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After I sold my financial
advisor practice I went into practice management consulting. In other
words, I learned all the things that I should have known when I was running
a practice. I wish I knew more about segmentation And completed segmenting
my clients on an annual basis. this does not mean getting rid of the bottom
20% of your clients every year. It does mean defining who your ideal
clients are.
Key practice management process annually
Financial advisors who segment
their clients earn 33% more than advisors who do not segment. A key
practice management metric is segmented clients. However, segmenting the
right way will show you where your revenue is coming from. We know your top
20% represent 70-80% of your revenue. Don't make the mistake of building
more than 2 segments. Ideal clients and non-ideal clients.
The first and most common mistake financial advisors make with segmentation
Did you know that 75% of financial advisors do not have a clear ideal
client definition? Start by scoring your ideal clients out of 10 in the
following categories
Client name Eg Smythe
___1. Comprehensive advice
___2. Brings all documents
___3. Consolidates business and delegates to you and your team
___4. Wants planning and advice
___5. Listens to you and wants to learn more
___6. Understands your fees
___7. Generates ideal revenue of $____________
___8. Has future potential revenue for themselves or their family
$__________
___9. Introduces you to the family / family members with potential
___ 10. Introduces you to other people (referrals) and wants additional
planning
coordinated with professionals (your _____ network of professionals)
Clients with a score of 10 out of 10 are ideal clients and potential
ideal family clients
Define who your ideal clients
are and what the ideal revenue is from an ideal client and an ideal family.
these people are financial delegators which means they delegate everything
to you to take care of and value time more than money. having a clear set
of criteria will help you segment better
Segmenting mistake number 2
For the last 33 years, I have
focused on practice management I have seen read, and heard everything there
is about segmentation. most of it is a make-work project. experts tell you
to identify abcd clients and I have three and four different types of
categories of clients. none of that is necessary you have ideal clients and
families Anne nonideal clients and families. your goal should be to
increase the ideal clients and families and decrease the non-ideal clients
and families so that you end up with 100% ideal families you want to work
with. stop the nonsense of categories gold silver platinum. How many ideal
client families do you work with now and how many ideal client families
would you like to work with in the future.
Segmenting mistake number 3
Not having a process or a
program to take care of non-ideal clients. Some financial firms have
programs to pass along non-ideal clients. if you do not have a program make
one by finding an “overflow financial advisor”. Someone who has the
capacity to take on additional clients and service your non-ideal clients
and families. Everyone deserves a comprehensive financial plan you just
can't deliver it to everyone. The overflow advisor can be a partner and
associate another advisor in your firm or someone down the hall or someone
locally who you know the angle to be part of your practice or team or not
part of your practice or team. Ask your firm how joint codes can work for
you when you segment clients. The key in working with an overflow advisor
is the introduction. introducing clients properly and positioning the new
advisor has more time to deliver more value and what that value will look
like for them is critical. clients deserve more than just an email.
Segmenting mistake number 4
Financial advisors often make
one of two big mistakes in segmenting and time management. They either pay
too little attention at the risk of losing clients or they work too hard at
trying to keep the wrong ones. Where do you spend your time? Once you
segment, you will spend more time with your best clients, and less time
with non-ideal clients. You will feel confident that you will keep the
right clients, and the non-ideal clients who have too big expectations will
be addressed. For example, on Friday you are going on holiday with your
family for two weeks. You get two phone calls, one from an ideal client and
one from a non-ideal client. The ideal client says” have a great holiday
let’s connect when you are back. Your non-ideal client says” wow must be
nice to take two weeks' holidays” Simple segmentation that will also
increase the value of your overall practice and peace of mind!
The next step? So how can you start segmenting your clients? Start with 2
segments. Ideal and non-ideal. It can be quite simple, start by creating an
excel spreadsheet and add in the following categories listed in this blog,
or create your own. Create a scoring method and determine if they are ideal
clients or non-ideal. Now the hard part comes in. Creating two plans, one
plan for ideal clients, processes, and systems, and one plan for non-ideal
clients processes and systems. You have to have a plan for each. Once you
create those plans, it will become clear how you are going to grow your
business at 15% or more on an annual basis and tackle capacity. Good luck
in growing your practice! If you have questions, email them to grant@ghicks.com
Ideal Clients Defined
Do you have a clear definition of what an ideal client is? How much revenue
do you want to generate for every ideal client, family or household? Is it
$5000 or $10,000 or $20,000 or more? Defining what your ideal revenue is
first. Then plan on delivering more value to those clients that pay you the
most, and you will gain confidence by delivering more to your best clients.
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