Who's your dream client? Time to figure it out

FPA report finds most advisers don't identify the type of investor they want to work with

Dec 12, 2013 @ 3:02 pm

By Liz Skinner

Three-quarters of advisers can't clearly describe who their ideal client is and that could be hurting their business, according to a Financial Planning Association report issued Wednesday.

Only 25% of financial advisers have formally defined who their ideal client is, the FPA survey of about 1,900 advisers found. Of those who have defined their ideal client, only 38% have actually put that into practice and have a majority of clients who fit that profile.

“When you can identify who you can work most effectively with, and become an expert in their needs, then you will naturally have growth and referrals because you'll do a really good job with those clients,” said Valerie Porter, an adviser and FPA's director of practitioner services.

When an adviser knows whom they are targeting as clients, they can direct their marketing time and money toward attracting that particular niche or group, Ms. Porter said. Additionally, clients will come looking for someone who has helped “someone like them,” she said.

Ms. Porter, an adviser with Woodbury Financial Services Inc., said most advisers probably don't clearly define and target a particular type of client because it can be scary to limit one's pool of prospects. It means advisers will have to say no to the clients outside that targeted market, she said.

A larger group of advisers set an asset minimum for clients. About 43% of advisers set an account minimum, according to the FPA survey, which was done in collaboration with Advisor Impact.

“Advisers spend a great deal of time building great relationships,” said Julie Littlechild, chief executive of Advisor Impact. “They spend considerably less time on building great businesses, and we believe that this creates risk for advisers, clients and the industry.”

Advisers reported a wide range of services they offer to clients.

Between 80% and 90% of advisers surveyed said they offer retirement income planning, financial planning and portfolio management, the three most-offered services. A perhaps surprisingly high proportion of advisers, 79%, offer college planning.

At the other end of the services spectrum, about 24% provide divorce planning and 18% offer tax services, the survey found.

Next year, the FPA plans to issue quarterly reports that follow up on areas that this inaugural practice management study identified as business weaknesses for advisers. Those reports will include further surveys and analyses, Ms. Porter said.

The first report will focus on time management, specifically analyzing whether advisers have clear business plans for themselves, including having defined the client for whom they most want to work, Ms. Porter said.

“If you aren't clear of your own course of action, it's hard to know how to allocate your time accurately,” she said.

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