Creating an Ideal Client Profile for Financial Advisors – Do advisors need an Ideal Client Profile?

what are the most essential elements of
an ideal client profile for financial
advisors who deal with individuals and
families hi I’m Mark little I’m going to
cover all the Essential Elements of uh
what needs to be involved in your ideal
client profile whether you should have
one or not and in the end I’m going to
cover three things that uh I don’t think
are covered anywhere else and so uh you
know the critical factors that need to
be final checklist once you’ve completed
your ideal client profile well let me
let me start with the basics should a
retail financial
advisor a financial advisor that deals
with the retail public individuals and
families should you have an ideal client
profile well it depends it depends on
whether you have minimum standard s now
in my case I deliver what what I
describe as truly comprehensive
financial
services and so in my case I have quite
a few minimum standards I’ll go through
some of those here in a minute but if
you have standards then you will
accelerate your client acquisition
process if you will sit down and draft a
clear and simple ideal client profile
now I’ve provided a link down in the
description uh for you to see an a
sample ideal client profile frankly it’s
mine and you can feel free to uh to
borrow ideas off of mine but if you’re
if you’re curious what a crystal clear
ideal client profile looks like that uh
creates enough Clarity that it actually
accelerates uh client
acquisition go look at the sample so
yes you should have an ideal client
profile uh many financial advisors do so
I’ve been in this business 40 years I’ve
been working with other financial
advisors since 2002 so prior to that I
just built my own business went about my
Merry way uh in 2002 I was asked to
speak at industry conferences and I
started interacting with a lot of other
financial advisers and I would always
ask almost first question when I’m
trying to understand you know what is it
that a financial advisor is attempting
to build in terms of you know what is
your client service model what what are
the the the deliverables that you
provide to your clients my almost very
first question is do you have an ideal
client profile so the reason I bring it
up is because the answer is off often
yes because I’ll say let’s pull it up or
send it to me and let me look at it it
and when I look at it if it exists it
almost always
violates uh some of the some of the
rules of what I have found to be uh the
essential elements that that really make
an ideal client that works all right so
what are they let me walk through what
needs to be the case now first of all I
would not put on the title of your page
you know ideal client profile I wouldn’t
do that but what we recommend is that at
the top of the page you say something
along the the idea of you know the the
client that we serve
best meets the following criteria or the
client we serve best have the following
traits or the profile of the client we
serve best is below okay so you get the
idea you’re not acting mercenary about
it you’re not you’re not saying look I’m
very rigid legalistically I only deal
with boomy boom bitty boom it is true
you you you know and that’s one of the
big mistakes that your ideal client
profile should resonate with people in
that as they go through it if they’re
are not if they’re a potential ideal
client of yours they should be able to
go through your ideal client profile as
kind of a checklist like yep that’s me
yep that’s me and and so you should set
up your ideal client profile in bullet
points and each trait of what what is a
profile
item should be a separate bullet all
right and on each trait there should be
a headline I do them in all caps and
then a little description that explains
the headline all right so as your
creating your ideal client profile these
bullets should be all of the traits a
that need to be in place for it to be a
client that you serve best now I
recommend that you just think about your
top clients right now you know pick pick
your top three clients and and ask
yourself very candidly what is it about
them or what is it about the chemistry
between them and with me that really
makes it work so you think about of the
clients that we actually serve best what
are the traits that seem to be in common
with them that really makes the
relationship valuable to them and I’m
saying be very candid about it and start
off with a draft ideal client profile
and list all of the traits uh you can go
look at the sample but for me uh the
client has to be passionate about their
goals now that’s not true for every
advisor but I’m saying it’s kind of a
quirk of mine uh I’ve sat in front of
lots of people over the years that they
don’t like goals they don’t think in
terms of goals and when you ask them
what are your goals they they start
sounding a little foggy or
wishy-washy and I’m not saying that you
know I’m not saying there’s anything
wrong with that but what I am saying is
it doesn’t work for me if somebody
cannot clearly articulate what they are
trying to achieve in terms of their
objectives that require money like
Financial objectives if if they can’t uh
explain it to me in some way then I I I
can’t work with them I mean I can work
with them but the relationship has never
been good so I I have that as a bullet
point for me you know that I need to
make I I work best with client who are
passionate about their goals now
thankfully that’s most
people and um and so that’s one another
one that I noticed that is just
something that upon reflection as I was
thinking about my top clients it’s that
