This month, I was asked to write an article for Trusted Adviser Magazine which you can read below but before you do, I just wanted to give a shout out to NextGen Planner, Taylor Beavis for the great work he puts in to producing the magazine. You can read the latest edition of the magazine including interviews from Pete Matthew and Kathryn Knowles here.
Find your niche before it is too late
I will often ask financial planners who are setting up a new practice, what are their biggest fears. Whilst not universal, the most prevalent response is the fear of not being able to find and attract new clients.
Whilst this can have an immediate and obvious impact, It can also have a profound impact on the success and wellbeing of the financial planner decades later.
In the early days, it is natural to be keen to take on new clients and there are good reasons for this. After all, bills need to be paid. Often it is also the abundance of time that influences a new practice to be less picky when taking on a new client. Faced with an empty diary it is all too easy to say yes to clients that don’t quite fit your proposition. Or, without a clear picture of what is, or isn’t, your ideal client, it is easy to initially be open to all.
I am not talking here about selecting super high net worth clients and ignoring the rest as that would miss the most important point. What constitutes an ideal client will of course differ between individuals but over the years, I have spoken with hundreds of financial planners running small businesses and one thing has become clear. In order for the business to be sustainable, the principle of a business has to enjoy what they do and that, in a business that is about people, means working mostly with the people that you like and want to work with.
I meet a fair number of business owners who fall into a category that I refer to as unhappily busy. So how do financial planners go from the optimism of those early days setting up a business with boundless possibilities ahead to feeling that there aren’t enough hours in the day and sometimes resenting the very clients that got them off the ground in the first place?
In the early stages of their business, the diary is mostly empty so they take on any client that walks through the door. They make promises that they will be there for each client throughout their working life and into retirement and they will be available to answer calls personally. In many instances, these early clients receive a discount from the usual fee in order to get them over the line and the firm celebrates the success of adding another client to their growing list.
Gradually, over time, as the business evolves, the income from those early clients sufficient to meet ongoing expenditure, the firm turns its attention to focusing on the clients that are more aligned to its proposition. However, at this stage the tension between servicing those early clients and the desire to take on new clients becomes apparent. The diary is now full with review calls and the requirements of running a business and the founding advisers can no longer do the thing that they most enjoy about the job, meeting new clients. Added to this, there is the very real issue of the promises that were made in those early client meetings. Having told someone you will always be there for them, how do you go back and say and tell them that you didn’t really mean always?
The answer to that question is something for another day. What all this points to is a need for newly established practices to learn from the lessons of much of the establishment. I am not suggesting that you turn clients away in their droves. There always has to be a balance between sustainability now and sustainability in the future but those practitioners who have one eye on the happiness of their future selves will have a better chance of knowing when it is right to point a potential client in the direction of another financial planning firm.
Having a clear picture of the type of client you want to work with really helps. You may have experienced confirmation bias before. I always notice it when I decide to change my car. Once I have settled on the model and type of car, I begin to see them everywhere I go as my subconscious seeks out positive reinforcement that I am making a good decision.
The same can be said if you have a clear, and I mean really clear, picture of your ideal client. The firms that I meet who have the highest proportion of their clients in the category that they would consider to be their ideal clients are the ones who create detailed pen portraits of what these ideal clients look like.
Once you have established that clear picture, it is much easier to design your proposition to meet the needs of those clients and to design marketing that speaks more directly to them.
As time progresses you begin to see results and a higher proportion of your client base is filled with ideal clients. It is at this stage that you begin to gain the confidence to say no. Recognising when a client isn’t suited to your business and being able to afford to act upon that is one of the most liberating things you can experience running a business.
There is much to do when launching a business but with each new client that you take on, you are making a commitment and creating a legacy. The legacy that you create will be determined by how close each new client is to your ideal.