Ask yourself what specific factors will help solidify and identify this group as a separate group, as a niche that you can serve particularly well. A working description of a general summary might be something like this: “Working senior executives of high-tech companies, specifically the XYZ and ABC firms, college-educated, married with children, ages 45-60.”
The second factor is geographic location. Time really is money, and in today’s world it’s unrealistic to think that you can work exclusively with high-net-worth clients by phone or always have them come to you. So, to save travel time for both you and your clients, make sure they’re not too far away from you. For example, you might say, “We work with clients in the greater Atlanta metropolitan area,” or “Our ideal clients live/work within 15 miles of our offices.”
Third is amount of investable assets. It’s important to differentiate between income, net worth and investable assets, with the last of these being the most relevant assessment of your ideal client’s wealth.
Related to investable assets is the fourth factor of minimums, including both minimum assets under management or account size — what you are actually given to manage — as well as your minimum yearly fee.
It’s crucial that these factors work in tandem, because if you accept a client who has less than your normal minimum for assets under management, and still charge your normal minimum fee, you might get in trouble with state regulators or the SEC for not offering services that are proportional to your fee. Of course, you shouldn’t be undercutting your minimums in any case, but if you do, make sure you’re doing it in a rational fashion.
The fifth ICP factor is financial challenges. Again, this is the core of how you build value for your clients and for your business. For example, if you’re working with senior executives, you’ll want to develop substantial expertise in addressing financial challenges associated with concentrated stock portfolios, defined benefit plans, long-term incentive plans, stock option plans, ensuring a smooth transition to retirement and providing for clients’ legacies upon retirement and death.
Also, to gain leverage in dealing with the financial challenges of clients in any niche, you’ll want to build a highly specialized expert network including — depending on your client niche — a suitable CPA, a high-end life insurance expert, an estate planning attorney and so on.
The sixth factor is to consider your source of clients. That is, how will you acquire them? Will it be through referrals, strategic alliances, seminars, or something entirely different? As previously discussed in this column, the very best source of new clients is referrals from existing clients, colleagues and strategic alliances with relevant experts in other fields.
High-net-worth personality, the seventh factor, refers to the eight high-net-worth personality types identified by CEG Worldwide. What’s important to know is that each of us is not meant to work with everyone. We all have personalities, and so do our clients, and as a result we’ll be naturally more or less compatible with different kinds of people.
So, as part of your ICP you need to understand which types of high-net-worth personalities you are best suited to work with. If you have a client whose personality conflicts with yours — one sign is if you’ve awakened in the middle of the night thinking about a conflict with a client — then you need to fire that client.
The final factor is personal enjoyment. Life is too short to spend your time and energy working with people that you and your staff don’t enjoy, people who are inherently rude, overly demanding, disproportionate time drains or just plain old hard to work with.
While this isn’t the first factor on the list, it’s still an important part of your ICP, and for your and your staff’s sake, make sure you really do enjoy all your clients.
Successful on Purpose
Your goal, as always, is to be successful on purpose, and defining and sticking to an ICP is truly square one. Some 25 years ago the industry icon Harold Evensky was speaking to a group of financial planners about how he had transformed his practice and moved up-market to a minimum account size of $1 million, which back then was pretty astounding.
An audience member said: “How can you do that? How can you possibly have clients with $1 million?” Harold replied: “Well, you only accept clients who have $1 million to invest.”
Your ICP should be part of your business plan and your marketing plan. Your staff should know it cold, and your minimums should be real, with exceptions made on an informed and deliberate basis, that is, have the exceptions really be exceptions and not common occurrences.
Ultimately, having and sticking to your ICP amounts to drawing a line in the sand and saying: “I’m going to be in charge of my business. I’m going to determine not only whom I’m going to work with, but whom I’m best suited to work with, and I’m going to populate my business only with clients who are profitable and enjoyable to work with.”
You’d be surprised how much fun it is to get up and go to work when you’ve built your business with the basic tenets of profitability and enjoyment in mind.