As a financial advisor, one of the most important aspects of your job is identifying the ideal client. It can be easy to assume that anyone with money is a good fit, but that’s not necessarily the case. In this lesson, we will take a closer look at what makes an ideal client and what you should be looking for in a potential client.
The first thing you should consider is whether the client has a problem. Do they have enough assets and the right type of assets to have a problem? For example, if someone is coming up on retirement and is concerned about risk management, taxes, long-term care, and estate planning, they are an ideal client. Typically, an ideal client would have $1,000,005 or more in retirement assets. However, you can work with someone with a little less than that, but they need to be groomed as a client.
The ideal client is generally between the ages of 57 to 66 or 67, with a net worth of a million and a half. The sweet spot age-wise is from 59 and a half to 67 because they’re capable of rolling over their 401k to do some other planning, even if they’re still employed, and they’re approaching retirement. It’s within ten years of retirement, specifically five years of retirement, and their motivations light up at this stage.
Ideal clients tend to be conservative, not wanting to pay any more in taxes than they are legally required to, and they are concerned about healthcare and what happens in a healthcare scenario. They are also concerned about risk management because they have acquired this pile of cash and have been through the crash in 2000 to 2002, and the mortgage crisis in 2008. They don’t want to go through that again, and their number one goal is not to run out of money.
Once they’ve expressed a desire to work with you, they must be willing to make some changes from where they are. If they are not willing to leave the advisor they are working with now, it may be difficult to work with them. They need to be able to commit to you that they’re willing to divorce their current advisor and move on when they’re ready and willing to do that.
In summary, an ideal client is someone who has the money, is in the right age bracket for planning, recognizes they have a problem, becomes educated to the point to see how that problem really is, and is highly motivated to get through the financial lab process, which brings them to a decision point. The ideal client just slides right through and asks if you can do business with them in some form. As a financial advisor, it’s important to focus on finding these ideal clients to ensure the best possible outcome for both you and your clients.