Monday, July 11, 2011

Financial Advisor Business Plans - Choosing Customer Segments

Depending on the customer market segment or segments you seek to serve with your financial advisory business, your operations and marketing must be different.

Think about which segments you are best suited to serve, as well as the difficulties you may encounter as you try to serve the needs of more than one of these groups.


High net worth individuals, called HNWIs, are generally defined as having assets of over $1 million ready to invest. If your fees will be earned based on the value of assets under management, it is certainly in your interest to seek out and work with as many HNWIs as possible if you are qualified to do so.

Keep in mind that each individual will need more attention and service than an individual with less money to work with, but it should work out to a more profitable relationship nonetheless. To attract these individuals, evidence of your expertise and experience with large accounts will go a long way, as will positive references from past clients.

You may be called on to go out of your way to serve these individuals - making house calls, interrupting your vacation to answer a question, and keeping in steady contact to reassure them that you are keeping an eye on their accounts.

Smaller Investors

For the much larger target market of investors with assets of under $1 million, you have the challenge of working with them enough to make sure they feel well-attended to, while carefully setting the expectation that there are limits to the time you will spend with them. More mass marketing techniques like advertising, as well as referrals, can work to find these types of clients.

Hourly Rate Customers

If you seek to serve those who are getting ready to enter the investment market or begin their financial planning, you'll find a large group more comfortable with paying an hourly rate for advisory services before investing money through you.

Think hard about whether this group will represent a large amount of your revenue or if you will consider the hourly rate offer primarily a means to up sell customers to other services you offer.

If the latter is your strategy, remember that customers can generally sense when they are being sold to and that receiving advice of value may be the best way to encourage them to work with you further.

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