The Client Selection Playbook: How top firms are strategically choosing their clients

The ability to choose clients smartly. It’s one of the most overlooked skills in our profession. But when done right – it’s one of the most powerful tools you possess.

Too often, especially in the early stages of a practice, advisors are willing to take a ‘yes to all comers’ approach. We open our doors to anyone who possesses investable assets and a willingness to meet. Long-term relationship profitability takes a distant back seat to short-term revenue.

But if you’re serious about building a billion-dollar business – one designed to grow and endure – client selection can’t be a passive act. It has to be a strategic undertaking. As advisors evolve into CEOs and business builders, your mindset must shift from “How many clients can I take on?” to “Which clients are aligned with the future we’re building?”

Enterprise value is driven by predictable cash flow. And that predictability doesn’t come from every client – it comes from the right clients. Clients who are advice-receptive, value your thinking, and act on your guidance. Clients who not only bring meaningful financial potential, but also match your team’s values and mission.

It’s time to be intentional about identifying those people. And those aren’t just your A+ clients of today, they’re the individuals who will evolve into your future best clients.

What Makes a Client a Smart Bet?

Not every future A+ client walks in with a complex, multifaceted $10+ million portfolio. Many walk in with a paycheck, a 401(k) and a long list of questions. The art lies in recognizing each individual’s potential – figuring out which of those prospective clients are the ones worth betting on.

When it comes to client selection, elite firms tend to have an ability to look beyond the balance sheet. They train their teams to spot what we refer to as ‘advice-first’ clients – individuals who are:

• Advice Receptive: They seek and value your guidance, not just executing transactions.
• Willing to Pay for Planning: They perceive genuine value in your advice rather than focusing solely on their portfolio’s investment performance.
• Savers with a Surplus Mindset: They’re consistent savers who strive to live within their means.
• Upwardly Mobile: They have a strong future earning potential and possible may be in line for significant equity compensation from their employer (or a future liquidity event if they have an ownership interest).
• Aligned in Values: They’re respectful, relational, and trust your process.
• Action-Oriented: They implement advice and are eager to grow for their family’s future.

These aren’t just nice, thoughtful and even tempered people – they’re smart bets. And smart bets build strong businesses.

Focus on Alignment Over Accumulation

In his writing on practice management, Michael Kitces emphasizes the importance of strategically selecting the right clients to build a successful practice and ensure a more sustainable business. A few of the key high-level takeaways from his work include:

• Defining Your Ideal Client Persona: Kitces notes that it’s crucial to create a detailed profile of your ideal client (including demographics, behaviors, motivations, and financial details) to help tailor your marketing and services to attract and appeal to the right prospects.
• Focus on a Niche or Specialization: Rather than trying to serve everyone, specializing in a particular area, such as a specific profession, life stage, or problem area, can improve your marketing effectiveness as well as enhance the perceived value of your services to those prospects you seek to serve. This can be achieved by interviewing existing clients to identify common key challenges and aligning your services and expertise to address those challenges.
• Implement a Screening Process: Utilize screening questions and introductory meetings to assess whether or not prospective clients are a good fit for your firm's services, fees, and approach. This will help you avoid taking on clients who may not be profitable or a good long-term match.
• Prioritize Client Profitability and Fit: Evaluate your existing client base to identify those who are most profitable and aligned with your ideal client profile. Consider the time spent, costs incurred, and the overall value exchange.
• Don't Be Afraid to ‘Graduate’ Existing Clients: If a client no longer aligns with your firm's services, or if the relationship isn't profitable, consider transitioning them to a more suitable advisor or service model. Whether this entails referring them to another advisor or selling off a portion of your existing practice, the long-term benefits will far outweigh the short-term discomfort.
• Focus on Value Beyond the Technical: While technical expertise is critical, it’s just as important to focus on building trust and rapport with your clients. Addressing immediate problems and gradually exploring deeper financial and life planning goals will inevitably lead to more engaged and satisfied clients. 

By strategically selecting and focusing on the right clients, advisors can create a more fulfilling and sustainable practice, leading to greater success and client satisfaction

Build Your Selection Strategy

Senior advisors often instinctively know who’s a fit. But what about your associate advisors, planners, or relationship managers? Can they identify high-potential clients too? If not, it’s time to equip them with a playbook that includes:

• A formal intake scorecard that evaluates both financial and behavioral traits
• A fee-based onboarding model where advice is compensated before any asset transfers occur
• Training on spotting life events that might signal complexity (e.g. future liquidity events such as inheritances or business sales)
• Role-play exercises to handle fee resistant client conversations and to help frame a more compelling value of advice discussion
• A firm-wide agreement on who you are built to serve and who you will refer elsewhere

When your whole team is aligned on client selection, everything sharpens: your marketing, your referrals, your client experience – and most importantly, your future cash flows become even more predictable. And that predictable cash flow serves as the foundation of your enterprise value.

Choose with Vision

Choosing clients wisely isn’t about being exclusive. It’s about being strategic. If you want to build a firm that lasts, you need to choose clients with the same care and clarity you bring to making investment decisions and choosing solution providers. And that starts with training your team to choose clients like a CEO – not just an advisor.

Ultimately, the goal is to bet on those clients whose values match your own, whose ambitions mirror your firm's, and whose complexity and expected needs will invite your best work and benefit from your expertise and skill sets.

Choose right and your future enterprise value will thank you.

Coaching Questions From This Article:

1. What behavioral and financial traits define your best clients—both today and tomorrow?
2. Do you have a shared, written definition of an ideal client or is it still subjective?
3. How are you training your team and your client advocates to identify advice-first clients?
4. Do you have a clear onboarding process for high-potential clients with low current AUM?
5. What would you change in your growth strategy if your only goal was to increase enterprise value five years from now?