Your Morning Cup of Links: Segment, Know Thyself, and Evolve

After a couple weeks of speaking at conferences and meeting with advisors, I’m finally  back in the office and ready for a coffee break.  It’s also my chance to dig through my emails and rss feeds to find out what’s being talked about in the industry’s leading magazines.

From segmenting your client base, to defining your practice and tackling the issue of baby boomer account draw down, here are three articles that are worth a few minutes of your time.

Segment and Target for Success – Investment News (Free publication; requires registration to view content)
You’ve heard me make the case for segmentation in the past. In this article, you’ll learn why seasoned advisors, and even new advisors, should be selective about which clients they bring on board. The author suggests that you’ll have a higher level of professional satisfaction, but also a more profitable practice. To me, that’s reason alone why you should read it.

What Type of Advisor Are You? – Forbes.com
Citing research from Cerulli Associates and IMCA, Forbes profiles various types of advisors. From investment-centric money managers all the way to high-touch wealth managers, they define the categories by the services delivered to clients.

I encourage you to take a read through the entire article to see where you fall on the spectrum – but  before you do, consider this stat from the study. Wealth managers are more likely to get more referrals – from clients or other professionals, with 55% of new business coming from referrals. Which leads me to ask – are they giving more referrals because they are more satisfied with the breadth of services they receive from their advisor (or “wealth manager”)? If so, shouldn’t we all be focusing on a fee-based, holistic approach?

As Investors Age, Advisors Face a Leaner Future – Forbes.com
And speaking of a fee-based approach, take a few minutes to read this article on what the author calls the investment industry’s biggest challenge of the next decade. As a result of the boomer generation switching from being savers to “spenders,” the article suggests that investment professionals will need to come up with a different compensation model that relies primarily on fees. This isn’t all that surprising.

The key point, and your practice management challenge, is to evolve your practice and explain to your clients why now is the time to start paying you – their financial advisor, the same way that they pay their lawyers and accountants. That sounds like a conversation that needs finesse. How are you approaching this delicate topic? And more importantly, replacing lost revenue?

Resolve to Break through in 2012

“Next year, I’m going to <insert resolution here>.” Who hasn’t done that? We all look ahead to a new year with the best of intentions, but it’s not often we take that next step and actually *plan* how we’ll make it happen.

If one of your resolutions is to focus on growing your practice, how about some help?

We’re hosting a webinar on Monday, November 28 at 4 p.m. ET called “Breaking Through in 2012.”  In it, we’ll give you tools to:

• Develop goals with a clear purpose
• Identify proven, high-value marketing activities
• Involve your team by getting their skin in the game

We’ll also give you something that people always ask for when we talk about planning – an easy-to-use plan template. Because nobody wants to start with a blank page.

The webinar will only last an hour and the registration is free. So make yourself a turkey sandwich (you know you’ll still be eating leftovers then) and join us — it will be time well spent and could help make 2012 a great year.

5 Steps for Advisors to Build a Niche Market

In an earlier post, I made the case for niche marketing. Were you intrigued? Skeptical? Heard some of it before but failed to act?  If you’re on the fence, or ready to dive deeper, this is your chance.

You don’t just pick a niche out of a hat. You need a well-thought-out approach to selecting and targeting a segment that will give you the kind of growth, differentiation, share of wallet and referrals that you crave.

1. Look at your book.

When was the last time you scrutinized your client base, looking for commonalities? Most advisors segment their books by AUM or revenue to the firm.  Take a second look from the client’s perspective, you might already be catering to a niche and don’t even realize it.  Tier them many ways – by profession, life stage, service model, and profitability, just to name a few.

We’ve even got a segmentation worksheet that will let you slice and dice your clients (so to speak) using 17 different factors.

2. Put on your thinking cap.

Once you’ve evaluated your book, what are the potential segments that might be worth your attention? Ask yourself (or better yet, bounce the ideas off someone you trust):

• Is the niche big enough?
• Is the focus narrow enough?
• Is another advisor already cornering this market

Be creative here. “High-net-worth investors” is hardly a niche. Maybe there is a blend of demographic traits that is a good fit:

• High-wage-earning women within five years of retirement
• Manufacturing-business owners aged 50 and older
• Investors within a 30-minute radius from your office who are within 10 years of retirement from a large corporation based in your area
• Recent retirees who are new to your area

3. Don’t be too quick to decide.

Hopefully, you’ve come up with two or three segments that look promising. Now is the time to do a SWOT analysis (strengths, weaknesses, opportunities, threats). If you’ve never done one, here’s an excellent video on how to do a SWOT analysis. This approach can help you evaluate your selections and make a better informed business decision.

Factor in any of your passions or dislikes (if you are not a particularly religious person, a focus on a particular religious group may be perceived as disingenuous).

4. Go all out.

Once you’ve SWOT’ted (did I just make up that word?), and have settled on a niche to pursue, it’s time to:

• Learn as much as you can about that segment
• Identify centers of influence
• Ask clients for referrals

Make yourself a rock star in that community. Go where they go, host workshops, live and breathe them. As an example, one advisor hosts presentations with the local sheriff on identity theft – something that many non-techy retirees are concerned about these days.

5. Build and be your brand.

Strong niches demand a strong brand identity. You need to be clear about what you bring to the table. You have to define who you are in everything you do – signage, letterhead, proposals, statements, all of it. And you need a succinct value proposition – for example: “I help business owners within five years of retirement transform a lifetime of work into long-term security.” In less than 20 words, you defined your niche, what you do for them and what benefit they get from working with you.

Research shows that advisors who focus on a targeted audience are more successful than advisors who don’t focus on a niche.  Now is the time to get started.

More May be Merrier, But Not Necessarily More Profitable: Niche Marketing for Advisors

When most advisors first get into business, they have a very narrow focus when it comes to finding new clients. However, after they have hit up their parents and sold all their college friends, the focus goes away. Years later, the advisor has built up a sizable practice by accepting a vast array of clients in all shapes, sizes and backgrounds. In essence, the book is made up of “anyone with a pulse and some money to invest.” The advisor struggles to find the time to meet all his clients’ needs, and still wants to grow his business – but has no idea how to differentiate the practice, because there is no acquisition strategy and little leverage.

Sound familiar? This might be the time to consider specializing in smaller but profitable market segments. These niches share common traits (there’s your leverage), so you can focus your efforts.

Why should you consider niche marketing?

1. Growth potential. You have a greater chance of winning a meaningful percentage of a niche market because it’s your specialty. You become the “go to person” in your niche.

2. Focused marketing and sales programs. You can target all your market activities – ads, networking, PR – to one group. You’ll spend your marketing dollars more wisely.

3. Lower client acquisition and service costs. Segmenting your client base allows you to determine the most appropriate product platforms, fee structures, and frequency and types of client touchpoints.

4. Deeper, more lasting relationships. The loyalty of your key clients can help you maintain profitable sales or service fee volume.

5. Referrals. As your reputation within your niche grows, so will your referrals.

6. Differentiation. You’ll stop looking like the advisor next door and grow roots with your niche.

I’m not saying it doesn’t require some work on your part, or that it will happen overnight. I’m also not saying you have to walk away from any of your current clients. In fact, you’ve probably heard some of this before. But when you begin shaping your practice to fit a niche – it can serve you well into the future. When should you get started? Now! Unless you haven’t run out of parents and college buddies to sell.

I’ll give you some ideas to select and grow your niche market in a future post.