Is this a great time to build up your list of ideal clients? I think so. People are more concerned about their money than ever and disillusioned with traditional investment-oriented financial advisors. Many of those advisors have a weak value proposition, making this the perfect time for their former clients to become your new ones.
So now is a time to not only find new clients but build a roster of those that are best suited to you. But first off, what is an ideal client? And how can you build a community of them?
Ideal clients often meet two key criteria:
1. They have the financial capacity to generate enough predictable recurring revenue so that their contributions to your business are significant.
2. Their personalities offer good chemistry with yours and they value your advice, which they demonstrate by actually following it.
A community of ideal clients, meanwhile, offers the advisor all the revenue she needs to run her business, pay her taxes, support her lifestyle and fund her family's goals, in accordance with her own personal financial plan. To do this, she often needs to generate at least $500,000 per year-and usually more. If she earns less than this, she might face gaps in her savings and investments, suffer from inadequate insurance coverage or make compromises in her lifestyle. Without a plan, the advisor more likely comes up with annual revenue only in the $200,000 to $300,000 range. When her plan is in place, though, she is internally motivated to work and achieve her goals.
Some advisors think having an ideal client community is just that-an ideal. Something that sounds too good to be true. That's understandable, given the forces at work against advisors. The very notion that they might stop adding new clients to their business in search of only those who fit perfectly seems strange. There are, after all, product manufacturers who want you to continually grab more clients so you have more people to sell their products to.
Your affiliate companies, such as broker-dealers, meanwhile, may be helping you with sales, marketing and practice management, but they do so assuming that you will prospect and market forever. Most of them don't have the time to truly coach and mentor you to build a more exclusive client list. They are too busy recruiting, handling compliance issues and trying to make the economics of their own businesses work in an environment of shrinking margins and budgets. It's a lot easier for them to simply recruit another producer than help you become more finicky about your clients.
Why Build An Ideal Client List?
Why not? Would you prefer that only some clients pay you what you're worth and enjoy your professional relationship?
Furthermore, why wouldn't you strive for such a compelling goal when it would likely inspire you to do better work?
Imagine in three to four years that you had an ideal client group, one you built by referral only, to a list of about 75 to 125 clients. Now imagine these things:
Such a group could generate annual recurring revenue between $500,000 and $2 million, based on your personal financial plan.