Who Is Your Ideal Client?

Many advisors have found success by narrowing their focus and choosing a specific niche to serve. In fact, according to a survey by TD Ameritrade, niched advisor practices showed 35% higher client growth, 25% higher revenue growth and 17% higher profit margins than non-niched financial planning practices. However, when you choose to establish a niched practice, you'll inevitably need to have some conversations about fit. 

Learn more about niching your practice, determining which clients are the best fit for your practice, and how to have those difficult conversations when a client isn't a fit in our FinPlan Friday conversation with Joe.


FinPlan Fridays

In our video blog series, FinPlan Fridays, Covisum® Founder and President, Joe Elsasser, CFP®, offers his take on the issues financial advisors see every day. Joe is a practicing financial planner with a unique perspective into the challenges for which Covisum provides technology solutions. Join us on the first Friday of every month for FinPlan Fridays, and get helpful tips to grow your financial planning practice. 


Hi, this is Joe Elsasser, CFP®, President and Founder of Covisum and also a practicing financial advisor, and welcome to another FinPlan Friday. Today, we're going to talk about how to have the hard conversation when a client isn't a fit. Now, in order to do that, we have to have several things going for us in our practice.

  1. We have to have identified a fit. Who is our ideal client? Who is the client that we can serve better than anyone else?

  2. We have identified the specific services that appeal to that ideal client that solve their biggest challenges. 

Now, assuming we've done that, over time, we're going to have fewer and fewer of these conversations about clients not being a fit, because our clients and our centers of influence are going to know what a "good fit" client is for us.

But as you're making that transition, you're going to get quite a few who are on the outside edges. And the key question there is, "how do you want to build your practice?" If you want to build your practice for the long-term, you're going to keep it relatively narrow. You're going to be the best for a certain subset of clients, which means that when you get a client or a prospective client in the door, either as a referral or responding to your marketing, you're going to have to have a conversation about whether or not they're a good fit for your practice. For us, we've found one of the more effective ways of doing that is to have the initial conversation about what their goals are, as you would regardless of whether you operate in niche practice or not, but then walk them through the specific services you deliver and actually explain why some of those services are or are not a fit for them. That fit conversation becomes so much easier when you have a defined slate of services.

Now, assuming that you get through that process, and there are still unanswered questions or still challenges that your practice is just not particularly well equipped to deliver on, then that's the conversation about fit becomes, "Your needs are X, Y, and Z. And although we can handle X, we're not specifically built to handle Y and Z." So that gets us to the third key point here. And that is identifying other advisors who specialize in areas that you don't.


So for our practice, we focus specifically on middle and upper middle income people in retirement transition and beyond. And every once in a while, we'll get a referral to (for example) a doctor who might own a couple of buildings and might have other business interests. Each of those represents something that is just outside of what we do. You want to refer them to another specialist in the community who you trust will provide a strong experience for them. It's one of those situations where they, from that point on, know that that's not your ideal client. And ultimately you build referral relationships with the other advisors that you're referring to. So for example, if I'm going to refer a high net worth doctor clients away, I'm going to want to refer that client to someone who's really a good fit who has specialized services for that sort of clientele.

And when I do that, I'm positioning myself as a good professional to refer the clients who are not such a good fit for them, that mass-affluent, upper-middle-market client who is in retirement transition. Now, they have to be a niche practice also. And so identifying those other practices in your community that have made the transition to really being a niche practice is critical to the process. So if I were going to recap:

  1. Know your own practice. What are you exceptional at?
  2. Communicate what you're exceptional at and also what you're not built to handle.
  3. Identify other professionals in your community who are built to handle those needs.

And if you can do all three of those, you'll have really smooth conversations when a client is not a good fit.

Financial Planner's Guide to Client Persona Development

Download this free guide designed specifically for financial advisors, and you’ll get the exact information you need to clearly define your niche and be on your way to establishing how you can serve them better than anyone else. 

Download the guide