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The Benefits of Client Segmentation

By Daehong Kwon, CFP

Every financial planner has their own criteria for classifying clients, such as age, profession, wealth, etc. Some financial planners only work with certain groups of people such as doctors, CEOs, unmarried women, or retirees, while others work for anyone and everyone.

I believe that financial planners who focus on specific groups of people stand a better chance to succeed in the future. This is because they have found a niche, meaning they will accumulate specific knowledge in their chosen area that will lead to client trust and improved work efficiency. It is okay for a financial planner who is just getting started to meet with people of all types but eventually they should narrow their market.

South Korea has seen markets for doctors, teachers, and small business owners. Financial planners who serve these clientele markets even carry a title of “such and such professional financial planner” and they cater their marketing to that group. Lately, financial planning for low-income people is emerging due to the increased awareness of welfare in the wake of the economic recession.

Finding a Segment

Engagement with a particular set of clients can be called clientele concentration from the perspective of client classification. I, personally, focus on client targets, but I am unique in that I do not take particular professions or classifications as a criterion. I limit the number of my clients to the neighborhood of 100 families in my practice. Among them, I engage in financial planning businesses with probable clients that are ‘in the process of being ironed out’ through trials and errors. In doing so, I have yet to create a community out of these people and develop value-added services.

To achieve this goal, I am exerting a lot of energy towards “the establishment of a relationship,” which is the first stage in the six stages of financial planning. Most criteria can be analyzed by numbers, but the analysis of more subjective categories such as lifestyle, values, or societal contributions can be more involved. During this process of finding my niche, certain misunderstandings arise unexpectedly, leading to upset clients, but I think this will be part of the growth process and could continue until I have a clear establishment of my clientele segment.

Turning Clients Away

If a client doesn’t fit within my niche, I will refer them to my colleagues or even business rivals. When I do this, the reactions of the clients vary: some find it to be uncomfortable whereas others find it honorable. If someone needs my assistance, but doesn’t fit into my business concept, I will help them out within my power and capacity.

Finding a clientele group has many benefits, including peace of mind. Thereby, I am focusing on my core clientele businesses, and expanding into pro bono social activities on an extra basis. That is the path I have been taking so far.

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