Carson Coaching Chronicle Issue #8: Client Segmentation

How many people do you think you can realistically develop meaningful relationships with???

British anthropologist Dr. Robin Dunbar proposed in the 1990s that we can do so with between 100 and 250 people, or an average of 150, Dr. Dunbar told the New York Times . While there has been some chatter around debunking what's widely become known as Dunbar's Number, it’s still a wise range to stay within when you want to have strong relationships with your clients.??

And that’s exactly why client segmentation is so critical!?Client segmentation can help you in various ways, including:??

• Evaluating client value.?
• Creating client service and communication models based on your client segments.?
• Aligning the expenditure of firm resources.?

In this issue of the Carson Coaching Chronicle, we’ll offer you some advice on client segmentation, as well as:??

• Access a free resource to help you with your client segmentation.??
• Insight into what we’re reading that you might like.??
• Current statistics and trends that may be on your clients’ minds.??

Without further ado, let’s get into the very first Carson Coaching Chronicle of 2024! ?

Keep It Simple: The Power of the Both And Concept?

The best thing to do when it comes to client segmentation is to keep it simple, writes Greg Opitz in the latest issue of the Journal of Financial Planning .?

There are so many things in our industry that are simple, but powerful, and evolve to be even more powerful over time. One example of this is client segmentation.??

And usually when you think of client segmentation, you think of the big five:

1. Current revenue
2. Current assets
3. Potential future assets
4. Whether or not they are a center of influence
5. How much you like working with them.

But Greg recommends adding a sixth: asking yourself if you have a relationship with both and – do you have a relationship with both partners and their children???

Adding this sixth element to your client segmentation can help you assess whether you might have an opportunity to serve your client’s heirs also.??

Read Greg’s full article in the Journal .??

The Perfect Advisor and the Importance of Focusing on Women??

Toward the end of 2023, Carson Group released its 2023 State of Women in Wealth Management Report . Not surprisingly, the research found that women are still largely underrepresented in the industry, making up less than 24% of all CFP professionals .??

But it’s imperative we change this because Greg Opitz writes in the latest Carson Coaching blog post that current trends demand more women advisors. Trends like:??

• Women outlive men by an average of 5 years .?
• Female executives prefer working with a female advisor .?
• Women will control more than $30 trillion in assets in the next decade.??
• 70% of women switch advisors within a year of losing their partner.??
• 82% of people want to work with an advisor from a similar background or family situation as them.??

As for the perfect advisor? Greg says she’s an advisor with a background in psychology and her CFP designation. ?

“This ideal advisor is competent (hence the CFP) and has high emotional intelligence (because of her background in psychology),” Greg writes in his latest blog post. Plus, he notes, women are generally better with both the numbers and in?connecting with clients – especially female clients. Check out Greg’s full blog post for more. ?

What We’ve Got for You This Month?

Our members have access to a range of courses and resources. While our courses need you to sign on to Carson Coaching Online , we offer you a free resource to use in your practice every month. Here’s what we’ve got for you on client segmentation:?

• Resource: Client Segmentation Spreadsheet : Use this template spreadsheet to assign points to your clients and complete a segmentation exercise.?

• Course (sign-on required): Client Segmentation : This course provides tools to make client segmentation simple. With the information you gain in this course, you can create a plan for client service, communication and overall business growth that focuses on your ideal client.?

?? What We’re Reading?

We love to read. And here’s what we’ve been reading to kick off the year that you might also want to check out!?

• According to Forbes Health , the average New Year’s resolution lasts just under four months . But the advisors interviewed by Financial Planning's Nathan Place noted they hope they can stick to the whole year. Among the top resolutions for advisors include: earning new certifications, managing health, increasing reach on social media, and developing a better mindset. Check out the full article in Financial Planning. What’s your resolution this year??
• Many New Year’s resolutions have to do with getting better and improving to succeed at something. But what exactly does it take to improve and succeed? Hint: you don’t have to have a natural talent, you can improve through hard work and learning. At least that’s what Adam Grant writes in his book, Hidden Potential: The Science of Achieving Greater Things . Grant notes, “People who make major strides are rarely freaks of nature. They’re usually freaks of nurture.” He explains that you can become a freak of nuture by starting before you feel ready and pushing through even if it feels like you’re going in circles. ?
• In the stats below, we cite some statistics for savings rates for the general U.S. population. But Dr. Michael Kothakota and Dr. Jessica Wery write in the Journal of Financial Planning that using these types of datasets is frustrating for financial planners and advisors because they're hard to use in practice. You all know that your clients are all unique and have their own goals. As such, their savings rates might vary based on those goals. And you usually have to take into account the behavioral and emotional factors that might impact whether they meet those goals. But Kothakota and Wery present a data-driven approach, illustrated by a hypothetical goals-based intervention one planner used with a client to increase their savings rate over time, that you can implement with your clients, also. ?
• But let's be real, even if you have all this amazing training and the perfect game plan to get your clients to up their savings, you won’t be able to get them to do anything if you can’t influence them to do their part of the plan. That’s where Phil Jones’?Exactly What to Say: The Magic Words for Influence and Impact comes into play. This book will offer you?the principles and real-life examples you need to influence your clients (and other business associates) and boost your confidence in conversations.??

