Five Tips on How to Serve the Middle Class and Make Money

Posted By on May 22, 2013|0 comments

People of the middle and lower-middle classes need more assistance with financial planning than those of higher classes for one simple reason: they have a greater probability of running out of money. Makes sense, right? In many conversations recently, including my interview of Joe Tomlinson, we discussed the opportunities available for financial advisors to serve the sometimes neglected middle class.

While it seems obvious that middle to lower class individuals have less money and, therefore, need a smarter plan, the bulk of products and services in the financial realm are geared toward individuals with high net worth.  When financial advisors speak about working with the middle class, there is often a sense of exasperation. It’s not that they don’t enjoy these clients; more often than not, advisors feel a sense of accomplishment, because they see a real impact when working with the middle class. However, advisors have increasingly expressed that it’s hard to turn profits working with clients in lower financial sectors.

Recently, I spoke to an advisor who indicated that it takes 20 to 30 hours to prepare a plan. To break even, he needed to charge the client more than $2,000.  However, he was charging $1,500 because his client fell into the middle class. He assumed his client could not pay more, which, in turn, meant the advisor lost money.

This does not need to be your reality.  In this post, I want to discuss a plan that allows you to work with the lower-middle and middle classes in a way that creates revenue for your business.

Model for the Middle Class

My model comes via Dave Ramsey, a real estate investor who went bankrupt before turning his experience into a way to proselytize good financiaThe majority of people define themselves as being in the middle class. l stewardship.  You may not agree with everything that Ramsey condones, but rather than look at his policy toward financial freedom, let’s look at his business model more closely to create a replicable model for serving the lower-middle and middle classes that can make money. His five-step plan is simple:

  1. Know your cost of service
  2. Have actionable steps for the individual (your client) to take
  3. Provide classes
  4. Use endorsed associates
  5. Help the individual (your client) see WHY

Let’s dive into each step

(1) Know the Cost of Service

Regardless of what services you are offering, you need to add up all the costs associated with running your business.  You will want to consider not only the cost of your time, but also the value of any other individual’s time/effort who is helping to serve the needs of the client. Take the hourly cost for each employee, remembering to include benefits, and multiply that times the number of hours worked on the client project. For instance, if you have two employees who each are valued at $50/hour (with benefits) and they both work 10 hours on the client project, your cost of service would be $1,000. Second, add up all the resources you may provide to your client, including paper copies, access to software, etc. Once you have each of these costs, aggregate them to calculate the cost of providing the service.  Once you know the cost of service, then you will need to mark up the price at a reasonable rate that ensures profit for your business. Remember, you won’t make a profit if you only cover your costs.

(2) Have Actionable Steps for the Individual (your client) to Take

Ramsey provides his “Seven BabyThere are seven baby steps you can use to enourage your clients. Steps” as a path you should encourage your clients to take. Here are the steps in a nutshell:

  • Baby step one: Create an emergency fund worth $1,000.
  • Baby step two: Eliminate debt via the debt snowball. This consists of listing all debt, excluding any mortgages, from smallest balance to largest. Then, advise the client to save money as fast as possible to pay this debt off.  While the idea of paying off the debt with the highest interest rate is a good one, the intent of the debt snowball is to pay off small debts in order to generate the positive emotion of paying off accounts. The feeling of success after eliminating debt helps perpetuate the snowball effect.
  • Baby step three: Amass 3- 6 months of expenses in a savings account for emergencies.
  • Baby step four: Invest 15% of income into ROTH IRA and pre-tax retirement accounts.
  • Baby step five: Invest in college funding, if applicable.
  • Baby step six: Accelerate payments toward paying off a mortgage (a controversial step for another discussion).
  • Baby step seven: Build wealth and give, which suggests that we should give back to the community from which we benefit.

These are fairly simple guiding points to provide a client. The brilliance of this plan is that it is laid out in a straightforward fashion.  These steps can easily be conveyed and taught one-on-one or in large groups, such as Ramsey does via his classes and radio show.

(3) Provide a Class

Now that you have created actionable steps for each person to take, capitalize on the opportunity to provide a regular class for your clients. This solidifies that your clients are getting necessary education to continue along their financial road map and fully utilize the plan you provided. Such a class can be held in your office, at a local university or junior college, or online.  By educating clients in a class setting, you are able to consolidate your time and reduce the cost of service, while reaching more people through instruction. Your value transfers to more people in a way that more efficiently achieves the revenue required to make a profit.

(4) Use Endorsed Associates

Once you have built up class participation, you can either keep the clients, or solicit associate-level advisors to further engage the clients. The latter task can be done by building a list of young financial planners in the area and providing appropriate instruction so that your clients can be passed on to your associates. Ramsey’s practice of this principle is evident through his Endorsed Local Providers (ELPs). He generates income by charging the associates, his ELPS, for an application, review and training. As an added bonus, Ramsey then advertizes these individuals in their local areas.

(5) Help the Individual (your client) See WHY

The biggest encouragement and incentive you can provide to clients is allowing them to see for themselves the benefits of achieving financial success. If clients are unable to Understanding why clients what to take financial steps will help them reach their goals.understand why they are taking certain steps, they are unlikely to follow through to attain their financial freedom.  This requires you to ask the individual some questions: What outcome would you like to achieve? What will you do with more money? What freedom will this create for you?

Ask your clients to explain their feelings.  In other words, understand their ‘WHY’ on a more personal level. Once they are able to voice their own ‘WHY’, it becomes easier to provide incentives that help the clients reach their goals.

The Sweet, or Rather, Middle Spot

While Ramsey’s five steps can certainly work for any clients, you can tap into an under-served market by utilizing his tips. It’s simple. And you can be profitable by serving the lower-middle and middle classes profitably. You just need a focused plan.  I have a friend in Denver who is dedicated to this target market []. His thriving business has enabled him to achieve the emotional and financial goals he has set for himself as an advisor.

As an aside, Ramsey’s radio show, educational material and classes are speculated to generate more than $30 million in revenue each year.  If a person who fell into bankruptcy can achieve such heights, so can you.


Utilize Dave Ramsey’s Five Step Plan in order to develop the under-served market of the middle class. Great customer service will come first, and the profits will follow!

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