Client segmentation is far from a new concept for financial advisors. At its best, segmentation allows firms to deepen relationships with clients, optimize service delivery and manage time more effectively to grow and retain a scalable client base.
Yet, according to Cerulli’s 2022 data, nearly two-thirds of advisors cite “serving too many non-ideal clients” as their top productivity challenge. However, many firms struggle to translate the idea of segmentation into an actionable strategy.
Here’s how to bridge the gap between knowing what to do and actually implementing it:
- Define Your Ideal Client Profile (ICP)
Your segmentation strategy must be anchored by a clear ICP. Without this, segmentation becomes directionless. Start by asking:
- Who are my ideal clients?
- What defines an ideal client or family for my firm — financially, relationally and culturally?
- What revenue levels make a client ideal?
Building a strong ICP helps ensure your efforts align with both client needs and your firm’s growth goals.
- Choose Meaningful Segmentation Factors
Once you are crystal clear on your Ideal Client, use that as a lens through which to build out your segmentation strategy. Beyond the basics like assets under management (AUM) and revenue, consider segmentation criteria that reflect the depth of your client relationships. Examples include:
- Professional Characteristics: Age, profession or life stage.
- Behavioral Traits: Frequency of referrals, advocacy for your firm or shared values.
Remember, softer factors — like emotional connection or shared goals — can often be the “X factor” in creating exceptional client experiences.
- Create and Communicate a Customized Service Matrix
Segmentation isn’t just about categorizing clients — it’s about tailoring your services to meet their needs. This requires clarity, fairness and transparency.
- Set Clear Standards: Define the level of service for each client segment and communicate it clearly.
- Prioritize Fairness: While your top-tier clients should receive the most attention and value, all clients should feel appreciated.
- Stay Flexible: Client circumstances evolve. Your segmentation strategy should allow for fluidity, reflecting changes in assets or client needs.
- Plan for Clients Who No Longer Fit
Every firm will encounter clients who no longer align with their ICP. For ensemble practices, transitioning these clients to junior advisors can foster team development. If you’re a solo practitioner, these conversations can be more delicate but are just as essential.
Our coaching team can help you navigate these transitions with confidence and professionalism.
By taking these steps, you can turn segmentation into a practical, growth-focused tool. Proper segmentation creates extraordinary client experiences, streamlines communication, likely increases firm revenue and allows you to focus on scaling your firm.
Need help refining your strategy? Reach out to Rob Thomas for personalized support at [email protected].
For Investment Professional use only. Not for use with the public.
This article is intended for informational and educational purposes only. This information is not intended to be complete or exhaustive, and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. Reliance upon information in this material is at the reader’s sole discretion.
The strategies described may not be suitable for all investors and involve varying degrees of risk, complexity, and potential tax consequences. Outcomes depend on individual circumstances, prevailing market conditions, and applicable tax laws, which are subject to change. Past performance is not indicative of future results, and no strategy guarantees success, risk reduction, or avoidance of tax liability. Investing involves risk, including the possible loss of principal.
Products and strategies mentioned may not be available to all investors, may involve additional costs or restrictions, and in some cases are limited to qualified or accredited investors.
Mariner is the marketing name for the financial services businesses of Mariner Wealth Advisors, LLC and its subsidiaries. Investment advisory services are provided through the brands Mariner Wealth, Mariner Independent, Mariner Institutional, Mariner Ultra, and Mariner Workplace, each of which is a business name of the registered investment advisory entities of Mariner. For additional information about each of the registered investment advisory entities of Mariner, including fees and services, please contact Mariner or refer to each entity’s Form ADV Part 2A, which is available on the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Registration of an investment adviser does not imply a certain level of skill or training.