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.
They could help you generate the revenue not only to serve them better but to garner for yourself the personal income you need to fund your lifestyle and family goals.
Your clients will be experiencing true, holistic financial planning where they follow your advice to make smart choices about their money in alignment with their goals and values.
Your business could be worth $1 million to $4 million and other advisors and companies would want to buy it.
Turn these bullet points into a clear, compelling and positive statement about your future business, in the first person. You can use your own ideal numbers.
By dividing your finite amount of time by a small, finite number of clients in your community, you enjoy a host of benefits:
You actually get to know your clients at a deep and meaningful level, which makes you and them feel much better about your relationship. This will inspire client loyalty and prompt referrals.
You have the time to deliver a much more valuable experience to your clients. That also makes the relationship better.
Your business revenue and cash flow are predictable, so you know you have the money to provide a higher level of service and fund your own lifestyle without interruption, regardless of what happens in the market, the economy or the world.
Friedrich Nietzsche said, "He who has a reason why can bear most any how." So now that you know why you want to build such a community, how do you go about doing it?
Phase 1: First you have to develop an ideal client profile and then establish a base of ideal clients from among your current clientele. If you are like most financial advisors, even if you have hundreds of clients, chances are that ten or even fewer are actually ideal. Don't be concerned. This is normal and you can add more using this group as a base.
Again, your ideal clients are those who generate enough money to make your business work and have personalities you enjoy. You can tell who is currently an ideal client and who is not just by looking at your calendar. Those who make you smile are probably ideal. Those who make you groan or evoke no emotional response one way or another are not.
Phase 2: Now you acquire more ideal clients by referral. Tell your existing ideal clients the truth about what you are doing. Really. The whole truth. Show them this article if you want. One of the reasons they are ideal clients is that you can be this candid with them. Tell them about your vision of a community of only ideal clients, and how it's good for both them and you.
Then ask for their help. Show them the profile of a great client. They will likely know people who would be part of this ideal community and it will make perfect sense to them to make the referral and the introduction. Every ideal client you will ever need is just one good conversation away.
While doing these things, you should go about building a team of experts who will be able to help you meet the needs of this clientele. It is likely you have spent too much time in the past on endless prospecting and marketing while trying to serve too many diverse interests. One of the benefits of having an ideal clientele is that now you can devote that time to building a superior set of "deliverables" and the team to deliver them. Most of these people are not on your payroll.
What do you do with your non-ideal clients? Some of them you keep anyway. You likely have a few clients with whom you have such a strong connection that you don't care how little they pay you. You may also have clients who are a pain in the butt, but you just can't let go of the extra revenue. It's OK to have a few exceptions. Over time, as you add more ideal clients and your predictable recurring revenue increases, you can "politely disengage" from most of the non-ideal individuals. And you can tell them the truth too. It might sound something like this: "I've decided to specialize and only work with people who look like this." Show them your ideal client profile. "Since this does not really describe you, I think you would be better served if you worked with an advisor who specializes in people like you. Would you like me to recommend someone?" You can either have other advisors lined up to refer them to or give them advice on how to find somebody else on their own. Your clients are adults and are perfectly capable of finding a new financial advisor. Their lives will go on.
Keep in mind that "ideal" does not mean impossible. One of the beautiful things about this business is that you can build yours any way you want. Late author and management consultant Peter Drucker said, "The best way to predict your future is to create it." Your ideal client community will not come into existence by accident. It's only possible for those advisors who can envision what they want their business to be like and who are willing to do the work to get there. Time will march at the same pace regardless of what kind of business you build. So why not shoot for the ideal?
Financial Advisor has been hosting Webinars since January of this year that provide more detail about how you can build this ideal client community. You can find them at www.fa-mag.com/multimedia/3423.html.
Bill Bachrach is the author of several books, including the best-selling Values-Based Financial Planning. He has delivered approximately 2,000 keynote speeches and presentations teaching financial professionals to build high-trust client relationships. For 20 years he and his team have trained successful advisors and planners to dramatically improve their client loyalty, build their business by referral only, and live a very high quality of life. (www.baivbfp.com).