Bowen, founder and CEO of CEG Worldwide, previously worked as a financial advisor and firm executive. He served successively as CEO of Reinhardt Werba Bowen Advisory Services and Assante Capital Management.

The Perfect Profile

By John J. Bowen Jr.

For years I've been encouraging advisors to serve one group of affluent investors—a niche or target market. It's one of the smartest practice management strategies advisors can implement. But if you want to go even further and become an elite advisor, you'll need to create one more filter when working with clients—an ideal client profile.

An ideal client profile is a detailed description of the top clients within your chosen target market. It ensures that you work with the most enjoyable and profitable clients in your niche. Advisors who drill down to this level in the client identification process draw in qualified prospective clients more easily, serve those clients more cost effectively and provide the top-shelf expertise and world-class service those clients are looking for.

Eight Questions To Ask
A detailed and effective ideal client profile will help you hone in on exactly who you should be working with—and help you steer clear of clients who aren't a great fit for your practice. In creating such a profile, you'll want to ask eight key questions about yourself, your business and your perfect client:

Who are the ideal clients you want to target within your market niche? Create a detailed portrait. Describe these clients in terms of their life stage (working or retired), their industry and occupation and their specific company and job (if they're still working). Include their marital status and education level as well as age range and any other relevant demographic characteristics. Example: "Working senior executives of insurance companies, Aetna and Travelers. College educated, married with children, age 45 to 65."
Where will your ideal clients live? Geography is an important yet often underappreciated issue. Many advisors spread themselves too thin by pursuing too many different types of opportunities, and they make it worse by spreading their limited resources over multiple locations. Most successful advisors stay focused on one particular geographic market. One advisor we coached, for example, chose as his niche divorced and widowed affluent women in the New York City and Long Island area, "so that they're close enough to us that we can have a real impact on their lives," he says.
How much will each ideal client have in investable assets? While you clearly want to move upmarket, you must define exactly what the next level is in terms of investable assets. One useful guideline is the rule of five. Calculate the average investable assets of the top 20% of your clients. Multiply that figure by five. The result should be your target.

For example, assume that the top 20% of your clients have, on average, $500,000 to invest. Multiply $500,000 by five. In this case, your ideal client will have investable assets of $2.5 million.

This is only a guideline, of course, and it isn't relevant for everyone. Use it to start thinking about possibilities. Advisors often don't realize how easily they can move upmarket if they are willing to set the bar high and act systematically to attain that goal by positioning themselves properly with their target market.
What will your minimum asset size be? What minimum fee will you charge your ideal clients? CEG Worldwide research shows high-minimum strategies generate higher income. About 73% of wealth managers (who earn $881,000 on average) have minimum asset sizes for new clients. In sharp contrast, fewer than 40% of investment generalists (who earn just $279,000 on average) use these minimums, according to a 2007 study.

In addition, consider instituting a minimum fee. For simplicity's sake, let's assume that your fee is 1%. In that case, your minimum annual management fee for a $1 million client would be $10,000. Should you decide to accept a client with less than $1 million, he or she would still be subject to the minimum $10,000 fee. Remember, however, that the SEC requires that your fee be "reasonable in light of the services rendered." The accounts you accept should not be so small that the fee becomes unreasonable.
What are the key financial challenges your ideal clients face? Determine what specific financial challenges your ideal clients face that you can effectively address, both by yourself and working with strategic partners such as CPAs and attorneys. Industry research tells us that affluent clients' biggest challenges include wealth preservation and protection, estate planning and tax minimization. Some other common challenges include allocating large retirement rollovers, managing concentrated stock holdings and increasing the tax efficiency of various investments.

For you to add the greatest possible value, the challenges will be complex—and will demand a high level of expertise. Our advisor client explains that his key areas of focus are the complex emotional issues regarding money that divorced and widowed women face. "You cannot be truly effective financially with these clients until you understand-and help them understand—the emotional concerns under the surface," he says.
What is the optimal way to acquire your ideal clients? Sourcing methods that top advisors use include referrals from existing clients, strategic alliances, credibility marketing and group presentations. You will need to gain insights into your niche market and ideal client base to learn the most effective marketing approaches, which you can do by interviewing centers of influence in the niche, for example.
What is the personality of your ideal clients? Many advisors work best with one particular type of high-net-worth personality. Just as important, they know to avoid other personality types. For example, if you value low-key, unassuming clients, you will probably want to steer clear of investors in your niche who act like headstrong VIPs.

Our advisor prefers working with divorced or widowed women who have a strong drive to take good care of their families. "Family stewards look to us to be almost like their coach in a wide range of matters, and that is a role we really enjoy," the advisor says.

Personality also affects the way clients value their advisors. Some treasure the relationship; others focus more on investment returns. In addition, personality affects the amount of time clients require from their advisors; some will require substantially more time than others.
Will you enjoy working with your ideal clients? The answer here should be a resounding "yes." Advisors often overlook the simple fact that they should enjoy the people they are working with on a personal level. After all, you will be spending a lot of time with them, and you'll be spending a lot of time thinking about them. An important part of your ability to provide your clients with topnotch service is your skill in building close personal relationships with each client. If you don't enjoy them as people, a strong relationship just won't develop—and your clients will definitely notice.

Using The Profile
Think about these eight questions carefully and document your ideal answer for each one of them on a piece of paper. This ideal client profile will become your guide for making future decisions about which clients to serve—and when it's in the best interest of you and the client to just say no. As you move forward, use your ideal client profile in two important ways:

To accept only ideal clients. Begin to accept only those new clients who match your ideal client profile. Adhering to your profile will be crucial for simplifying your practice, optimizing your profitability and enjoyment and maximizing your chance of reaching your goals.

To help assess existing clients. Segment your current clients to determine which ones you should work with moving forward. This will help you not only in working with the right clients, but also in working with the right number of clients.

Every few months, take time to adjust and update your ideal client profile. Armed with this framework of whom you want to work with (and should be working with), you'll find that pursuing only the best clients will come naturally.

Reprinted from: Financial Planning