How to Recognize the Perfect Client

4 minute read

One of the greatest stumbling blocks to happiness you’ll encounter in your professional practice is dealing with a customer who does not appreciate you, who does not use you to the fullest extent, or who does not trust you. Working with this person can turn your joy into drudgery; this is not the perfect client. Identifying who the perfect client is right from the start can make all the difference.

Use this four-point test to find genuinely great clients who will appreciate your professional managed money expertise and refer you to their equally perfect friends.

The Client Hierarchy

In a managed money relationship, there are five categories of people that you will have in your database. The first is a lead. A lead is nothing more than a name, an address, or a phone number. At this point, it is unknown whether or not this person is qualified to work with you or is someone with whom you would want to do business. A lead does not have much value until you gather more information and determine if the name should move up the relationship chain.

The second category is a prospect. Once you have spoken to your lead, gathered initial information, and determined that they are someone you want to work with, they can then be categorized as a potential client.

The third category comes into play when the person does business with you for the first time and becomes a customer. In the brokerage industry, most relationships are really customer relationships rather than client relationships. A customer is someone who does a little bit of business with you and a little bit of business with somebody else. Gas stations do not have clients—they have customers who stop there because of the location when they need gas. On the other hand, dry cleaners have clients because a person will continue to work with the same dry cleaner as long as they continue to starch his shirts correctly.

In the financial industry, a customer is one who will only have a portion of their assets with you. The transition to the fourth category happens when that customer entrusts you with all of his assets and works with you exclusively. At this point, you develop a client relationship. These types of relationships are most prevalent with financial planners and investment consultants.

However, the most valuable relationship category is the fifth, that of the advocate. An advocate is when you have a client willing to speak on your behalf.

There are two types of advocates:

  1. Referral sources. Those who regularly refer you to family, friends, or associates. These people support and encourage you in all their efforts.
  2. References. Those who do not feel comfortable actively referring you to someone else but who are more than happy to act as a reference and will explain to a total stranger what it is like to work with you and your team.

Recognizing The Perfect Client

As we look at these five categories—lead, prospect, customer, client, and advocate—we still have not outlined a definition of the “perfect client.” As professionals with attractive fee-based businesses, we should be able to determine whom we want to work with and under what parameters.

Consider the following four criteria: A perfect client will be someone who:

  • Has money now. This client is not waiting for money to come in. They aren’t looking to hit the lottery. They have money now and meet a specific minimum account size pre-established for your practice.
  • Has recurring income. A client with a lump-sum distribution will tend to start living off of her assets the year after she first receives her windfall. This means that you will have to raise more assets each year to cover the declining asset base. You want clients who have recurring assets, either in new stock options or more growth in their business. You want clients who not only have enough money upfront
    but a pool of money that is regularly replenished.
  • Is busy. You want clients who are either busy working, or if retired, busy playing. The worst thing in the world is having a retired client who is not active. They are the ones who will watch CNBC all morning and then call you at 9:30 to ask whether or not you agree with what was said. You want a client who has a life, so you can be left to do what you do best: manage their financials.
  • Delegates by nature. Given a choice to do something themselves or delegate it to someone else, the perfect client will always choose to delegate. An excellent example of someone who does not like to delegate is a hobbyist investor—a transaction-oriented client who uses you for information but does the bulk of their business somewhere else.

Instead, you want a client willing to delegate the responsibility of managing their assets to you as the consultant. It is best to ask them upfront: “Are you a hobbyist investor, or do you prefer to delegate that responsibility?

Think about the clients in your database who do not meet all four of these criteria. You will see that these clients are your biggest problems in most cases. To make your professional practice more attractive to high-net-worth individuals, you should raise the bar on the type of clients you will accept and work exclusively with “perfect clients” that meet the criteria you have established for yourself. You will find that you become substantially more attractive when you are less accessible to the general public. Even more importantly, you will find yourself working with clients who not only appreciate your managed money expertise but will promote your value to other potentially perfect prospects.

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