they enjoy
Simplicity now what I’m not saying is
that I’m not interested in complicated
clients so remember when I said for each
bullet point you was you
establish what the the concept is by
putting a headline and then you can put
a sentence or two in essence describing
what you know explaining the headline so
uh you could in my case you put enjoys
Simplicity and I put that in all caps
that’s the headline then how do I
explain that well uh I make it clear
that I I work best with clients that
enjoy having their financial affairs
structured in as simple as a way as
possible given the the circumstances of
their finances so uh if I were to
explain it out loud to a client I would
actually say it a little bit differently
I would say I actually enjoy working
with complex situations complicated
clients with complicated and interesting
problems what I’m saying is that I like
to work with clients that once all the
complicated moving parts are uh
identified I’m going to put in place as
simple of a structure as that relevant
financial situation will allow for so it
may still be somewhat complicated but
not this complicated I I I’m going to
structure it so that if there are this
many complications in a in a family’s
financial affairs if I can structure it
so it’s much
simpler maybe still complicated but it’s
much much more streamlined and simpler I
like clients that really love that
idea and and some clients it just seems
I’ve figured out over the years some
clients that that is not an important
value of theirs you know it’s almost
like they go for the most complex
structure like how many of you have ever
come across a um a client who says uh
well I I’ll ask why do you have
retirement accounts in 10 different
banks and they say because I got them
different years so I ended up in 10
different uh retirement accounts because
I was shopping for the highest yield and
so now I end up with 10 accounts so if
this were an actual client relationship
I would ask them if I could structure it
so that you have uh your four retirement
accounts All in One account and and they
are in substantially similar things to
getting in essence as good as return as
before but and sometimes even better you
know do you like the idea of having all
of these retirement accounts in a single
account versus the way you’ve got it now
and what I’m saying is I like clients
that enjoy Simplicity as simple as you
can get it given the complexity of their
situ
so I’m saying be candid about all of the
traits now I said make a draft so more
on that in a minute what you’re going to
do is you’re going to put together a dra
a draft ideal client profile and you’re
GNA have somebody else look at it and I
would recommend you know let your spouse
look at it if you have people working
for you in the firm have a conversation
with them uh I I take good friends out
to lunch like so if I have a colleague
or an associate or an acquaintance who’s
a
successful uh person affluent person uh
I’ll I’ll ask him to lunch and say would
you mind if I asked a business question
and I would slip my draft ideal client
profile in front of them and and I would
get their reaction to it and and just
have them go through it Point by point
and see if they have any uh lack of
clarity on the way that you’ve written
it or if there’s something that you’ve
put there that gives them a toxic
reaction ction
now I’m not saying that you shouldn’t be
very very clear about the profile that
you’re looking for so much so that if
who you’re showing it to does not fit
the profile well maybe they have a toxic
reaction only simply because it’s not
describing them and and you explain to
them no uh that’s the point of the ideal
client profile for the people that it is
a good fit for they’re just checking
them off and when they’ve gone through
the entire list they go wow that’s
me but
explain uh that it will also describe
who it’s not and that’s tip number two
tip number one is be candid about all
the traits that need to be in place for
a client relationship to be a really
really good one and so those are the the
all the traits um but then you need to
make sure that there are bounce out
factors now this is the biggest problem
that ever see in ideal client profiles
it’s that the advisor writes the ideal
client profile to Encompass everyone in
other words it’ll say well I work with
you know Physicians and Health Care
Professionals but also business owners
and corporate people so in other words
everyone no that’s that’s that’s not the
way to craft an ideal client profile if
you just work with Physicians and Health
Care Professionals say that and if you
uh come across somebody who looks at it
and they say well unfortunately I don’t
fit that profile I’m a business owner or
you know I’m a lawyer or something
something else other than a physician or
a healthcare worker you just you you you
need to craft it in a way that you just
say I’m sorry well then you don’t fit
the profile of the client we serve best
okay fine well be careful now how do I
recommend that you put bounce out
factors so that if somebody comes to it
and it doesn’t fit the profile it’s
actually a good thing that you’re
actually getting rid of people that you
don’t want to work with all right so I’m
recommending two things in this bounce
out Factor uh so that when somebody
reads it if they don’t fit the profile
they will self select themselves out
okay so the two factors that I recommend
are
if you
deliver uh more than one client
deliverable so in other words you’re not
just a financial adviser that just does
Investment Management money management
nothing else okay well that’s you don’t
you may not even need uh an ideal client
