By Brian Bowen, Director of Advisor Integration
Ask a dozen wealth advisors how they segment their practice, and you’ll get a dozen answers. I’ve heard exceptionally thoughtful responses that take age, needs and wealth into consideration. There’s a strategy around revenue generation, time intensity and future potential. Also, there’s a fair number of advisors who express that “all clients are important — all are A clients.”
For seasoned advisors with experience around practice segmentation strategy, I’d love to hear it to incorporate into a future column. However, for purposes of this post — and for those who are early in their career, or in growth mode and still working to perfect your segmentation strategy — give this simple idea a try. The payoff can be huge.
Ask
A great segmentation strategy starts with one simple question: “Mr. Client, how often should we talk?”
That’s it.
The answer will tell you exactly how well you’ve done in explaining what you do and how you do it. Did you brand yourself effectively? If the client responds with “Every few days” or “Weekly,” then you know you need to hit the reset button on the conversation and reset expectations.
But if the client’s response is a much more palatable and time friendly suggestion like, “A quick monthly or quarterly check in would be great,” then promise to execute on it and implement it into your practice.
Segmentation Strategy = Communication Strategy
I contend that a segmentation strategy is simply a communication strategy. When do we talk? How often? This strategy is easy to understand, easy to implement and serves as great building block to operationalizing your practice. You can define the segments as you uncover the desires of your clients, but it can be as simple as A clients get calls monthly, B clients get calls quarterly and so on.
Systematizing your outreach strategy in this simple and operationally feasible method is a win-win all around. It is easy to manage in your CRM, clients know exactly what to expect, and you have not introduced several traits/wildcards that are difficult to keep straight, define and implement. Let this be the backbone for many of your day-to-day business decisions. As my mentor always told me, “KISS it.” Keep It Simple, Son.” There’s something to be said for this maxim in our vexing, increasingly complicated world.
A Matter of Trust
So, we have this incredibly simple and straightforward segmentation strategy. Now let’s talk about the second reason it’s a winner: integrity and honesty. According to a 2018 Policy Brief by Stanford University’s Institute for Economic Policy, financial advisors are often perceived as dishonest and consistently rank among the least trustworthy individuals. In my mind, we need to tackle that head on and the easiest way to do it is to make and keep promises. That’s exactly what this segmentation strategy does.
According to research from Yale University, making and keeping promises increases cooperation and trust in a relationship by up to 50%.
“Trust doesn’t require immediate payoff – what matters is the promise, and the reliability in keeping it.”
– Yale study (Ederer, Stremitzer & Szech, 2023)
According to the Center for Financial Inclusion, a 2018 study on customer experiences in financial services found that customers will use terms like “confidence” and “trust” when describing positive interactions. Integrity will become your greatest brand attribute. The trust that is earned by making promises and keeping them will increase loyalty and encourage business growth.
Simplifying Segmentation
So far, we have a communication strategy for which you can hold yourself accountable while increasing your standing in the client’s eyes. Eventually, you can layer on certain rules and complexities to your segmentation. Or keep the segmentation simple but layer on these ideas in an easy-to-review section of your CRM.
At Dynamic, our Wealth360™ platform offers an easy to review “Notes” area that can be used for quick reference. I’m a fan of including some of those other client traits in this area, rather than layering it into your segmentation.
Here are some quick-reference ideas I’ve seen advisors use in the Notes field:
- Wealth and Needs: Categorize your clients (e.g., high-net-worth individuals, mass affluent, business owners, retirees, etc.) based on their financial complexity, wealth and service needs. This allows you to tailor service offerings and fees accordingly.
- Family Dynamics: Where are the children? Do any other family members hold influence? Any potential family referrals?
- Recent News: Any family event or news items that this client is passionate about?
- Impact on Practice Valuation: Analysis and estimates of your practice value. The reasons for that valuation are eye opening.
For more on practice valuation, watch the Dynamic webinar, “M&A Considerations”
Each of these ideas is incredibly powerful. A practice with this level of detail is a fine-tuned machine that allows the advisor to know exactly what the next conversation should be and what to expect from the client; holistically, it provides a great view into the health and financials of the overall practice.
A proper practice segmentation isn’t about time efficiency or maximizing revenue. It’s about making a commitment to your client and following through. When it comes to growing your practice, there are dozens of complexities we deal with, but segmentation shouldn’t be one of them. Keep it Simple!
Want to discuss more simple ways to segment to grow your practice? Let’s talk! Dynamic’s Business Development team is available for a complimentary, objective conversation. Contact us at joinus@dynamicadvisorsolutions.com or (888) 997-4212.
In Grow Your Practice, Director of Advisor Integration Brian Bowen shares practical, proven strategies to deepen client relationships and build trust — the building blocks of steady growth — with easy-to-implement tips you can use right away. Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.
Photo: Adobe Stock