Kitces and Carl - Real Talk for Real Financial Advisors Evaluating The Tradeoffs That Come With Retaining 'Legacy' Clients: Kitces & Carl Ep 153
Dec 12, 2024
This discussion tackles the tricky situation of legacy clients in financial advisory. Emotional attachments often conflict with profitability, prompting advisors to reevaluate client portfolios. Trust and long-term relationships can justify higher costs for services, akin to personal experiences with providers like dentists. The hosts emphasize striking a balance between fulfilling relationships and the pursuit of high-revenue clients. Additionally, they explore how evolving client selection criteria impact advisor well-being and business success.
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The Overwhelmed Advisor
- Michael Kitces recounts a conversation with an advisor struggling with client capacity.
- This advisor insisted his numerous small clients didn't require much time, despite a large team and low profitability.
The Burnout Risk
- Advisors can choose to prioritize client service over higher profits, accepting lower profitability.
- However, ignoring the trade-offs of this choice can lead to burnout and other negative consequences.
Evaluate the Trade-offs
- Advisors should acknowledge and evaluate the trade-offs of keeping smaller clients.
- Consider the impact on health, family, and business profitability before making a decision.