profile in that you’re looking for a
certain type of client that does your
brand of investment management or is
looking for that and and it might
Encompass everyone but if you offer more
than one deliverable so in my case I
said that we we deliver truly
comprehensive financial services so
likewise if you deliver two or more
services maybe investment management and
financial planning or uh in financial
planning investment management and
estate planning or you get the idea two
or more uh or like in my case you you
actually deliver on comprehensive
Financial servic
however you define that well then I
recommend in that case if you have two
or more deliverables make sure to say
that one of the factors is I only work
with financial
delegators now bill backra in his famous
book values-based financial planning uh
he describes better than I’ve ever seen
it described before the different types
of clients and if you haven’t read that
book you should it’s it’s a book that uh
that’s designed for the retail public so
it’s it’s designed for your potential
clients to potentially read this book uh
but in there he gives a really clear
definition in a way that c potential
clients would understand and he breaks
them out into you know uh he he asks the
the the reader of the book to say which
personality type are you are you a doit
yourselfer or are you a financial
delegate
or are you something a term I think he
coined a financial collaborator okay so
what is that well a financial
collaborator is someone that goes to an
advisor and they want to see a range of
options but they want to make the final
decision so they want to collaborate
with the
advisor uh what’s it doit yourself or do
I need to even describe it it’s someone
that doesn’t want your help and doesn’t
want to pay your fees okay so what am I
saying to put in as a bounce out factor
I I would say who are Financial
delegators so what’s a pro the profile
of the client we surest they’re all
financial delegators and I would Define
that uh and just for your information
it’s the opposite of a do-it-yourselfer
a do-it-yourselfer would say um you know
why on Earth would I pay an adviser to
do something that I could do myself well
the financial delegator has a very quick
response to that a financial delegator
says why would I do anything myself that
I could possibly hire someone else to do
therefore freeing up my time to do
things that are more important than
money and this is Bill Barrack’s whole
point you know I we work you know the
profile of the client we serve best is
they’re all Financial delegators someone
who appreciates advice and is is willing
to hire someone to do it in essence you
can read how I put it below in the
sample ideal client profile but that’s a
bounce out Factor if you word it
carefully and accurately to the way you
mean it in your head then when somebody
reads it they think to themselves no I’m
more of a do-it-yourselfer that’ll
bounce them out and that’s a good thing
do you really want to be working with
doyour sers or financial collaborators
well in my case no I want to work with
people that value advice are willing to
pay for an advisor and when I take go to
the trouble to create a financial
strategy across all of their financial
affairs it’s not like I want clients
coming in there and picking and choosing
like it’s a cafeteria oh I’ll do this
and I’ll pitch that I’m not going to do
this because I don’t know about you but
when I create a comprehensive written
lifetime Financial strategy it’s
comprehensive and if you go eliminating
pieces and parts of it well then it
doesn’t glue together and it doesn’t
create the probability of achieving the
financial objectives that the client has
shared with me okay so Financial
delegator is a balance out Factor what’s
the other one you should in some way
shape or form Define the minimum account
size that you’re willing to deal with
now you can do this by saying you know I
work uh only with clients
that um that have investable assets over
$2 million or three million or five
million whatever your minimum is you you
could do it that way uh or you could say
you know our our services only make
sense to people willing to pay
$36,000 per year for truly comprehensive
financial services and I’m just picking
36,000 out of error it could be whatever
your annual fee is it could be 26,000 or
like in my case
$45,000 uh per year for an ideal client
so you could put the fee amount so you
could put the investable asset amount
minimum that you require before you’ll
work with someone or you you could put
the actual fee amount or you could do
like like you’ll see in the sample the
way I did it our services are so
comprehensive they make sense only for
families who have accumulated over $5
million uh in
assets besides their residents okay and
the reason I chose that way of
establishing and explaining the minimum
is because I found with affluent people
they can conjure up that number in their
mind pretty accurately without having to
go look anything up and I also have
found in my testing of this that if I
put the fee amount in there
45,000 even really great potentially
ideal clients self- select out it’s just
it it it for some people uh that number
just sounds too big not even knowing
that the value we provide exceeds
$45,000 so I decided to word my minimum
in a way that I thought they could
conjure up on their own without having
to think too hard and I added the part
not including your residents so that you
know uh Mo I don’t know about you but
most of my clients do not plan on
selling their house at some point in
their life and spending the money on
goals so most people have their
