Ask an advisor: Do I have to accept every client?

Ask an advisor: Should I take clients who don't fit my business model?

December 9, 2024 5:16 PM

A young wealth manager in San Francisco wonders whether he can sometimes refuse prospective clients.

Welcome back to "Ask an Advisor," the advice column where real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.

When a financial advisor starts their own firm, it's important to envision what kind of business it will be — and who it will be for. Different RIAs are adept at serving different kinds of clients, whether they're young or old, working or retired, mass affluent or high net worth. Andre Jean-Pierre of Aces Advisors, for example, specializes in Gen Z investors. Jay Zigmont of Childfree Wealth specifically advises clients without children.

But when a young wealth manager is just getting started, it's hard to turn away any potential clients, even if they don't fit the business model. Every firm needs a clear mission, but it also needs to stay in business. Does it make sense to be flexible about one's clientele in the beginning, or is it more important to stick to the plan?

One person facing this dilemma is Said Israilov, a certified financial planner in San Francisco. In August this year, Israilov founded Israilov Financial, an RIA devoted to advising millennial immigrants working in tech. But so far, that's not who's been knocking at his door. Should Israilov compromise on his vision, or maintain his focus?

For help, Israilov turned to his fellow financial advisors. Here's what he wrote:

Dear advisors,

I've recently launched my financial advisory firm, dedicated to serving millennial tech workers in Silicon Valley. As I spend time on marketing efforts, I am getting occasional inbound inquiries from prospects who are way outside of my niche target demographic.

They are usually pre-retirees, about 5-10 years before retirement age. Based on several conversations I've had with seasoned advisors, it seems that the service model for preretirees requires a different approach and skill set. I am also thinking about the long-term sustainability of my business; I am hoping to build lasting client relationships and help them grow in their financial journey. And as a fairly young financial advisor, I can relate better to the millennial demographic.

As I plan to quickly grow and scale my practice in the coming year, should I accept clients outside of my niche?

Sincerely,

Said Israilov

And here's what financial advisors wrote back:

Protect your vision

Tom Balcom, CFP and founder of

1650 Wealth Management

in Lauderdale-by-the-Sea, Florida

Yes, you should accept older clients — but only if you do not have to change your business model. If you can adjust your asset allocation models to work with these individuals, then feel free to accept these investors. If accepting these new clients causes you to have to change your business model, then do not take them on, since doing so will take your focus off of your core mission. Also, these preretirees may be a good source of referrals for both their contemporaries as well as your target demographic.

Stick to the plan

Crystal McKeon, CFP and chief compliance officer at

TSA Wealth Management

in Houston

It seems like you already have a pretty good handle on the future of your business and where you want to go with it. Some people who are just starting out must take on any client who is willing just to keep the lights on. If you are in a situation where you can be choosy about who you take on as a client, you can make your life much easier and provide better service in the long run. It is best to stick to your business model and clients that you have the talent and resources to serve best.

Choose people carefully

Kashif Ahmed, CFP and president of

American Private Wealth

in Bedford, Massachusetts

Before you get into niches and service models and skill sets, figure out who you would enjoy spending time with. If you take on clients you don't enjoy working with, that frustration will be detrimental to your interactions with other clients, and worse, you will take it home with you. And that is not fair to your family. No amount of "growth" or revenue is worth working with people who don't bring you joy, and instead make you miserable.

And for what it's worth, I don't believe in niches. I have clients that vary widely in age, professions, amount of wealth and complexity. But I relish every one of them, and every moment I spend with them. It's more important to surround yourself with people you enjoy being with, and will enjoy doing the planning for.

Growth is key

Daniel Lash, CFP and partner at

VLP Financial Advisors

in Vienna, Virginia

You should only accept clients if you can accommodate them with your growth, meaning you'd potentially have another advisor serve a different niche of preretirees. If you do not feel you can scale that quickly to accommodate these clients, then I would recommend against it since the service may not live up to the clients' expectations.

You may also want to consider finding another advisor in your area who already has this preretiree niche, but does not serve the niche you want to serve, and discuss the possibility of sharing referrals.

Talk to as many owners of financial planning businesses as you can to gain insight into how to create a well-functioning firm. Not all planners will be good business owners, and learning from others can be helpful in this process. Good luck!