For the vast majority of advisory firms, strong organic growth is a top priority, but how do you ensure that your firm has a singular vision when it comes to attracting ideal clients and their assets?

One critical tool that successful advisors create is ideal client personas, which represent the attributes and demographics of their most profitable clients, who in turn find the most value in the firm’s services, Nikolee Turner, managing director for business consulting at Charles Schwab's Advisor Services, said in a recent podcast.

"In working with many advisors. We’ve seen firms grow their business by narrowing their focus to their ideal client personas,” Turner said. “Focused marketing efforts are more likely to reach your intended audience and actually resonate with them. Not only can this help with new business, but it’s also more efficient."

Schwab’s 2022 RIA Benchmarking Study found that firms with a documented ideal client persona, client value proposition, and marketing plan attracted 42% more new clients and 45% more new client assets in 2021.

While 81% of advisors rate “having a clearly defined ideal client” as important or critical to their business, only 25% of advisory firms have a formal ideal client defined at their firm, the firm found.

“In order to drive growth over the long term, any company has to understand what type of person they are perfectly designed to serve. By understanding and focusing in on the unique needs of your target client, you’re able to develop an experience that is perceived as valuable to that client and differentiates your firm in an increasingly competitive industry,” Schwab said in “Defining Your Value, a workbook advisors can use to create ideal client personas.

Narrowing your focus allows you to find and win the type of client your firm is best structured to serve, spending less time and money prospecting with clients who aren’t good fits, the company said. Developing strong ideal client personas also helps a firm craft effective marketing and communication strategies that zero in on profitable investors most likely to do business with your firm, Schwab said.

To create an ideal client persona, the firm urged advisors to identify “two of your favorite clients who are profitable, loyal and engaged. Clients you get real joy and energy from working with—whom you’re thrilled to have because they value you and use your services,” Schwab said.

From there, identify common characteristics, demographics and themes “that really tie them together and resonate across clients, like their mindset, financial goals, occupation, etc. Your ideal client persona will not be a single real person; it will be a composite of the best characteristics of your existing clients who value the services you provide and are truly the best fit for your firm,” Schwab said.

Strong personas include physicians and dentists who have built their wealth through their practices and need planning for a secure retirement, the firm said.

Executives or professionals who want to leave a lasting financial legacy for heirs and business owners in transition who are preparing for a  liquidity event and need tax and wealth-planning advice are also strong personas, Schwab said.

In creating ideal client profiles, Schwab also urged advisors to dig deep into commonalities that seem to resonate across clients. That can include in areas such as charities, concerns, personality traits, investing styles, risk profiles and even communication preferences, such as quarterly portfolio reviews.

The next step is to “look through the eyes of your clients” and find out what clients value about your offerings, products and services, which will give firms their value drivers, Schwab said.

These exercises should help advisors uncover what differentiates them as a firm such as “your service model, the solutions that you provide to address different kinds of challenges, community involvement, etc. As you walk through these different elements, you begin to create a picture of what your ideal client perceives as valuable – and why he/she works with you instead of another advisor,” Schwab said.

From there, firms can create a client value proposition which is an explanation that resonates with your ideal client and explains the value he or she gets from your firm as opposed to a competitor.

Schwab said examples of strong value statements include the following:

• “We provide customized wealth management, including charitable giving expertise that helps simplify our clients’ complex financial lives.”
• “We understand affluent women who have divorced or been widowed and help them regain financial independence.”
• “Many of our clients haven’t managed their finances for quite a while so we provide guidance, education and expertise. Our clients feel informed, confident, and reassured.”

“A strong client value proposition enables you to meet with prospective clients and paint the picture of why they will look back in a couple of years and be grateful that they made the decision to work with you,” the firm said.