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After I sold my financial advisor practice I went into practice management consulting. In other words, I learned all the things that I should have known when I was running a practice. I wish I knew more about segmentation And completed segmenting my clients on an annual basis. this does not mean getting rid of the bottom 20% of your clients every year. It does mean defining who your ideal clients are.

Key practice management process annually

Financial advisors who segment their clients earn 33% more than advisors who do not segment. A key practice management metric is segmented clients. However, segmenting the right way will show you where your revenue is coming from. We know your top 20% represent 70-80% of your revenue. Don't make the mistake of building more than 2 segments. Ideal clients and non-ideal clients.

The first and most common mistake financial advisors make with segmentation

Did you know that 75% of financial advisors do not have a clear ideal client definition? Start by scoring your ideal clients out of 10 in the following categories

Client name Eg Smythe
___1. Comprehensive advice
___2. Brings all documents
___3. Consolidates business and delegates to you and your team
___4. Wants planning and advice
___5. Listens to you and wants to learn more
___6. Understands your fees
___7. Generates ideal revenue of $____________
___8. Has future potential revenue for themselves or their family $__________
___9. Introduces you to the family / family members with potential
___ 10. Introduces you to other people (referrals) and wants additional planning
coordinated with professionals (your _____ network of professionals)

Clients with a score of 10 out of 10 are ideal clients and potential ideal family clients

Define who your ideal clients are and what the ideal revenue is from an ideal client and an ideal family. these people are financial delegators which means they delegate everything to you to take care of and value time more than money. having a clear set of criteria will help you segment better

Segmenting mistake number 2

For the last 33 years, I have focused on practice management I have seen read, and heard everything there is about segmentation. most of it is a make-work project. experts tell you to identify abcd clients and I have three and four different types of categories of clients. none of that is necessary you have ideal clients and families Anne nonideal clients and families. your goal should be to increase the ideal clients and families and decrease the non-ideal clients and families so that you end up with 100% ideal families you want to work with. stop the nonsense of categories gold silver platinum. How many ideal client families do you work with now and how many ideal client families would you like to work with in the future.

Segmenting mistake number 3

Not having a process or a program to take care of non-ideal clients. Some financial firms have programs to pass along non-ideal clients. if you do not have a program make one by finding an “overflow financial advisor”. Someone who has the capacity to take on additional clients and service your non-ideal clients and families. Everyone deserves a comprehensive financial plan you just can't deliver it to everyone. The overflow advisor can be a partner and associate another advisor in your firm or someone down the hall or someone locally who you know the angle to be part of your practice or team or not part of your practice or team. Ask your firm how joint codes can work for you when you segment clients. The key in working with an overflow advisor is the introduction. introducing clients properly and positioning the new advisor has more time to deliver more value and what that value will look like for them is critical. clients deserve more than just an email.

Segmenting mistake number 4

Financial advisors often make one of two big mistakes in segmenting and time management. They either pay too little attention at the risk of losing clients or they work too hard at trying to keep the wrong ones. Where do you spend your time? Once you segment, you will spend more time with your best clients, and less time with non-ideal clients. You will feel confident that you will keep the right clients, and the non-ideal clients who have too big expectations will be addressed. For example, on Friday you are going on holiday with your family for two weeks. You get two phone calls, one from an ideal client and one from a non-ideal client. The ideal client says” have a great holiday let’s connect when you are back. Your non-ideal client says” wow must be nice to take two weeks' holidays” Simple segmentation that will also increase the value of your overall practice and peace of mind!

The next step? So how can you start segmenting your clients? Start with 2 segments. Ideal and non-ideal. It can be quite simple, start by creating an excel spreadsheet and add in the following categories listed in this blog, or create your own. Create a scoring method and determine if they are ideal clients or non-ideal. Now the hard part comes in. Creating two plans, one plan for ideal clients, processes, and systems, and one plan for non-ideal clients processes and systems. You have to have a plan for each. Once you create those plans, it will become clear how you are going to grow your business at 15% or more on an annual basis and tackle capacity. Good luck in growing your practice! If you have questions, email them to grant@ghicks.com

How about your goals for your practice in 2023?

Comprehensive Practice Management checklist

https://practicemanagement.getresponsepages.com/ 

Sample: Comprehensive Financial Advisor Practice Management Benchmarking Report

Key data and KPI's Key Performance indicators. Do want a sample benchmarking report to help you understand how to get the edge on your practice and your competition? 

https://benchmark.getresponsepages.com/

Updated 2023 Technology Checklist for Financial Advisors 

This checklist is five years worth of research on the best processes elite financial advisors and their teams implement to acquire and service ideal clients, while running an efficient practice. 

https://technologychecklist.getresponsepages.com/ 



We are here to serve your practice, let’s talk

Contact us to help get clarity around your goals on paper, and have the goals conversation by contacting
Grant at grant@ghicks.com or click on the link to set up a no-obligation 20-minute
discussion https://my.timetrade.com/book/JMTNJ regardless if we work together, let’s have a chat and listen to your biggest practice management concerns to help you get clarity around your future business.

Grant Hicks, CIM, is President of Advisor Practice Management and co-author of “Guerrilla Marketing For Financial Advisors” 1st and 2nd editions. www.advisorpracticemanagement.com for speaking,
workshops, or coaching, contact Grant at grant@ghicks.com Grants combined financial advisor clients manage over 5 billion AUM, and earn over $50 million dollars combined!