How many financial advice clients should you aim to advise?

By Christina Bentley on November 5, 2018

Have you found your ideal number?

It might seem counter-intuitive for someone just starting out in the sector, but an important entry on any list of tips for new financial advisers must address the question of how many clients you should aim to advise. Your first reaction might be to say “the more the merrier”, but, of course, your own resources will mean that there is an actual limit to how big your client base can be at any one time.

With qualified leads for financial advisers hard to come by and involving much effort on your part, it might seem strange to think that there could be a point at which you say enough is enough. However, any business has to have realistic expectations and targets, and if you find yourself working over capacity, then your clients will suffer and ultimately your business will also.

The cost of too many clients

If you are operating over capacity, then you won’t be alone. While the optimal number of clients for a financial adviser will totally depend on individual circumstances and resources, if you feel that things are spiralling out of control or that you aren’t able to give each client the attention they deserve, then something is seriously wrong.

To understand your own personal capacity, you need to have a good idea of how much time you have available for clients. If finance lead generation is taking up a good chunk of your time, then you only have a certain amount left to actually get on with the work. If you have enough clients at any given time, then cut back on chasing leads and give your existing user base more of your time.

Of course, it could be disastrous to stop your marketing and client acquisition initiatives completely, but often by scaling back a little, you can double-down on work and make your progress up to that point more solid.

Know your optimal capacity

Knowing your optimal capacity can be a difficult thing as quantifying it relies on being able to take stock of where your business is at any given time. If you are a one-person band, then things such as finding pension leads for IFAs can be an important part of your daily routine. However, once you decide to pull back a little and give more time to your existing clients, you can better work out how much is really needed.

Your optimal capacity can then be worked out in strict time terms, and this can only be a good thing as it helps you understand your limitations with the current resources you have. Of course, if you employ staff or are looking to expand your business, then this can also be the perfect time to set out on a period of growth.

The time factor

Julie Littlechild, a speaker, writer and researcher who founded AbsoluteEngagement.com with the aim of helping financial advisers, thinks that the time you personally invest in client relationships is the defining factor in your capacity. This is another element that is hard to quantify because each client will have different aims and needs and so the scope of your offering to them will change from case to case. Also, any assessment that you make in this way is always a reflection of where you are at that point in time and not necessarily a good idea of where you might be in a few weeks, months or years.

Dunbar’s Number

Another slightly more philosophical element to the discussion about how financial advisers get clients and how they know when they have achieved the right balance is ‘Dunbar’s number’. This research in psychology and anthropology suggests that the maximum number of clients may in fact be determined by the physiological limit of your brain’s neocortex.

The theory suggests that the number of social relationships that you can maintain – Dunbar’s number – is around 150 people on average. This number happens to coincide with the average size of ancient villages and their tribes and the Roman army’s military unit size. In a more up-to-date relevant statistic, it also happens to be the average number of Facebook friends or Twitter followers who are actually engaged. Whether or not this means that there really is a physical limit to how many clients you can manage is open to debate, but it certainly puts an interesting and different spin on the question.

Planning and efficiency

If your quest for chasing every investing lead is successful and you find yourself wondering if you have hit a limit, then that is certainly a good problem to have. Financial planning businesses need to walk it like they talk it, and that means a continuous effort to strive for increased efficiency, leading to greater profitability. Today, technology plays a major role in any business, but even with the greater potential reach that tools such as social media offer, it might just be that distance relationships without in-person interaction can’t exceed a certain number if they are to be managed properly.

It’s not difficult to see that the time saved in travelling to meetings or other constraining real-world elements offers more time to be involved in ‘virtual’ networking and lead acquisition. However, it is equally true that to maintain a full client base, you need to spend time on their needs while also carrying on with other important professional tasks, such as ongoing education or volunteering in the community.

Your limits

Ultimately, putting the time into finding financial adviser leads is necessary for the successful acquisition of clients. However, knowing when to scale back your efforts in this area and put more time to use elsewhere is an essential part of knowing how to run your own business. That’s the really key element – the fact that it is your business and you need to do things your way.

Of course, the capacity of any individual planner will vary wildly dependant on any number of different factors. The skill that you have to develop is knowing your own strengths and weaknesses well enough to be able to make the decision about how many clients you should actually aim to advise.

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