For years I've been encouraging advisors to serve one group of affluent investors-a niche or target market. It's one of the smartest practice management strategies advisors can implement. But if you want to go even further and become an elite advisor, you'll need to create one more filter when working with clients-an ideal client profile.

An ideal client profile is a detailed description of the top clients within your chosen target market. It ensures that you work with the most enjoyable and profitable clients in your niche. Advisors who drill down to this level in the client identification process draw in qualified prospective clients more easily, serve those clients more cost effectively and provide the top-shelf expertise and world-class service those clients are looking for.

EIGHT QUESTIONS TO ASK

A detailed and effective ideal client profile will help you hone in on exactly who you should be working with-and help you steer clear of clients who aren't a great fit for your practice. In creating such a profile, you'll want to ask eight key questions about yourself, your business and your perfect client:

1. Who are the ideal clients you want to target within your market niche? Create a detailed portrait. Describe these clients in terms of their life stage (working or retired), their industry and occupation and their specific company and job (if they're still working). Include their marital status and education level as well as age range and any other relevant demographic characteristics. Example: "Working senior executives of insurance companies, Aetna and Travelers. College educated, married with children, age 45 to 65."

2. Where will your ideal clients live? Geography is an important yet often underappreciated issue. Many advisors spread themselves too thin by pursuing too many different types of opportunities, and they make it worse by spreading their limited resources over multiple locations. Most successful advisors stay focused on one particular geographic market. One advisor we coached, for example, chose as his niche divorced and widowed affluent women in the New York City and Long Island area, "so that they're close enough to us that we can have a real impact on their lives," he says.

3. How much will each ideal client have in investable assets? While you clearly want to move upmarket, you must define exactly what the next level is in terms of investable assets. One useful guideline is the rule of five. Calculate the average investable assets of the top 20% of your clients. Multiply that figure by five. The result should be your target.

For example, assume that the top 20% of your clients have, on average, $500,000 to invest. Multiply $500,000 by five. In this case, your ideal client will have investable assets of $2.5 million.

This is only a guideline, of course, and it isn't relevant for everyone. Use it to start thinking about possibilities. Advisors often don't realize how easily they can move upmarket if they are willing to set the bar high and act systematically to attain that goal by positioning themselves properly with their target market.

4. What will your minimum asset size be?What minimum fee will you charge your ideal clients? CEG Worldwide research shows high-minimum strategies generate higher income. About 73% of wealth managers (who earn $881,000 on average) have minimum asset sizes for new clients. In sharp contrast, fewer than 40% of investment generalists (who earn just $279,000 on average) use these minimums, according to a 2007 study.

In addition, consider instituting a minimum fee. For simplicity's sake, let's assume that your fee is 1%. In that case, your minimum annual management fee for a $1 million client would be $10,000. Should you decide to accept a client with less than $1 million, he or she would still be subject to the minimum $10,000 fee. Remember, however, that the SEC requires that your fee be "reasonable in light of the services rendered." The accounts you accept should not be so small that the fee becomes unreasonable.

5. What are the key financial challenges your ideal clients face? Determine what specific financial challenges your ideal clients face that you can effectively address, both by yourself and working with strategic partners such as CPAs and attorneys. Industry research tells us that affluent clients' biggest challenges include wealth preservation and protection, estate planning and tax minimization. Some other common challenges include allocating large retirement rollovers, managing concentrated stock holdings and increasing the tax efficiency of various investments.

For you to add the greatest possible value, the challenges will be complex-and will demand a high level of expertise. Our advisor client explains that his key areas of focus are the complex emotional issues regarding money that divorced and widowed women face. "You cannot be truly effective financially with these clients until you understand-and help them understand-the emotional concerns under the surface," he says.