Forget what every senior advisor has ever told you, a bigger client base isn't always better one, if you're focused on maximizing net earnings.
Financial adviser coach Tony Vidler explains why bigger isn't always better when it comes to adviser client bases:
Let’s begin by challenging a big myth pervading professional service firms – Big is good. Big is not necessarily good when it comes to an ideal-sized client base. A big client base can simply be an anchor.
While it is true that many fixed costs inside a firm are reasonably static, or not proportionately related to the number of clients one has, there is usually some sneaky, overhead-creep that goes along with increasing the size of the client base being serviced. The variable costs directly related to marketing & servicing naturally go up with increasing client base size.
One of the more interesting and worthwhile things an advisor can ever do is to spend some serious effort analyzing the business they have. Work out what your servicing costs per client are each year for example. Work out what the overheads per client are. Understand what your clients cost you – and not just in hard cash, but in support personnel time
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