Knowing your Clients is the Key to Advisor Success

Knowing your Clients is the Key to Advisor Success


Why Financial Advisors should Identify and Define Clients and Target Audience

By: Julie Galbraith, Guest Blogger and Compliance Liaison
Published August 8, 2018

Sometimes keeping up with the ever-changing needs of your clients can feel like you are walking on wet sand. Understanding who your clients are, having a deep knowledge of the things that matter to them can be the difference between success and failure as a financial advisor. In addition, knowing who your target clients are – the ones you’d like to acquire in the future – can provide the blueprint for your marketing efforts and overall brand.

Identifying your Target Market

A strategy of “anything goes” is not effective when it comes to defining your audience and your clients. Defining your target helps you to better serve your clients as you begin to identify patterns regarding stages of life. The needs of a young couple in their mid-thirties are going to be quite different from a couple who is three years from retirement. Analyzing your current client base for these patterns can help you identify what kind of clients you’d like to acquire in the future. At what stages are you able to best serve your clients? Is there an area where you face challenges? In order to sustain your business, what kind of clients, and how many, do you need to acquire each year? What life circumstances are they facing in which you can offer significant expertise?

Taking the time to define and outline your ideal clients gives you focus. You’ll be surprised at the relational ground you can gain when you take the time to truly understand who your clients are, beyond a financial perspective. A lot of regulation has come out in the past few years regarding the suitability of investments for particular clients, and the advisor’s responsibility with regard to that knowledge. Knowing the net worth and risk tolerance of your clients isn’t enough. You need to really demonstrate that you understand every facet of your client’s financial situation and their goals for the future and that the investments you are putting your clients into are not counter to those goals and their financial situation. With advisors who have a large number of clients, this can prove a challenge. It is important to know how to stay on top of a client’s ever-changing needs, so you do not end up in quicksand.

Stay in Communication with your Clients

The best way to make sure you are keeping up with your client’s suitability needs is with meetings that allow you to investigate the facts. Is the household planning on a baby? Did their child start college or will they reach this stage in the next few years? Do they need to shift their investments because of retirement or loss of an income stream? A call or meeting with a few well-worded questions can give you the information you need to avoid an investment strategy that isn’t suitable for your clients (avoid that quicksand!!). Once you have the information you need, you will then be able to create a strategy for your client that is appropriate, aligning with their goals and risk tolerance.

Where advisors get into trouble is missing the details. Taking a few cursory notes and uploading them to the client file isn’t sufficient to demonstrate your knowledge. While it isn’t always fun to trudge along and create detailed notes, as you do this consistently, you will eventually reach solid ground. Each client is different and will have different accounts and features, and each account should constantly be updated to reflect the most current information. If this seems like overkill just remember, in an arbitration situation a lawyer will spend hours picking apart every detail of every transaction and the client’s suitability at the time of the trades; and if you have an account on file with five hundred thousand dollars in it, but the account value says between seven-hundred fifty thousand and one million, you will have no ground to stand on.

The best thing you can do for yourself and your clients is to maintain up to date accurate records so that you and those clients who entrust you to keep them out of the desert, have the confidence to move forward on terra firma.