For many financial advisors, setting asset minimums helps ensure that their firm can generate enough revenue to maintain business costs and compensate the advisor appropriately. While finding prospective clients who are a good fit for the firm can be challenging, what can be even more challenging is letting a prospect who doesn’t meet the firm’s asset minimum requirements know that they wouldn’t be a good fit for the firm. The topic of assets and net worth can be a very sensitive topic; some prospects may take it very personally when they’re told they don’t have enough to be taken on as a client, and at the same time, many advisors feel awkward when they have to turn prospective clients away.

In our 105th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss some of the reasons that conversations about asset minimums with prospective clients can be so difficult, and offer a few ways to gracefully inform a prospect they do not meet the firm’s asset minimum while still providing value for them even if the relationship isn’t going to continue.

As a starting point, it’s important to recognize that many prospective clients may not know what an asset minimum is, why some advisors have them, and whether they would qualify to work with a particular advisor because of their minimum requirements. A simple way for advisors to educate prospects about asset minimums is to include the information on their firm’s website. This would help prospects searching for an advisor online to self-select themselves out from firms whose asset minimums may not apply to them. This could also help prevent them from scheduling unnecessary meetings in the first place, saving both the advisor and the prospect time and potential awkwardness.

Additionally, advisors can spend time in the initial discovery meeting explaining who the firm’s clients generally are when meeting with new prospects, reviewing typical asset management ranges and any particular niches served. This can help prospective clients who don’t see (or comprehend) the information on the firm’s website understand why working with the advisor might not make the most sense for them, which can help to avoid any hard feelings and make it easier for the prospect to accept why the advisor may decline the engagement. Importantly, even though a working relationship may not make sense, advisors can still offer to help the prospect move forward with their financial planning needs. For example, the advisor can offer a list of vetted advisors with lower (or no) asset minimums who would potentially be a better fit for the prospect , and they can even compile a brief list of some simple action items for the prospect to tackle on their own, so that they can begin addressing some of their most immediate financial planning needs.

Ultimately, the key point is that even though asset minimum conversations can be awkward, being honest and upfront can keep advisors from feeling pressured to engage with a client who can’t generate enough revenue to justify the relationship. And by communicating with honesty, clarity, and empathy, advisors can help mitigate any of the prospect’s disheartened feelings of rejection while still providing valuable guidance on what they can do on their own and who can help them, letting the prospect go with their dignity intact.

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For many financial advisory firm owners, growth is often the primary goal in the early years of launching a business. However, at a certain point, initial business growth goals will have been met, leaving the business owner at a crossroads of deciding where to take the business next – should they maintain the firm’s current size or continue the growth trajectory and adapt to the firm’s growing needs to bring on more clients? Even though the business may be doing well, deciding to grow past a certain point can bring on a whole new set of challenges, as with an expanding business, the capacity for advisors and other employees becomes more limited and can strain the firm’s resources. Some advisors, though, may choose not to continue growing the business further, and this choice will inevitably involve the challenging task of saying “no” to future growth opportunities.

In our 104th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how financial advisors can recognize and define what ‘enough’ growth looks like for their firm and how to create limits to help them say “no” to future opportunities that may create unwanted strain on the business.

Advisory firm owners can start by assessing how growth would impact themselves, their employees, and the firm. Typically, growing a firm involves adding more responsibilities, which can create more procedures and processes and requires time, staff capacity, and resources across the firm. To handle these additional responsibilities and projects, firm owners often have to decide whether to delegate tasks, automate them, save them for later, or refuse them altogether. And for many advisors who choose to keep their teams smaller and are not interested in hiring and training more employees, determining when to reject new opportunities and how to communicate their choice can be key to finding and maintaining their desired balance. This is because some advisors may not want to take on new clients and additional projects that may overload staff and take away time that could otherwise be spent on keeping current clients happy. Whatever the constraints may be, understanding when – and why – to stop growing can help advisors learn how to say no to unnecessary opportunities that may cause unwanted growth and strain on the firm, staff, and resources.

Ultimately, the key point is that while saying no to growth can feel scary (because we sometimes tend to fear that not continuously striving for growth and staying busy will somehow lead to inevitable failure), protecting the time, capacity, and resources of the firm by turning down unnecessary opportunities can be the best thing for the firm whose goals don’t involve growth. And by defining – and honoring! – the firm’s constraints, the process of intentionally declining these opportunities can become easier and more efficient (e.g., through automated processes and templates to respond to such opportunities). Over time, respecting the constraints of the firm can help the firm owner and the team make better choices and even open up new opportunities that are more relevant to the firm’s future direction, offering a positive impact on the overall goals of the business!

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