The first step in developing a consistent marketing strategy is to choose a target client profile by defining what kind of clients you serve and want to serve. It’s almost impossible to approach a market effectively if you don’t know whom you are trying to reach.
There’s also a financial advantage to having a specific target client. When we look at other professions for best practices, there’s a strong correlation between pay and client profile. In legal firms, accounting firms, and doctors’ practices, specialists make more money than generalists do. Yet in financial services, advisors staunchly resist specializing. That’s often because they approach their work with a fear of scarcity. Choosing one group of people excludes others, thereby “limiting” their opportunity to grow the client base. This can be scary if you think each new client represents new revenue. As we saw in the last section, however, taking all comers may increase top-line revenue, but it frequently erodes bottom-line profits. Conversely, the deeper you dive into the interests or needs of a common group of clients, the better able you are to serve them, increase the percentage of assets they place with you, and get referrals.
Being a generalist can be hard on your revenue stream, and it can detract from the quality of your working life. When advisors have to meet the needs of a diverse client base, they tend not to develop any particular expertise that could engage them more in their work and differentiate them from the competition. Trying to be all things to all people also tends to result in generic, sometimes even superficial, service. As generalists, advisors frequently have to cater to the least common denominator.
Choosing a target market makes it easier to define and offer the most appropriate services. The more specifically advisors can meet their clients’ needs, the more satisfied the clients will be and the more rewarding the advisor’s work will become. Moreover, the more satisfied your clients are, the more referrals they are likely to make and the more word will spread about your services to other people in that niche.
For example, Sally is a horse owner in ranch country and has become the advisor of choice for her target audience: wealthy cattle ranchers and farmers. She stays on top of their trends and problems and can be very specific in how she addresses their needs. On a typical day, she will spend the morning meeting with a cattle rancher and the afternoon meeting with a horse breeder. Her knowledge of their issues makes it easy for her to wow them with information on the specialized feeding, housing, breeding, and medical costs related to their industry. Not only is Sally’s information highly targeted, but she also shares their interests, which elevates her credibility and their trust—not to mention her enjoyment of the business.
Another example is an advisory firm client of ours that specializes in technology executives with stock options. The advisors study the tech sector, staying abreast of trends and developments that matter to their clients. They have an advanced understanding of stock options and a profound feeling for the considerable challenges and opportunities faced by tech executives. They have become experts in this area and therefore easily attract new technology clients who need and value their expertise.
Whatever your niche, having one makes it easier to develop a compelling brand and value proposition that is highly attractive to your target client because it shouts out, “We are all about you! No other financial advisor knows your needs better.” Choosing a niche requires knowing yourself and your audience and having the confidence to proclaim openly and boldly who that audience is. We often suggest that advisors start by simply describing the group of people with whom they do their best work. For example, a firm that specializes in the technology sector can have this as their statement of their target audience: “Over the years we have found that we do our best work with highly paid executives in the technology sector. These individuals have complex financial needs and very specific issues they need to address. Because we focus our work exclusively on these individuals, they benefit from our specialized knowledge of how to make, manage, and maximize their highly concentrated wealth.”
More often than not, it is a lack of confidence that prevents advisors from focusing their experience, expertise, and efforts on a target client group.
Reprinted with permission of John Wiley & Sons Inc. from The Power of Practice Management, by Matt Matrisian, (c) 2013 by Genworth Financial Inc. Matt Matrisian is director of practice management for Genworth Financial. Look for another excerpt tomorrow at fa-mag.com.