Top of Mind: 10 Stats and Facts?

We gathered some stats and facts from current headlines that might be top of mind and relevant to your clients. Here they are:?

66%...Percentage of Americans who say they were able to save money in the past year. (Forbes Advisor )?

49%...Percentage of adults who have less savings – or no savings – compared with a year ago. (Bankrate )?

3.9%...The personal savings rate is only 3.9% of disposable income as of August 2023. During the pandemic, the savings rate reached a high of nearly 34% before falling to 26.3% in March of 2021. (CNBC and Forbes Advisor )?

40%...Percentage of millennial and Gen Zers who noted that paying off debt was their top financial goal for 2024. (CNBC )?

64%...Percentage of people surveyed who say they are cutting costs to deal with economic uncertainty. 50% said they are building up their savings and 41% said they are postponing larger expenses. (Northwestern Mutual )?

59%...Percentage of people surveyed who said that a recession is their top financial fear heading into 2024, followed by inflation, higher interest rates, and impacts of the election. (USA Today )

52%...Percentage of U.S. adults who say they have a financial plan that factors in economic uncertainty and variations. In contrast, 84% of high-net-worth people say the same and 79% of people who work with a financial advisor. (Northwestern Mutual )?

12%...Percentage of retirees who say they plan to return to work now in 2024 due to inflation and high cost of living. (ResumeBuilder )?

66%...Percentage of those retirees returning to work who are concerned they will face age discrimination on the job. (ResumeBuilder )?

57.7...Average age of an investor using a dedicated advisor in 2023, down from 59.4 in 2022. (Barron’s Advisor )??

The Inside Track: What The Coaches are Saying about Client Segmentation?

You’ve met most of our team. Now we want to give you some insight into their expertise on our topic du jour, which, as you can tell, is client segmentation. We asked our team to weigh in on the following question: What are your top tips for client segmentation? ?

Here are their answers: ?

“Use the segmentation spreadsheet provided in our CCO course or create a similar tool that allows you to see the number of households, amount of revenue and amount of assets per segment, as well as overall return on assets, average revenue per household and average assets per household. In addition, the spreadsheet provides similar data points for households by age range (clients in their 90s, 80s, 70s, 60s, 50s and under): total number of households, average revenue and average assets per age group. Taken together, this data enables advisors to understand precisely where their revenue is coming from and where it is not. It provides insight on profitability and future revenue streams. Tools such as this empower smart, data-based decisions regarding service model, staffing model, connecting to G2 clients and delegating middle- and lower-tier relationships to associate advisors or out of the firm altogether.” – Michael Rose. (Note, the spreadsheet is the featured resource this month, which is linked above!)?

“Start with the end in mind – do you want to be purely leading the firm and eventually get to zero clients you’re officially the lead for? Or do you want to always have 20 or 30 clients? Or do you LOVE the client work and want to always have a full plate of clients you’re lead advisor for? Look at revenue for tier, not just AUM (for advisors who have clients with brokerage assets that don't generate revenue). Finally, TALK THROUGH IT WITH YOUR COACH! Share your segmentation spreadsheet (minus client names), because some aspects of segmentation can be more art than black-and-white, by the numbers. For example, where do you draw line for A+ clients? What do you do if a new client is A+ but you're at the total number of clients you want to be lead advisor for?” J.J. Peller.?

“Once you segment your business and before you implement changes on service models you really need to understand the amount of time it takes to service the different segments. I think many advisors jump too quickly to here is the segment and what we will do for/with them without considering the time cost for them and their team,” Jessica Colston, MS, PCC .

Want More????

Did you like this newsletter? Then you might like our platform Carson Coaching Online , where you can get access to more content like courses, resources, ghostwritten articles (such as our beloved Weekly Market Commentary) and greeting cards.???

See if membership might be a good fit for you. Visit our website or email us at [email protected] . Or, schedule your complimentary 30-minute coaching exploratory call today with Katie Trout, Client Relationship Specialist , or Brian Money, Director of Strategic Partnerships ?

If you need some help with your client segmentation, give us a call! With Carson Coaching, you don't just have one person, you have a whole team.?

We’ll see you again in February!??