Most financial advisors rely on the tried-and-true classification of Assets Under Management (AUM). However, this can be short-sighted and cost you relationships and even new opportunities. You’re missing out if you chase high-net-worth clients without a broader segmentation strategy in place. Savvy and emotionally intelligent advisors look beyond the balance sheet and give due attention to the relational side of business.
Though it’s been the norm for some time, assigning so much weight to AUM creates a service model predicated on history alone. In the process, you might overlook important factors like potential or fit. For example, you might have a high-AUM client who’s unpleasant, evasive and lacks respect for your time. On the other hand, a client with a more modest portfolio might inherit some wealth in the near future. They might also be a dream client, personality-wise.
By setting specific internal filters, you have a roadmap for determining which types of clients are worth your time and energy. Here are a few ways to gain clarity on these fronts.
Segmenting by Attitude
It might sound unconventional, but segmenting by attitude can produce tangible results. To gauge the relationship, ask yourself two simple questions:
If this client calls at 4:55 pm on a Friday, what’s your visceral response? Would you welcome or dread the interaction?
Your time is a precious resource. Clients who are pleasant, gracious and follow your advice should receive a higher tier of service than those who create headaches. With this binary in mind, you might flag clients based on disposition and how it affects your practice. Doing so protects your peace of mind and improves the firm’s overall culture, two facets no amount of money can buy.
Another Dimension: Advocacy
AUM models don’t account for one important factor you might not have considered. Advocacy can and should be used to your advantage. Consider a client with mid-range assets who’s always raving about your firm. They might not be a big fish based on wealth, but their social capital may be an undervalued asset. For example, they might interact with and refer high-net-worth prospects.
In the age of influencers, modern firms can’t afford to discount or ignore the power of influence. A client’s value to your firm exceeds the fees they pay directly. If AUM is your singular focus, you might inadvertently place a client “advocate” in a lower service tier. However, when you reframe in terms of advocacy potential and make these clients feel seen, growth often follows. According to 2024 data from the Kitces Report (Vol. 1, 2024), “69% of advisory firms get new clients through referrals from clients or Centers Of Influence (COIs).”
Choose a Naming Convention
Once you have defined your segments and who meets the criteria, you need a naming convention. Some prefer the classic Platinum, Gold or Silver. Others assign letter grades: A+, A, B, C. However, you can do what works for your firm’s brand. We have seen firms use mountain ranges (Everest, Denali, Rainier) or other thematic elements that speak to their specific niche.
A word of caution: Be discreet. Regardless of your preference, make sure your method is “client-safe.” You don’t want a client to see “Class D Client” or “Low Priority” next to their name and get turned off. Stick to neutral or positive labels that make sense to your team but won’t cause an awkward moment if encountered by the unintended party.
Next Steps
Smarter segmentation can fast-track your productivity. A practical internal system empowers you to make decisions that protect your time and grow your bottom line.
Find more ways to give each client those warm and fuzzies inside with these three tips for a personalized experience.
