When you’re pining for a book of high net-worth clients with tens of millions of dollars to invest, don’t neglect the large, lucrative middle-market population, says Sara Gilbert, founder of Strategist Business Development in Montreal.
Middle-market clients are those who have between $100,000 and $1 million to invest. You might not think they can substantially add to your revenue, but there are advantages to pursuing this group as opposed to high net-worth prospects.
There are relatively few high net-worth clients and competition for their business is fierce. Acquiring such a client can take a great deal of time and resources. Also, these clients expect a high level of service, from frequent meetings to access to concierge services.
Furthermore, high net-worth clients often have several advisors and are constantly being courted by your competition. Losing one of these clients can be a significant blow to your business.
“If you have a client who represents a third of your business, and he leaves,” Gilbert says, “that’s a huge chunk of your business that’s going to go at once.”
Middle-market clients, on the other hand, usually have only one advisor, and they are likely to remain loyal if they are happy with your service.
Here are three ways to build your business through middle-market clients:
1. Establish your ideal-client profile
Advisors are sometimes reluctant to focus on the middle market, Gilbert says, because they fear they will have hundreds of clients with various needs. You can mitigate this problem by defining your ideal client.
If your roster consists of clients you enjoy working with, Gilbert says, you will find that they have several characteristics in common. “It doesn’t need to be cookie-cutter,” she says. “But you have to leverage their similarities in order to serve them better.”
Examine your current client base and note which clients you enjoy working with most and those you would like to replicate. Do these clients share a similar investment style? Are they at a particular stage in life? Do they require similar services?
Because the middle market is a larger population, you can narrow your focus.
2. Provide service that inspires referrals
While your middle-market clients won’t expect you to coordinate limousines and concierge services, they will require a relationship in which they feel they are being given sound financial advice and their questions are being answered.
When clients are happy with the service they receive, they are more likely to talk about you among friends, colleagues and family members. This is especially true if you indicate that you are accepting new business. Tell your client that you truly enjoy working with him or her. Your client will connect the dots, Gilbert says, and start thinking about people they know who might benefit from your help.
3. Spread your message to large groups
High net-worth clients often expect extensive one-on-one time with their advisors, which can leave little time for prospecting activities.
Pursuing middle-market clients, on the other hand, can be more efficient. You can hold educational events, for example, in which you educate groups of middle-market individuals on topics that interest them.