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Cerulli: Advisors Should Segment Clients

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A financial consulting firm says advisors can become more efficient by dividing their clients into segments based on net worth.

Cerulli Associates Inc., Boston, says it found that only 37% of all advisors currently employ formal client segmentation, although another 39% report having a “sense of client groups” or an intuitive client segmentation approach.

Only 17% of advisors express no interest in slicing their clients into sectors by wealth, Cerulli says.

Segmentation is most commonly practiced by advisors who serve clients with a net worth mainly between $5 million and $10 million and by those whose clients’ net worth is primarily in the $1 million to $5 million range, the consultant found.

To be successful at segmenting clients, the advisor needs to balance relationship skills with their talent for analysis, Cerulli says. Although most advisors understand the potential of client segmentation, it finds many don’t actually practice it routinely.