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Why You Need to Segment Your Clients

Nov 5th 2013
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By Nate Biddick, CFP®, Manager of Practice Consulting Group, 1st Global

Every business in the world runs into the same problem: limited resources. The choices businesses make in applying those resources are paramount to determining the level of success you can reach in your business.

When it comes to running a successful CPA firm or wealth management practice, effectively segmenting your client base is a crucial first step in maximizing the resources and efficiencies of your operation.

Many advisors we’ve worked with prickle a bit at the idea of judging clients. Segmentation is not judging the person or simply looking at your long-time relationships only as dollar signs. Segmenting your client base is the exercise of choosing a set of client characteristics and then targeting service specifically to that group. While segmentation does indeed allow a firm to manage its resources, it also allows the clients to benefit by having their expectations set for the client service they would like to experience from your firm. When service standards are clearly agreed upon and consistently delivered, everybody wins.

Why Segmenting is Important

As a CPA or financial advisor, you have a certain number of clients who naturally require more attention than others. Many clients have needs for multiple solutions and will demand more of your time for this reason. By effectively segmenting your clients, you are able to not only help them find the appropriate solutions they are looking for, but also provide the level of service that higher value clients deserve and require.

Segmenting also helps to establish clear service expectations with your clients. When you have properly identified the needs of a particular client segment, you are in a better position to tell them how you are able to serve them. Take review meetings, for example. For higher value clients with multiple planning needs, setting the expectation that they will only have two review meetings a year may not be in line with the complexity of the solutions they need monitored. This is probably more of an appropriate number for clients with simpler problems to solve. In general, the more complicated clients' problems are, the more you will need to meet with them. Segmenting helps you determine which clients fall into which category early on in your relationship.

Ultimately, there are a limited number of hours in the day and it’s important that you know how to prioritize clients in terms of your access and expertise. When done correctly, this process helps you delegate tasks among your staff and determine who has access to the advisor. If you’re a senior advisor and you’re spending time answering simple questions that an associate advisor could easily handle, then you’re taking time away from the higher value clients. Write down everything you’ve done for the past two weeks, then take out a highlighter and mark your highest value work. How many of those tasks were services for client segments that an associate advisor, paraplanner or administrator could service as well as (or better) than you?

Everyone deserves to be treated well, but treating people equally is different than treating people fairly. As a business owner it’s in your best interest to make decisions that balance these two ideals. If you don’t make client decisions proactively, then they will get made for you and then the snowball rolls:  client needs begin to dictate how your firm operates. Not being proactive in your segments and service is a recipe for having your business run you – not the other way around.

Get Started 

There are many different ways to segment your clients, and most advisors only create categories based on the the client’s financial value to the firm. A better way is to consider the client’s value from both a quantitative and qualitative standpoint. The quantitative view means determining the client’s financial value of the relationship to your firm. The qualitative view is determining if the client is a fit with your firm culturally. Are your investment philosophies aligned? Do the clients recognize the value you bring to the relationship? Do you generally enjoy working with them? We believe that a client’s qualitative attributes are as important as his or her quantitative attributes. As stated above, there are limited hours in the day – with whom do you want to spend your most precious resource?

While they may take a lot of work initially, segmentation projects are well worth the time and energy you invest in them because they lead to increased efficiencies in the long term and allow you to take better care of your higher value clients. When you effectively segment your client base, you are essentially building a moat around these valued relationships and working toward ensuring their loyalty down the road. You are providing the highest value relationships with your highest level of service.

We work with many of our advisors to help them effectively segment their roster of clients. When this exercise is complete, advisors are empowered because they have taken the first step in taking control of their business. For a more detailed discussion and specific advice on how to segment clients, give us a call today.

Nate Biddick is manager of 1st Global’s Practice Consulting group. Nate’s primary objective is to empower advisors to advance to the next level within their financial services practice by serving clients better and more completely.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements.

1st Global Capital Corp. is a member of FINRA and SIPC and is headquartered at 12750 Merit Drive, Suite 1200 in Dallas, Texas 75251; (214) 294-5000. Additional information about 1st Global is available via the Internet at

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