Traditionally, investment planning has been at the forefront of how financial advisors add value for their clients. From advisors who earn commissions from the sales of financial products to fee-only investment advisors who charge based on client assets under management, the value advisors provide to their clients has often been centered on investment management. But, with the rise of index funds and the commoditization of investment advice, generating sufficient investment ‘alpha’ to justify a fee has become more challenging for advisors. Combined with growing advisor (and consumer) interest in comprehensive financial planning services, the number of ways advisors can add value for their clients has expanded greatly. And at a time when working as a fee-only planner, or even as a fiduciary, is not the same differentiator that it once was, being able to offer a value proposition tailored to the needs of the advisor’s ideal target client has become more crucial than ever before and could be one of the keys to success for advisors in the years ahead!
When an advisor is thinking about their value proposition for clients, they might be tempted to list as many planning value-adds as they possibly can (to reach the broadest possible base of potential clients). But this can create challenges for the advisor as well, as they will have to spend significant time managing the variability of the planning needs of their diverse client base. An alternate approach, however, is for the advisor to focus their client service proposition on the planning needs of a specific target client, which not only increases the efficiency of the planning process, but can also facilitate marketing efforts as prospects who fit the target profile will be most attracted by the depth and specificity of the advisor’s planning services!
To start crafting the persona of their ideal client, advisors can list key attributes of their target client. For advisors at established firms, this could mean thinking about their top clients, while those starting new firms could think about the type of clients they would like to serve. Client differentiators could include age, occupation, personal affinities, professional affiliations, and other criteria. The key is not necessarily to narrow down to a specific niche that meets every trait of the ‘ideal’ client, but rather to generate a sample persona that allows the advisor to start thinking about their ‘ideal’ client’s planning needs.
Once an advisor has a better idea of who their target client is, they can then consider how to tailor their value proposition to those clients. Because the advisor’s target client will probably only have certain planning needs (and may not require others), advisors can offer the value-adds from the hundreds of options available that best serve this target client. By applying the ideal-target-client framework, advisors can not only better target their marketing efforts (as they can align their website and other advertising efforts with their ideal client’s needs), but they can also streamline their day-to-day work, as they will encounter fewer ‘new’ issues as their client base grows.
Ultimately, the key point is that while there are more than 100 different ways to add value to their clients’ lives, the most successful advisors are likely to be those who are able to go deeper into the areas that are most important for their specific clients. In fact, by crafting an ideal target-client persona and shaping their service offering around the value-adds that most apply to these clients, not only can advisors enhance their efficiency, but they can also better differentiate themselves from more generalist firms, potentially leading to more efficient marketing and greater client growth in the long run!
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