Helping Everyone You Can Vs Getting Paid What You're Really Worth: Kitces & Carl Ep 130
Jan 25, 2024
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The podcast explores the tension between helping clients and getting paid well as a financial advisor. It discusses the importance of aligning wealth with values and attracting more profitable clients for greater happiness. The concept of the 'barbell approach' in balancing affluent clients and limited means is explored, highlighting the need for setting boundaries. Additionally, the importance of creating high-value products and getting paid what you're worth is emphasized.
Financial advisors who prioritize serving their clients and have a service-oriented mindset tend to be happier than those who are primarily motivated by income.
Thriving advisors generate more revenue and profit per client by working with fewer clients, resulting in higher profitability and improved overall satisfaction.
Deep dives
Happier financial advisors prioritize service over income motivation
Financial advisors who prioritize serving their clients and have a service-oriented mindset tend to be happier than those who are primarily motivated by income. The study found a negative relationship between income motivation and happiness, suggesting that playing the income game can be challenging and unsatisfying. However, the happiest advisors were those who combined a service orientation with working with affluent clients who could pay them well for their services.
Thriving advisors generate more revenue and profit per client
The study revealed that thriving financial advisors generate around 40% more revenue per client and more than 100% more profit per client compared to struggling advisors. Despite not necessarily working with super wealthy clients, thriving advisors had clients with a higher average household value, resulting in greater revenue and profit. By working with fewer clients, thriving advisors could better manage their workload, resulting in higher profitability and better work-life balance.
Advisors who work fewer hours are happier and more profitable
The research showed a clear connection between the number of hours worked and advisor happiness. Happier advisors tended to work fewer hours, while struggling advisors often found themselves working longer hours for less money. Additionally, thriving advisors had better profit margins and lower overhead costs, in part because they worked with fewer clients and didn't need as much staff support. By setting clear boundaries and focusing on serving clients who could afford their services, advisors were able to achieve higher profitability and improved overall satisfaction.
In our 130th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the advisor mindset that leads to more happiness.