residents and they plan to continue
having it but anyway the point is the
two bounce out factors I recommend that
you do include are financial delegator
and an amount of assets below which you
will not work with someone now keep in
mind what are we describing here what
kind of
client the ideal client so all right so
somebody reads this and they say you
know I don’t have that amount of money
accumulated other than outside of my
residence uh okay fine well they then
they don’t fit the ideal client profile
the question is would you work with them
at all and that’s really my final point
that you should if you accept clients
that don’t meet the ideal client profile
well then you should set up a separate
profile for nonideal clients so okay
fine be be true and honest about the
ideal client profile you list all the
traits of the client you serve best you
put in a couple of traits of Bounce out
factors financial delegator and we work
best with u you know uh families who
have accumulated more than I’ll pick a
hypothetical number that you might
choose but let’s say $3 million so I
work with families that have accumulated
$3 million not including their residents
okay fine so that’s going to bounce out
a couple of people when they read it
well that’s fine then all I want to know
is of those people that are bounced out
am I still willing to accept them as
clients but maybe not ideal clients if
the answer is yes then you should take
the time to map out a separate nonideal
client profile now on this final point
you need to follow the same basic
principles you need to list the traits
of how people opt in and what will
bounce them out but at the top of the
page please do not put non ideal client
profile you don’t want to sa that term
to a potential client I would suggest
for the non-ideal clients that you name
them something else but in your mind and
my mind when we hear that other name we
think nonideal client but yeah I’ve I’ve
worked with advisers who called their
nonideal clients signature clients okay
that’s fine so the signature client we
serve best has the following qualities
and then you list the qualities of the
now minimum standard or you’re not going
to work with them at all all and that’s
the question on the table what is the
minimum and what are the traits of
someone that you’re you’re just not
willing to work with at all so if you
tell me well I’m at the point in my
career I don’t want to accept any
clients unless they have
$250,000 in investable assets okay well
there you go there’s your minimum
standard uh usually for nonideal clients
and some some advisers call them Legacy
clients so the Legacy client we serve
best has the
following traits and you you just say
like I eliminate a lot like do you
really care if they’re you know enjoy
Simplicity or passionate about their
goals it it should be some less strict
criteria but be honest still be candid
because there still may be some things
that that you will insist upon I don’t
accept non-ideal clients but if I did I
would still want to have Financial
delegator on on that list just me so be
candid about it but include the balance
out Factor as whatever the minimum is
and and our signature client or our
Legacy Client Services make sense for
families who have accumulated at least
uh
$250,000 in assets outside of their
residence something like that so that’s
really it be candid about all the traits
make sure you’ve got a very clear bounce
out Factor we recommend financial
delegator and describing your minimum
and then if you accept clients that
don’t meet the ideal client profile
we’ll just be honest about it let’s call
them a certain class of client call them
signature clients and say and you’re
going to create a second document a
totally separate profile for the non-
ideal client and it’s it’s going to look
similar to the ideal client profile but
in the at the top it’s going to say the
signature your client that we serve best
has the following qualities and you list
all of them including your minimum
standard that if if if it’s below a
certain amount it’s just not profitable
for you to accept them as a client and
so there you go most advisors have two
profiles they have the ideal client
profile and the non- ideal client
profile and when they’re sitting in
front of somebody
discussing uh whether it’s a good idea
to work together or not I get them to
describe their situation and once I’m
clear on their situation very quickly
it’s obvious which profile to share with
them I know in my case if if as they’re
describing their financial affairs they
have less than $5 million well put the
ideal client aside and I’m going to say
it seems like you fit the profile of the
signature client that we serve which you
mind if we just went through it together
and see what you think and then I have
them go through it I have them read it
out loud Point by point and let them s
select into that profile and look what
you’ve accomplished at that point you’ve
got uh someone who agrees and self-
selects that they do meet your profile
and now you can schedule your initial
client interview there you go so uh I
wish you all the success with the ideal
client profile and if you want to look
at the sample go look at mine
and post it on your website post it
everywhere you know once you have the
profile of the ideal client that you
serve best it’s all about how many
potential ideal clients in your
community know you exist and know what
you do and this ideal client profile
makes it very well known out in your
circles that you run in make sure that
the people who know you and like you
have seen your ideal client profile at
some point along the way