What is the single biggest contributor to a profitable advice practice?

You’ve heard it before. Identify your ideal clients. Develop a client niche. Define your target market.

There’s a reason you’ve heard these recommendations before. In our collective years of experience in working with financial advisers and risk specialists (and we’re talking well in excess of a century!), our team has seen this be the key to unlocking greater outcomes for a business – time and time again.

“But that’s just stupid ‘Consultant-speak’- it doesn’t work in real life!”

We’ve heard many arguments and opposition views to this:

• “I can’t turn business away while I’m waiting for the elusive ‘ideal client’, I have bills to pay!”
• “We can’t be that selective – if we turned a client away all our referrals would dry up.”
• And further to that… “We’re attached to an accounting firm so we have to take whatever referrals they’re prepared to send us.”
• “I’d say no to the wrong clients if I had more of the right clients knocking on my door.”
• “Even if they’re not going to be profitable, we might as well take them on – any revenue is good revenue, and we have the time to do the work.”

Some of these may well be an okay argument, if the alternative to taking on the client meant that you sat on your proverbial playing Solitaire. However, if you take advantage of your foresight, and spend that time marketing or building networks in the right places, you will generate a significantly better return on investment, and will find that the right type of clients will indeed start knocking on your door!!

I have lost count of the number of times I have worked with advisers who have been in a position where they receive referrals from a third party (or sometimes an in-house team) and they feel that they are not able to tell the referring parties who to source. In many cases, they discover that the referring party is keen to deliver referrals, but does not know exactly who the adviser is looking for. In the absence of instruction or clarification, they will send anyone who may possibly require some type of advice. When these advisers provide more specific descriptions of the type of referrals they seek, the referring parties – usually business owners themselves – understand the need to work with appropriate clients, and are happy to oblige.

This concept of target market is even more relevant and important in a fee-based advice business. Those readers who provide financial advice as well as risk advice will no longer be able to take on a non-ideal client on a low upfront fee in the hope that their trail commission ends up paying them back over time. Even if you specialise in, and only provide risk advice, the bottom line is that if you take on any client at any cost, you will build yourself a problem. You will take on more and more clients who will become liabilities; they may cost you dearly at claim time, or worse, won’t pay you enough for the number of times they call you. They prevent you from servicing your true clients, the ones who you really can deliver great value to and get great profits from.

What good can come from this?

We know it’s a fact – and have seen businesses prove it time and again – that when you are very clear about the people you want to work with, you get greater success from your business. And this can be attributed to a number of factors:

1. When you’re clear on your target market you build your entire service offering around them – and you hone your skills in the areas of advice that they need. The adviser who focuses on FIFO workers understands intimately the tax structures on which they work, the nuances of booking appointments with them, the flow-on emotional effects and family issues that can result, etc.
2. The product suite you use to implement your advice for that target market is also suited to them – at the right pricepoint, with the right functionality and accessibility for your clients.
3. You’re on the cutting edge of their likely upcoming needs, so that you can evolve your offering, and spot problems for them before they arise, placing you in the very best position to solve their challenges, as and when they need you to.
4. Your team can focus their education on the needs of that client base. The business that services self-employed medical specialists deepens their education in areas such as SMSFs, for example, and they know the best insurers that will cover their clients, with the best policy inclusions and definitions.

Better services = better advice for clients = happier clients = clients who refer more people. And guess what? They refer more people who are like themselves!

There is also something quite magical about finding your niche market. When you are very clear about the type of client with whom you work best – and you build your service offering around them – you will discover more of them.

Your marketing can be more targeted and effective. Just like when you buy a new car you suddenly see more of them on the road…when you become clearer on the ideal client you’re seeking, you will see them more often, and can attract them to you.

You will get to know what they read, how they think, and your marketing will become very targeted and effective. You will start working with clients who are true centres of influence within your market and, pretty soon, these clients will start seeking you out.

Overall, you can achieve the leverage and compounding effect that comes from that wonderful thing called focus. You and your team can gain greater efficiency and mastery in your target market, rather than experience the dilution of effort, and often sheer exhaustion, from trying to be all things to all people.

It’s one thing to define your target market… quite another to turn away those who don’t suit it!

For many advisers, it goes against their natural instinct to say ‘no’ to a potential client, or refer them onto someone else; and yet when you master the art of staying true to your client base, you’ll wonder why you didn’t start choosing who to work with a lot sooner!

As you build your business and your message around your desired clientele, you will find that you will receive less and less enquiries from those you don’t want to service. Yet, it is a good idea to have a solution for people, rather than simply blithely turning people away. Find another adviser (or a few) that you can refer people onto – someone who has structured their business to provide a quality service perfectly suited to their needs at an appropriate price point (for both adviser and client). Don’t be deluded into thinking that because they’re not a good fit for you, they’re not someone else’s ideal clientele!

If you’re not saying ‘no’ to at least some of your enquiries, you’ve either taken this journey some time ago and are really clear on your marketing message, or you’re still not getting it.

There’s a similar saying related to training staff: “What if I go looking for my ideal client and I don’t find many?” Well, what if you take on non-ideal clients, and find too many of them?

In the next article in this series, we’ll look further at what you can do to identify the best clientele for you, and what to do if your current client base doesn’t hold as many of the ‘right’ type of clients as you’d like!

In Practice Management, Elixir Consulting shares strategies for building better advice businesses.

Sue Viskovic is the Managing Director and founder of Elixir Consulting, a specialist consulting and coaching firm that is dedicated to helping financial advisers and risk specialists to get their businesses performing better.

Contact or follow the author: Website | Twitter | Facebook | YouTube