The Advisor Delta™

Narrator:
Welcome to the Advisor Delta, the practice management podcast dedicated to helping investment advisors grow their business and reach their goals. Whether you're looking to scale your practice, streamline operations, adapt to emerging technology, or deliver more value to clients, this is the place for actionable insights, thoughtful leadership, and innovative strategies. Brought to you by Worldsource Wealth Management. Let's dive in.

Wai-Ke:
Hello! I'm your host, Wai-Ke Kim. For those tuning in for the first time I am the VP of Practice Management at Worldsource, and have dedicated my career to empowering financial advisors and clients alike.
In today’s episode, we're diving deep into the concept of client segmentation—a crucial strategy for creating capacity and delivering a personal touch to your service model.
This topic is close to my heart, as I’ve seen firsthand how rewarding segmentation can be in giving advisors time back in their schedule to create a better experience for clients. But you know, I’ve also spoken to many advisors that find segmentation kind of a tedious process to go through. Is it enough to just divide up the clients by AUA and call it a day? Well, maybe. But if you really approached your time as the valuable resource that it is, you’ll have to admit that some of your biggest clients might not actually be the most important to the growth of your business in the future.
I remember when I was an advisor and I was referred to this couple who were both working for the City of Toronto, so decent paying jobs, great pensions and all of that, but they were seriously in debt because of some poor investment decisions in the past, and their dedication to putting their daughters through private school. Well, they might not have looked like great clients on paper, but boy did they ever have an incredible network of friends that they referred to me and who became some of my top clients! I know that you probably have clients that might similarly not be your biggest clients in terms of AUA, but they ARE valuable to your business.

Today, we’ll explore how you can categorize your clients to better meet their needs and ultimately improve your practice's efficiency and growth potential.
Client segmentation involves organizing your entire client list into specific categories based on defined characteristics and preferences. This term client segmentation may be a bit overused, and might not even sound all that exciting, but I’m going to share some insights with you that will definitely have you thinking differently by the end of this podcast.
So, why should you consider segmenting your clients?
A 2017-white paper by Fidelity Investments highlighted how advisor practices that segmented their clients not only offered better client service but these practices also experienced greater efficiencies and growth potential.
Client segmentation is about being client-centric, allowing you to tailor your services to meet the distinct needs of each client tier.
When clients receive services and messaging that are tailored to their needs, they are much more likely to feel happier with your relationship, which increases their loyalty to your business.
Allocating the appropriate amount of time and resources to each client will help improve your team’s productivity and may increase your profitability.

But how do you get started?
• The first step is to define what your goals are for your business.
• Do you want to acquire another business OR grow organically?
• What are your pain points when it comes to servicing capacity?
• Knowing your desired outcomes will help you design your approach and allow you to use your time more effectively.

Now, let’s look into some segmentation categories and criteria for segmentation:
1. The FIRST most common and simplest method of segmentation is based on assets under administration (AUA), which is purely QUANTITATIVE.
While many advisors find that it makes a lot of sense to group clients according to the size of their AUA, it’s important to look beyond the numbers.

2. So, another segmentation category I will mention that you can consider is through QUALITATIVE aspects like demographics or behavioral characteristics.
Qualitative characteristics, such as life stage, can provide much more effective insights into the appropriate servicing level for clients in similar phases.
By using demographic and behavioural elements you can determine what the unique needs, pain points, values, and expectations each group has.
For example, if you are developing your service model for an elderly client, consideration may be given to the suitability of virtual or in-person meetings.
If your client has young children, you may consider client appreciation events that are designed for families such as an afternoon at the cinema.
For business owners, you may proactively facilitate meetings with the client’s other professional advisors such as accountants and lawyers.
Some specific categories for segmentation may include:
• Established professionals (like executives, doctors, dentists, lawyers)
• Adult children of important clients could be a category as well
• Young families with school aged children and mortgages
• Elderly clients
• Business owners
• And finally Client’s at different life stages: such as young accumulators, older established accumulators, and finally retirement and estate planning clients
3. Now, many successful advisors often use a combination of quantitative and qualitative data to develop a comprehensive client profile.
You might assign weights to various attributes you may feel are attractive or important in a client like revenue potential, referral likelihood, where they are located, whether they are a center of influence, or even how much you enjoy working with the client. You’ll notice that it does not have to simply be A, B, C and D clients, you can really define specific categories that are far more meaningful, based on what makes sense for your practice.
This helps in prioritizing your time and resources effectively and might even help ensure you spend MORE time with clients that are ENJOYABLE to hang out with!
One method is not superior to another, and some advisors may choose to use a combination of segmentation methods to best categorize their clients.
Once you have defined the categories of your clients, you can then design your servicing package to each level of client based on the value you would like to provide and what will resonate with this group.
Put together a document that outlines what each client tier or grouping will experience. This could include the types of communication they receive, products or services that are available to them specifically, the events they’re invited to, and other additional touchpoints during special holidays or occasions.

One final note when it comes to segmentation. I don’t believe that it should be a one and done activity. As your practice evolves, you develop new skills and expand into new markets – your client segmentation strategy will likely need to evolve as well. Consider conducting an annual review of your business model every year. Segmentation will be a part of that. Does it still make sense to communicate to the various segments the way that you did last year? How did your touchpoints land with certain clients. What could you improve? What was awesome and should be repeated? Does the breakdown of segments still make sense?
Regularly evaluating the segmentation of your clients will ensure that your practice remains efficient, stable and client-centric. You’ll allocate your time and resources more effectively and identify new opportunities for growth. I always say, I’d much rather be proactive and drive business success. I think many of you are the same. We kind of like planning things, don’t we?
As we wrap up today’s episode, REMEMBER that a thoughtful client segmentation strategy can seem time-consuming initially, but it’s an investment that pays off in spades.
By standardizing your processes, you enhance client engagement, develop retention tools, and ensure your resources are aligned with client needs.
Whatever client segmentation method you choose, consider monitoring and evaluating your strategy EVERY SO OFTEN and adjust as needed.
It is important to evolve your strategy as your client base evolves.
I hope today’s discussion on client segmentation has given you some valuable insights and practical strategies to implement in your practice.
Until next time, I’m Wai-Ke Kim, and I look forward to our next conversation. I’ll be here to keep pushing for excellence in YOUR advisory journey.

Narrator:
Thanks for tuning in to the Advisor Delta. We hope you found today's episode valuable in supporting your practice. For more episodes and insights, don't forget to subscribe and visit us at www.worldsourcewealth.com. And remember, together, we can take your practice to the next level.
Worldsource Financial Management Inc., a mutual fund dealer, and Worldsource Securities Inc., an investment dealer, are divisions of Worldsource Group of Companies Inc., operating as Worldsource Wealth Management. The views and opinions expressed in this podcast are those of the participants only.
This podcast is for informational purposes only and does not constitute financial, legal, or professional advice. Listeners are encouraged to seek professional guidance for their specific needs. Worldsource Wealth Management does not endorse any products, services, or companies mentioned in this episode.