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A recent report showed that, as demographics shift, the age cohort traditionally thought of as ideal clients is shrinking. There are far fewer people aged 45-64 than there were a couple of decades ago, and that number will continue to decline for several more years.
So advisors looking to grow have fewer prospects to pursue, and those prospects likely have existing advisory relationships. As the industry adapts, here are a few ways advisors are responding.
It’s true that advantages like the CFP designation or comprehensive financial planning have helped set some advisors apart, but as more and more IAs acquire them as part of their bid for high-net-worth clients, these features don’t have the same effect—they’re still important, but they carry less weight as differentiators. In this environment, advisors are also contending with the double-edged sword of client loyalty. Because the industry-wide retention rate is about 97%, every new client you win represents significant lifetime value, but only after you devote a great deal of effort to convince that prospect to be part of the 3% who move.
The same report discovered that aggressive spending on marketing was paying off for the fastest-growing advisors, but it’s important to be strategic about those dollars—because mass marketing a generic approach to a general audience will have less impact than ever in this tightening competitive landscape.
All of this is leading some IAs to take a bigger step back, reframing their growth objectives around a different type of client and a different set of strategies. While the target client for many practices used to be virtually anyone in the 45-64 age range with a minimum asset level, taking a more specialized approach can present a tangible reason for a client to make the move. It can also open up new possibilities beyond this shrinking demographic.
For instance, estate-oriented practices can serve older clients with philanthropy and family trust services, while building relationships with younger family members who have not yet formed strong advisory attachments. Similarly, advisors who position themselves as business transition specialists can also find traction outside of this age group, as well as tap into multigenerational family opportunities.
So amid heightened competition for fewer desirable clients, consider your target market not just as an age group and asset level, but as an individual who has cause to switch advisors. When a dentist starts considering selling their practice, their generalist IA may not have the knowledge or the network to guide them through it. When a corporate exec changes professional roles, they may be open to a conversation with someone who understands their compensation structure and retirement options.
And when your offering is about sharing a relevant cache of expertise with a well-defined group, the path to new clients can become much more straightforward.