From the September 2011 issue of Investment Advisor • Subscribe!

Getting the Right Clients

To find the right clients, advisors must first look within themselves

As I was sipping my coffee at Starbucks recently, I overheard the following conversation between a financial advisor and his friend:

Friend: How is business going?

Advisor: It’s okay, but I need to get more of the “right clients.”

Friend: What is a “right” client?

Advisor B: Anyone who has money.

I had to laugh—his timing was impeccable—but in reality the advisor’s answer wasn’t really funny; as the saying goes many a truth is said in jest. The truth here is that there is much more to defining a “right client” than the size of his or her net worth.

A “right client” (aka target client) is a client whose wealth, other demographics and investing style fit into your business model and whose psychographics fit within your preferences.

The chart below shows typical demographics that can characterize one’s target clients. I would suggest you complete this chart for your top 25 clients. Once the chart is completed, look for trends in each item to determine the demographics of the clients who fit best into your book and business model.

Demographic Analysis

Were there any surprises? Is the net worth lower or higher than you expected? Is your business model, process and procedures in line with the common needs of your “right” clients? What, if any, adjustments should you be making to ensure a better client experience?

Now that you know what makes the right client, it is time to work on who. The who is determined by gaining a sense of the psychographics or the attributes relating to personality, values, attitudes, interests and lifestyles. In other words, what type of people do you enjoy working with?

Before you embark on this exercise for your clients, I would recommend you identify your own psychographics. Take some time and have a think—get a strong understanding of who you are, how you like to communicate, what type of people you like to be around and how you see the world.

Below is a chart of some typical psychographics that may be helpful in identifying your personal preferences.

Psychographic Analysis

Recognizing and identifying your communication style and personality traits can be challenging and may be best discovered by using a testing service such as Myers-Briggs.

Myers-Briggs focuses on two key activities: taking in information, and organizing and processing the information in order to make decisions. Some of the key questions it helps to answer for you are:

  • Where do you put your attention and get your energy? Do you like to spend time in the outer world of people and things or in your inner world of ideas and images?
  • Do you prefer to focus on the basic information you take in or do you prefer to interpret and add meaning?
  • When making decisions, do you prefer to first look at logic and consistency or first look at the people and special circumstances?
  • In dealing with the outside world, do you prefer to get things decided or do you prefer to stay open to new information and options?

Other testing services focus on similar but different factors. No matter what type of system you employ, its purpose is to give you guidance, insight and, most importantly, understanding into your preferences.

Once you have identified your own preferences, take those top clients from the demographics exercise and create their psychographic profile. Do you see common themes? You most likely will because numerous studies and writings have shown that likeability (and trustworthiness) is directly correlated with the similarity of values, beliefs, interests and experiences. One researcher described it as “an ancient skill encoded in us by our forebears.” When people connect at this basic level, they are engaging in an embryonic form of trust with each other.

In other words, as the old saying goes, people like to do business with people who are like them.

Does this mean that your “right” clients have to be exactly like you? Not necessarily. The answer depends on you and your ability to appreciate the differences between you and your clients, and to see their behaviors as a reflection of a personality type and not something to be judged. This is much easier said than done. You must want to do this and have an acute sense of awareness of both who you are and who your client is.

Case Study
Advisor B has a client who always has to be the first to have the “next best thing” and has to share his excitement regarding his new purchase to all. Advisor B felt that his client was very materialistic and could be doing something more worthy with his money. Furthermore, Advisor B likes his meetings to be efficient, to the point and action-oriented, and the client often gets distracted. This client fits Advisor’s B demographic target perfectly and he wants to retain him, but is feeling some stress in the relationship.

Advisor B went through the aforementioned exercises and learned that leaving a legacy for his children and community drove his client’s buying behaviors and that his communication style was very decisive and determined.

Advisor B did some introspection and discovered that instead of trying to understand who his client is and what drives him, he was judging his client’s actions, attitudes and presentation style in a very negative manner because they were different from his. This prevented Advisor B from really connecting with the client and fostering a true relationship with his client.

Advisor B has two choices here:

  • Keep doing what he is doing—judging
  • Embrace the differences between them—understanding

Not as easy as a choice as it may seem. Embracing the concept of understanding takes acceptance, adaptability and action—in other words, the advisor must be open and able to recognize, acknowledge and experience other people’s feelings. Understanding versus judging is not necessarily human nature and to embrace this way of thinking will take focus and determination—you must want to do this. If you do, it’s a great opportunity to see life from a new perspective and experience a whole new world that perhaps you didn’t see, service and satisfy before.

Bottom line: A greater probability of converting prospects into clients, clients into advocates and conversations into money in your pocket.

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