Where to Find the Ideal Client for Your Practice

Hint: There is no single ideal client or place to find them.

Many firms dictate to their advisors and brokers the exact type of client they want to solicit. Most firms want to target clients with higher earning potential and greater disposable income. Though not set in stone, the ideal client is usually older with an already established investment portfolio with a seven-figure balance.

These can be lucrative clients, but it also can be argued that clients not meeting ideal demographics should still be targeted. Some believe that advisors should target people between 21 and 45-years-old whose cash or liquid investments fall between $50,000 and $500,000. If you're an advisor looking to add to your book of business, you perhaps shouldn't overlook the younger and less affluent group of investors.

Key Takeaways

  • Many financial advisors are taught to seek out new clients with a large number of liquid assets, many of whom are older, in order to keep a steady business.
  • Younger, less affluent clients, however, are often in need of financial advice and although they have less to invest for now are also less likely to already have an advisor.
  • Regardless of your target demographic, understanding where and how to meet more people that fit that mold is important to growing your book of business.
  • Many leads can be found in unassuming places around your community including clubs, groups, neighbors, professional memberships, or other advisor referrals.
  • With growing communication capabilities, financial advisors can also target clients digitally. As long as relationships can be managed online, there's no reason to exclude non-local clients.

Client Demographics

For starters, there are no defined principles that everyone falls into. There are millennials with more disposable income than they'll ever need, and there are folks preparing for retirement that have never used an advisor and simply don't have adequate savings.

In general, most middle age and older individuals with high net worth may have already achieved success, so they may be a more difficult client to obtain. They are more likely to already have a financial advisor, or they may already have a successful investment plan they want to replicate.

In contrast, their younger, less affluent counterparts may have spent much less time investing. They likely have not gone through multiple economic cycles or recessions. They may not be employed by a company that offers a 401k or do not yet have the cashflow to begin contributing due to constraints on their personal liquidity.

Alternatively, older investors with more disposable income might already have achieved their financial goals. After achieving milestones like getting married, buying a house, starting a family, older investors with larger portfolios may only be planning when they might be able to retire. On the other hand, younger investors with less money are only beginning their financial journey and may require more guidance to achieve the milestones mentioned above.

Who Is the Ideal Client?

Younger Clients With Lower Net Worth
  • More likely to need your help creating investment accounts or getting started with a 401k.

  • May have greater future earning potential than older clients as they begin their careers.

  • May be more likely to demand active trading/portfolio repositioning in preparation of major life changes.

  • More likely to be inexperienced which affords you the opportunity to educate and help foster the client's growth.

  • Have time on their side, and have the ability to financially strategize for the long-term.

Older Clients With Higher Net Worth
  • More likely to already have retirement savings or an investment portfolio.

  • May be more focused on strategizing drawdown of existing portfolio.

  • May be more likely to require passive-style of investing as future major purchases are less likely.

  • More likely to know what their investment style, have their investing preferences, and know what they want.

  • May require a more shorter-term approach as the investor's timeframe will likely be shorter.

As a registered rep, this doesn't mean that you should turn down higher-end accounts. They are great income generators and, if you do a good job, they may refer you to other wealthy individuals. Remember, however, that younger workers are more apt to switch jobs (and roll their 401(k) money into an IRA) and buy or sell houses as their family grows. These are instances when they are likely to need the advice of a financial professional, and they occur more frequently with younger demographics.

You may consider narrowing your practice to target only high-net worth clients or only working class families. Wealthy clients may be more demanding, expect top quality service, and be more focused on returns in the short-run, while less affluent clients may be more interested in hitting long-term goals like college or retirement saving.

Finding Potential Clients

So, how do you find these individuals so that you can make your sales pitch?

Lists

As a registered rep, you can sign up for a number of mailing lists provided by marketing firms that can help you pinpoint your demographic. Local marketing firms can provide you with similar data. Several online-only services also now exist that can provide leads by email or social media marketing.

Local Organizations

Consider joining your local chamber of commerce. This will allow you to meet a variety of business owners and prominent people in your community. These folks may need funding or financial consulting, and a strong relationship with local businesses may lead to them referring their clients to you as well.

Also, think about joining the local gym or other local organizations that may provide networking opportunities. These will allow you to meet a diverse group of people that are in your community. Remember, people like doing business with someone that they can see and touch, as opposed to just a voice over the phone or text in an email.

Link Up With Other Finance Professionals

Make friends with other individuals in the area in the same profession. For whatever reason, other companies or brokers may not be able to help a client - whether this is due to time constraints or lack of expertise. Offer to set up a referral system where you feed them business, and they'll send business your way. Remember: this type of relationship should be a two-way street, and be mindful to help generate leads for these connections.

School Events

Consider contacting local schools to give the kids a (free) discussion about your career as a registered rep. School administrators are usually receptive to this. This allows you to introduce yourself to new members of the community as well as contribute to the children's understanding of saving and investing. You can even send the kids home with your business card and literature describing yourself, your firm, your licensures, and your abilities. This will open up a number of doors to young couples with growing families in your community.

Look Local

Your local communities are filled with younger, less wealthy investors who are open to the idea of hiring a financial advisor for themselves and their families. Advisors have to be creative in their methods for finding them and making the sales pitch count. These individuals are not always high net worth investors, and no one client is going to make you extremely wealthy. Over time, however, adding a significant number of these clients to your book of business will almost guarantee a steady stream of commission in the not-so-distant future.

Developing a Digital Presence

In addition to becoming a recognizable name in your local community, financial advising firms are not limited by location. As long as you can communicate with clients and send/obtain documents digitally, there is no reason to think your relationship with your clients can't live virtually.

For the greatest flexibility of your business, consider developing an online presence to attract customers not tied to your specific geographic location. Develop a professional website to demonstrate professional credibility. Reach out to prospective clients on social media. Leverage scheduling tools, video conferencing platforms, and document sharing applications to streamline everything you'd normally do - just not in person.

If you're not entirely sure where to begin here, consider joining a professional group that may provide guidance. For example, The Financial Planning Association (FPA) offers coaching services on digital marketing.

Where Do Financial Advisors Find Clients?

Clients can be found anywhere. Often, you never know where you might meet someone who needs financial advice. By expanding your physical and digital presence, you're more likely to find clients that need your guidance. This includes being active in your community, joining professional memberships, connecting with fellow advisors, and developing an online presence.

Who Is the Best Type of Client for Financial Advisors?

There's a substantial different across the types of clients a financial advisor can help. Younger, less wealthy clients may result in long-term relationships that feel more emotionally rewarding. Older, more wealthly clients may be easier to work with and generate more income for your firm. Of course, no single demographic has all of the same trait, so there is no single best trait or type of client.

Who Do Financial Advisors Help?

Financial advisors help anyone needing financial guidance. Some people need help as they prepare to move out of their parent's house and set up their first retirement account. Others need help planning for selling their house as they prepare for retirement. As long as someone has an event coming up that impacts their finances, that person can use financial advising.

The Bottom Line

People everywhere need help managing their finances. Whether they are old or young, local or around the world, there are clients to be had when attempting to expand your financial advising practice. It's important to consider not all clients are the same, and assumptions should not be made about their financial standing. Anyone in your community - regardless of their age, how they are dressed, what car they drive (or whether or not they even own a car), every prospective client is an opportunity for you to help someone achieve their financial goals.

With a stronger presence in your local community or within virtual communities, you'll be able to target your specific demographic and get more clients.

Article Sources
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  1. FPA. "Digital Marketing."

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