Why Advisors Need to Define Their Market

You’ve heard of Harrod’s department store in London.  Founded in 1824, it’s motto has been “All things for all people, everywhere.”  This was fine when the sun never set on the British Empire and the typical Harrods customer wasn’t going to be concerned about price.  Stepping into the late 20th century, at least one of the major brokerage firms decided it would be “All things foe some people.”  Advisors need to carefully select their market.

This doesn’t mean you turn good business away.  It means you focus.  In the real estate business, it’s common for certain realtors to be considered experts in a certain neighborhood.  A homeowner might not be expecting to sell right now, but when they do they know exactly who to call.

Financial advisors should consider their market as one of three possible alternatives;

1. Where you live.  You spend most of your time in the neighborhood.  It’s where to play golf, shop and dine.  Your children attend school nearby.  You patronize many merchants.  You are involved in the community.  You worship nearby.  You can raise your visibility.

2. Where you work.  You commute into the city.  Your firm’s office in in a big building with their name on top.  You are surrounded by other office buildings.  Your personal office is impressive.  You have a conference room nearby.  Almost every prospect is within walking distance.  You have a favorite bar and favorite lunch restaurants.

Here’s the third alternative:

3. A specific field.  You were an engineer.  You know plenty of engineers.  You graduated from an engineering school.  You are president of the local alumni club.  You belong to one or two professional engineering associations.  You attend conferences.

Using Data to Define Your Market

This article will focus on the first two alternatives. 

You want to know where wealthy people live, since they are your likely prospects.  For the “Where you live” advisor, you want to find the right towns and neighborhoods.  For the “Where you work” advisor, you want to get home address information to drip market to the executives in those downtown office towers.

The US Census website (www.census.gov) is very useful.  It’s free.  Through Quickfacts, you can access local data.  A community profile will include information such as population, 2010 to 2019 growth, % of those 25+ with a college degree, median income and other data.  Running nearby town names through helps find the wealthy enclaves.  Advisors searching with a city can look at median income by zip code. 

Enter market research.  You know where the wealthy live, is it possible to find out what they buy?  The Nielsen organization, a famous market research firm owns a company called Claritas.  They have a tool called “You Are Where You Live.”  Do an internet search on those five word and Claritas.

Claritas is in the business of selling data, but they show you a bit for free too.  This will be fun!

They have divided the population into 40 personality types.  They have names like “The Wealth Market.”  Each profile talks about age, income, education and asset level.  They also talk about the financial instruments they buy and how they tend to get financial advice.

Next, you are looking at the “You Are Where You Live” feature.  You can enter a zip code, see a boundary may and learn what personality types tend to live there.  There’s often about five types.  This helps you target where wealthy prospects live and gives you insights into their buying habits.  You can see how this can support target marketing. 

You might choose to buy additional data, but the initial amount they provide is enough to keep you interested.

Let’s not Forget Compliance

Your strategy will involve populating these areas with prospects.  Not all data you access on the Internet can be used however you choose.

  1.  Always read and respect the legal and privacy notices on websites.
  2. Only use sites for the purpose originally intended by the site.  If it says “not for commercial purposes,” go away.  They know you have been there.
  3. Get approval from your Compliance manager before starting Internet research or prospecting strategies.

Related: What Are Clients Worried About?