Treating Each Client Differently: Dumping the One Size Fits All Approach

When you are in business, you cannot apply a single strategy to handle your entire client base, since the clients belong to different backgrounds, different social statures, different communities, have different ideologies, and have different needs. No matter how big or small the business is, client segmentation is an integral part of all business strategies. Consider an everyday product like soap, Hindustan Unilever manufactures both Lux and Dove, but the marketing strategy for both soaps is night and day. Lux Ads features big bollywood figures, like Aishwarya Rai and Kareena Kapoor, while HUL keeps it subtle for Dove, they have real people, no glam, for their dove Ad. The brand positioning for both soaps is completely different, because the target segment for both soaps are distinct. Or be it any daily use product like an umbrella, if you google umbrella for kids, you'll see a variety of red, yellow and pink umbrellas with cartoon characters imprinted on them, and if you google umbrella for men you'll get black, blue and max brown.

The positioning, packaging, the marketing strategy differs, for different sets of people. The same logic applies to advisory business as well, especially because this is a service oriented industry. Here, the one size fits all approach doesn't work, you need to have a customized strategy for each client.

Each individual has a unique motive behind investing, it's important we understand that unique motive, and try to create a bridge between where the investor is today and where he wants to be in future. Even if the goal is same for two investors, the characteristics of the goal would differ. For one investor, his retirement goal is 20 years away, the investor is in a stable financial position, he can afford to take risks and invest in a product with a good growth potential over the long run. For another investor, retirement is just five years away, for him risk protection is the primary objective, it is ideal for him to start moving his other investments also from high risk asset classes to low risk ones.

Each individual has a different personality, which influences his/her investing. An investor may prefer investing a small SIP amount even though he needs to invest more and can afford too, but his preference is backed by his skepticism, he is scared because of his pressing fear of losing money. As a usual course of action, you explain to the investor, the need to increase his SIP amount, but in this case since the risk tolerance of the investor is low, don't push him so much that he quits altogether, let him begin with small steps, and gradually you shall advise him to take the next step.

Then you would come across diverse investors with varied investment needs and goals. There'll be old investors and young investors, men and women, clients with special needs, investors who are single, married, divorcées, widows, couples with kids, couples without kids, businessmen or salaried individuals, and so on. No two investors are the same, if you want to provide the best services to your clients, you must treat them differently. Preferences and expectations among different types of investors differ. Say for instance, Millennials, they are essentially looking forward to quick and hassle free investing processes, you don't have to be too formal in your approach, communicating through e-mail or WhatsApp works good with them. While if you are dealing with a Corporate HNI client, formal attire is the bare minimum. It's when you understand people's unique needs and preferences, then only these investors will be able to trust you, which is the center-point of any advisor client relationship.

These different types of people also extend to you an opportunity to develop your niche. It helps you in identifying your favourite set of people, the type of people with whom you are most comfortable working with and also the other way round. It may be because of certain common characteristics that you share, like similar community, similar educational background, etc., or because of the expertise that you have developed over time, after working with such people.

A general practice for effectively catering to different investors is client segmentation, that is creating buckets and putting the customers into those buckets on the basis of certain similarities they share, and then catering to each bucket of clients differently. However, within each of these buckets also, each individual is unique, two people with similar demographics and goals also, will react differently to a fall in the value of their investments, they will have different communication preferences, they will have different personalities, and hence different expectations from you.

So, people may be similar but they are not same, and the success of financial advisory practice lies in creating a pleasant investing experience for investors, by providing them personalized services, and gratifying the unique needs of each investor.

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