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5 Reasons Financial Planners Need Client Segmentation

By Niraj Nanal, CFP

Starting a financial planning practice without a specific client segment is like starting a journey without a destination. It is very important for planners to decide which kind of client base they would like to work with. For example, a client segment could be medical professionals in Pune, India, aged 35-45 with an annual income of Rs 1200000 or more.

Financial planners need to decide their own segment before starting a financial planning practice. In fact, with any business, people will find that client segmentation is an integral part of business planning.

Advantages of Client Segmentation

Clarity/Focus: Clarity is very important before starting a practice. Proper segmentation gives clarity and focus when creating a business strategy.

Differentiation: Specialization is very popular in the financial planning industry and clients prefer to work with specialists rather than general practitioners. Planners who focus on a particular client segment can create their own specialized brand to differentiate themselves.

Increased Marketing ROI: Once a planner is clear with their client segment, it becomes simpler to market. They can strategize properly and gain maximum benefits through appealing to their client segment instead of the mass market. In short, planners can increase the ROI on their marketing activities.

Tailored Products/Services: As a planner becomes specialized in dealing with a particular segment of clients, they start understanding the segment’s unique needs and requirements. This allows them to create tailor-made products or services where they can demand premium.

Fun: Planners should select a segment of clients with whom they find fun to work with. It is very important that financial planners enjoy the experience of dealing with their clients. For example, a planner might enjoy working with small and medium sized business owners between the ages of 30 and 45 because they share similar values. Finding the right segment will add an X factor in a planner’s practice, and make work feel like a vacation.

5 comments to 5 Reasons Financial Planners Need Client Segmentation

  • Avishek Guha

    Thanks for the post.I recently passed advance module of cfp exam.your post really help me cause i’m a fresher.

  • Badarish

    Segmentation is the core of any marketing strategies:
    Besides the 5 benefits highlighted here what you think is most impt for new planner.

    Clients could also take planners for granted it is at the theoretical frame work. Day to day he should work with these segmented clients.

    could you help us through what is the best method in prospecting new clients: Apart from traditional reference and cold calling?

  • Thanks avinash & Congrats best of luck for your future carrier in FP practice.

    Badarish-Traditional methods of marketing may not work in fee based practice
    Doctors dont go to the patient
    You need to ask are you a doctor or chemist?

  • Mike

    I am transitioning from the law to financial planning. How specific do you recommend the segment needs to be. I am aiming at small business owners in southern NH, as they were the majority of my clients. But that seems broader than the segment you defined. What is the downside to a broad segment?

  • Hi Mike,

    Before deciding on the specific segment you need to know the total size of the segment group.
    If it is sufficient as per your business plan than you can focus on the same otherwise you have to select 2-3 client segments
    For eg Small business owners,Physicians etc

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