Grow your practice by narrowing your client base
ROBBIE ROBINSON 20-Mar-2019
If you were an architect, it would be hard to build a house without visualizing who was going to live there. Similarly, it’s pointless to build a blueprint for your business without defining your ideal client. Before you can decide how to position your practice, you need to understand who you’re trying to reach.
Consider that some financial advisors concentrate their business on a niche group of clients—like retiring senior executives or small business owners—while others choose to focus on high-net-worth individuals or the mass affluent.
Spend some time thinking about your circle of clients, contacts, prospects, partners and employees. Now, visualize where you want your business to be in three to five years. Are you on track? To get there, you need to assess how you will grow your business over the next few years.
Begin by identifying the clients you want to serve. Consider these three questions:
- What types of clients do you know well?
- What types of clients are highly desirable?
- Who do you most enjoy working with?
In the early years of building a business, many financial advisors find it beneficial to cast a wide net and take on all types of clients. But there comes a moment when you realize that not all clients are worth your time.
Efficient financial advisors appreciate that they can grow their business more effectively by narrowing their client base. And as the Pareto principle taught us, 80% of your business will come from the top 20% of your clients. Plus, if you’ve identified your ideal client, you should pursue those prospects that fit your criteria.
One way to narrow your client base is to create a specialized practice. For instance, you may decide that your ideal client is a small business owner or a senior executive. You could build a practice that caters exclusively to a specific type of client. A specialized practice can have many benefits, including allowing you to develop a deep, specialized knowledge base.
Another way to narrow your client base is to build a practice that reflects your own passions and interests. When you incorporate the things you’re passionate about, studies have shown that your clients, your team, and your business are far more successful.
Yet another way to narrow your book is to reposition the bottom 20% of your client base. Stories about financial advisors breaking up with clients aren’t always plentiful, but to generate more efficiency in your practice, you may need to part ways with some of your clients.
Remember, if your practice doesn’t look like you envisioned, take the time to reassess and then build a blueprint that reflects your strengths and targets your ideal client. Defining your practice is an important exercise that can help you:
- Focus on the clients you want to work with
- Attract and retain the best talent
- Meaningfully grow your business