ELITE ADVISOR BEST PRACTICES

Who Is Your Ideal Client?

Focus on working with clients who are exactly right for you

By Jonathan Powell

Key Takeaways:

  • Seek out only the most enjoyable, high-profit clients within your chosen target market niche.
  • Your ideal client profile will help you work with the right clients and the right number of clients.
  • Consider eight client characteristics when developing an ideal client profile.


In a previous article, Pick Your Niche, we showed you why elite advisors choose to focus on specific niches and how they go about selecting ideal niches for their businesses. The fact is, you’ll enjoy major benefits—being able to attract qualified prospects more easily and serve ideal clients more effectively, for example—by narrowing your focus to serve a single community of affluent individuals.

Once you’ve chosen your target market niche, you still have to create one more major filter to help you work with only the most enjoyable, high-profit clients within your niche.

This filter is your ideal client profile—a detailed description of the clients within your market niche who will be the foundation of your success.

You will use this ideal client profile to accept only those new clients who possess the traits you are looking for. Adhering to your profile will be crucial for simplifying your practice, optimizing your profitability and enjoyment, and maximizing your chances of reaching your goals.

You also will use this ideal client profile to help assess existing clients and segment them to determine which ones you should work with moving forward. This will be an important step not only in working with the right clients but also in working with the right number of clients.

Creating your ideal client profile

As you craft your ideal client profile, consider each of the following eight client characteristics. Write down your ideal answers for all eight on a single page.

1. General description. Who are the ideal clients that you want to target within your market niche? Describe these clients in terms of their stage of life—whether 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.

2. Geographic location. Where will your ideal clients be located? Most elite financial advisors stay focused on one particular geographic market per principal and avoid spreading themselves too thin by pursuing too many different types of opportunities.

3. Amount of investable assets. How much will each ideal client have in investable assets? While clearly you want to move upmarket, you must define exactly what the next level is in terms of investable assets. One useful guideline is called the “Rule of Five.” Take the top 20 percent of your clients and calculate their average investable assets. Multiply that figure by five. The result should be your target. For example, if the top 20 percent of your clients have on average $1.4 million in investable assets, then your target would be $7 million (5 x $1.4 million). Bear in mind that this is only a guideline and is not applicable to everyone. Use it to start your thinking about possibilities.

4. Minimums. What will be the minimum level of assets and minimum fee you will charge your ideal clients? CEG Worldwide research clearly points to the success of high-minimum strategies in generating higher income. For example, 34.3 percent of surveyed advisors earning at least $150,000 had set asset minimums of at least $1 million, whereas only 9.2 percent of advisors earning less than $150,000 had set asset minimums of $1 million. This means that most advisors who are targeting the affluent should define $1 million as the minimum required for assets under management.

In addition, consider instituting a minimum fee. If for simplicity’s sake we assume that your fee is 1 percent, then your minimum annual management fee for a $1 million client amounts to $10,000. If you decide to accept a client with less than $1 million, then he or she should still be subject to your minimum $10,000 annual fee.

5. Financial challenges. Determine the specific financial challenges your ideal clients have that you (or your strategic partners) can effectively address. For you to add the greatest value, the challenges will be complex, demanding a high level of expertise. Examples of such financial challenges include allocating assets of large retirement rollovers, managing concentrated stock holdings, increasing tax efficiency of investments and managing generational transfer of wealth.

6. Source of acquisition. What is the optimal way to acquire your ideal clients? It might be introductions from existing ideal clients, strategic alliances, credibility marketing, group presentations and other acquisition methodologies.

7. High-net-worth personality. What is the high-net-worth personality of your ideal clients? Many advisors find they work better with one particular high-net-worth personality than with others. Just as important, they find that they should avoid certain other personality types.

8. Personal enjoyment. Will you enjoy working with your ideal clients? The answer here should be a resounding yes. While this would seem obvious, financial advisors often overlook the simple fact that they should enjoy the people they are working with. An important part of your ability to provide your clients with world-class service will be your skill in building close personal relationships with each client. If you don’t enjoy your clients as people, this just won’t happen.

As you contemplate a substantial change in your client base, don’t panic. I have never met a financial advisor who has only ideal clients. But the more you focus over time on serving investors who are exactly right for you, the better off your firm and your team will be in the years to come.


About the Author

Jonathan Powell is a managing principal at CEG Worldwide, LLC in San Martin, California. Working with many of the nation’s top financial firms, he enjoys helping financial advisors transform their professional and personal lives by implementing CEG Worldwide’s research-backed principles.