also look at the corresponding revenue. For example, $5 million in illiquid or highly appreciated securities is not likely to generate much revenue. On the other hand, your practice may charge a flat or hourly planning fee that makes AUM irrelevant.
From a qualitative standpoint, an ideal client is someone who:
There’s a clear progression from “needs” to “wants” that is predicated on the person’s awareness of what’s missing or what could be better. For example, most people would benefit from the objective opinion of a financial advisor but don’t realize how much until they receive it.
The move from “want” to “value” requires an appreciation of what you do. One easy measurement of that is their willingness to pay you. But it also comes out in your conversations. Do they quibble over your fees? Or do they express their genuine appreciation for your help?
Japanese organizing consultant Marie Kondo is known for asking if something “sparks joy.” You can apply the same principle when considering a client. An ideal client is someone who is a joy to work with. Do you look forward to a client meeting or phone call? Or do you cringe when you see who is calling?
Your ideal client definition should include both quantitative and qualitative factors. While there may be plenty of wonderful people who need, want and value what you do, not all of them will be profitable. Similarly, lots of clients may meet your quantitative criteria but are not much fun to work with.
If you want to build the practice you’ve always wanted, make sure to define your ideal client.
Brought to you by Pathfinder Coaching & Consulting, https://pathfinderadvisor.com/.
The representations and opinions herein are the opinions and view of Pathfinder Coaching & Consulting and are not the opinions or views of EQIS. The information is believed to be reliable but is neither guaranteed by EQIS nor any of its affiliates. EQIS and Pathfinder Coaching & Consulting are not affiliated. EQIS is not responsible for the content or availability of the third-party websites made available.
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