As a proud Gen Xer, I’m inclined to say Patrick Swayze had better lines in better movies, but he’ll likely forever be known for saying “Nobody puts Baby in a corner” in the 1987 hit “Dirty Dancing. ” Believe it or not, there’s a lesson in that quote for advisors. As in do the opposite. Well, don’t put clients in corner, but recognize the value in segmentation.

Many advisors think they’re already doing this because they set minimums on the amount of client assets they’ll take on $250,000, $500,000, $1 million and so on. That makes sense when considering the fee-based model many RIA practices run on and there’s certainly something to be said for catering to high net worth and ultra-high net worth clients. After all, a substantial stable of those type of clients can propel top line growth while making for a more efficient, potentially more profitable practice.

Indeed, focusing on specific asset levels is one interpretation of segmentation, but as the advisory industry and its clients grow more sophisticated, advisors can take segmentation to the next level by focusing on certain demographic groups and the like.

In fact, segmentation is as important as ever because it speaks to the bespoke tailoring and customization that today’s clients demand. Think of it this way. The financial goals and needs of a cardiologist and those of an owner of a plumbing business could well be different. Perhaps dramatically so. That doesn’t mean one should receive better service than the other, but it does imply those clients likely require different services and strategies.

Segmentation Helps Advisors, Too

Advisors often hear that they can no longer deploy cookie-cutter approaches in an effort to keep clients satisfied. However, it’s not just clients that benefit from segmentation. Advisors do, too.

As Brie Williams, global head of advisory solutions and wealth intelligence at State Street Investment Management, points out, advisors embracing segmentation can realize increased efficiencies while delivering the personalization clients crave. Enhanced profitability and improved pathways to strategic growth are also part of the segmentation proposition for advisors. She adds that advisors defining their purposes and identifying segmentation “lenses” are crucial to the objective.

“While revenue and assets are important inputs, avoid defaulting to AUM-only segmentation as it rarely tells the full story,” notes Williams. “Layering in behavioral, complexity, or life-stage insights can help you uncover service mismatches or growth opportunities that might otherwise be missed. For example, a client with $500K in investable assets who consistently refers new clients may deserve more attention than a $1. 5M client who engages minimally and does not make referrals. ”

In other words, advisors don’t need to reinvent the wheel and the even better news is many are likely already embracing segmentation whether they realize it or not. For example, smart advisors already monitor and segment clients by factors such as AUM, life stage and even how demanding (or not) they are .

In Segmentation, Communication Matters

Upon executing the aforementioned steps, advisors can further segment clients by frequency of contact, fee schedules, how much staff resources and time is allocated to those clients and expected level of service – points mentioned by Williams.

Advisors should also remember that the familiar theme of communication is pivotal in segmentation and that’s true with both clients and staff.

“Plan how to communicate your segmentation approach. Internal teams will need training on the new method; clients will need to know about changes in service,” says Williams. “While each will need tailored messages, be sure to use benefit-oriented language for both so that each person can see what’s in it for them, and how the transition is focused on value creation. ”