Whenever we work with a financial advisor or financial advisory team to create a client segmentation model, we always start by defining their ideal client.
Most advisors think about an ideal client in terms of quantitative aspects such as assets under care or income level.
But we recommend that advisors consider someone who:
- Wants what you do,
- Needs what you do, and
- Values what you do
The word “value” can be a bit tricky to pin down since it can function as both a noun and a verb. In this context, we mean that the client believes what you do is important or beneficial.
Value often goes hand-in-hand with “value proposition.” Nick Murray describes value proposition as the answer to the following question: “What is it that I can consistently do for people that they will readily perceive as being worth to them much more than I’m charging them for it?”
One of the best ways to show your value is through the power of transformation.
When someone buys something, they are looking to make a change. In some cases, the change is rather straightforward: “I’m thirsty so I bought a soda.” The transformation is from thirsty to quenched.
In other cases, it goes a bit deeper: “I bought the new outfit so I can feel more attractive and have more confidence.” The outfit is a bridge to a greater self-esteem.
Most clients are not truly looking for a financial plan, reduced risk, or better investment returns. Instead, they want to see a meaningful difference in their lives. Most will say they are looking for confidence and peace of mind that comes with achieving a level of financial security and success.
In fact a Morningstar survey cited in the July 2020 issue of the Journal of Financial Planning found that what investors valued the most in a financial advisor was that he or she “helps me reach my financial goals.”
The investor who reaches his goals is transformed from a state of aspiration to a state of achievement. The advisor is the bridge that makes that transformation possible.
While advisors provide value in many ways (organization, accountability, improved returns, etc), clients choose to work with you because they want to be changed!