Why you should choose your clients wisely

If you aim to improve your productivity — and honestly, who doesn’t? — you’ll want to ensure you serve only your target clients.

That’s because the most prevalent productivity challenge for advisors is serving non-ideal clients, says Boston-based research firm Cerulli Associates. The insight is featured in the March issue of The Cerulli Edge — U.S. Asset and Wealth Management Edition.

A clearly defined target market is key to proactively minimizing productivity challenges, the firm said in a release on Wednesday.

That means having the discipline to turn some clients away. While advisors in the early stages of their careers may not want to do that, selectivity is critical for established advisors.

“On average, practices serve 142 clients per producing or revenue-generating advisor,” Cerulli said in the release. “As practices grow, they must be mindful of exceeding advisor capacity and diluting the client experience by taking on too many clients outside their core market.”

The challenge, then, becomes articulating your core market — something even long-time advisors struggle to do, Cerulli said.

“Many default to generic categories such as ‘retirees’ that are far too broad to have a meaningful application to their business development efforts or differentiation value,” Marina Shtyrkov, associate director with Cerulli, said in the release. “Wealth management firms should encourage advisors to identify their niche early on and consider how they can uniquely service that segment of clients in a way that other advisors cannot.”

For example, if you’re a second-career advisor, consider how your experience in your past career may be useful in targeting certain clients.

Cerulli also noted the role of technology in managing higher client volumes without compromising on service or advisor resources. Yet, tech often isn’t sufficiently employed.

More than two-thirds (69%) of U.S. advisors believed their practices could make better used of their existing technology stacks, Cerulli’s research found.

The high percentage “underscores the persistent opportunity for technology providers that can truly make their platforms the path of least resistance for advisor adoption and implementation,” Shtyrkov said.

Advisors can also manage capacity by referring non-ideal prospects elsewhere, implementing tiered services and hiring additional staff.

“Ultimately, practices that strategically align their value proposition with the right client type, fee structure, and AUM [assets under management] segmenting will be best positioned to scale,” Shtyrkov said.

For related insights, visit our continuing education site, CE Corner, to find out how you can develop and communicate your personal brand to appeal to your ideal clients.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.