Advisors need to set standards and stick to them.

In 1999, San Antonio financial advisor Mark Little was at the top of his game. After starting in the financial services business in 1987, he had built his practice, Wall Street Services Inc., to more than 1,247 clients. He had become one of the top producers at his broker-dealer. He was also on the verge of quitting the business.

"I couldn't service all those accounts in a way that was satisfying to me," he recalls. "I was financially successful and emotionally miserable." Hiring a junior financial advisor, a route some professionals in such a situation might consider, would have added a level of complexity to his business that Little wasn't willing to assume.

After much soul searching and goal evaluation, he concluded that what he really wanted was to redesign his business so it would enable him to offer top-notch service to a limited number of clients, and to deliver it "without having to kill myself." Attaining that goal would mean paring back his client list to a fraction of its bloated size.

To do that, he devised a client profile that would match his needs and goals. He had three main requirements. First, a client would have to be a delegator who was willing to have Little handle the investment process. He would need to be comfortable with consolidating all of his investment accounts with one firm. And, he would need to pay a minimum annual fee of $9,000 and a management fee of 1.09% of assets.

As a next step, Little held seven seminars for all of his clients at a nearby hotel beginning in July 2001. "Basically, I told the truth, which is that I had more clients than I could service well," he says. "I explained my new client profile, and suggested scheduling a meeting to discuss how important it was to work with me versus someone else." He also offered referrals to other financial advisors to clients who wanted them.

"Most clients accepted what I had to say, though a few asked how I could do this to them after so many years. I told them that this was about my being unable to do my best job for them under the old circumstances, and about getting the attention they need."

Only 17 of his old clients stayed on, a situation that he says was "almost like starting over." His business grew mainly through referrals and today, he has 100 clients who pay an average annual fee of $12,400. "What I did may sound extreme, but I can tell you I'm a lot happier today than I was before I made the change," he says.

Facing A Crossroad

While few financial advisors pare their client list as much as Mark Little did, those who have been in the business for a length of time usually face a crossroad in at least a few client relationships that finally prompts them to suggest a parting of the ways. Most financial advisors shudder at harsh-sounding references to firing a client, preferring to use gentler terms such as "disengagement." Whatever the phraseology, there are times when a nudge toward the door is unavoidable.

The split can happen for any number of reasons. Like Little, some find that they have grown beyond a comfortable size and need to cut back. With too many clients, it becomes difficult, if not impossible, to give them all as much attention as they would like. Others point to philosophical differences that, either in the beginning of the relationship or over a period of several years, create insurmountable and irresolvable conflicts that consume large blocks of time and detract from the daily operations of the business.

"Financial advisors initiate a client departure for two main reasons," says Bill Bachrach, a San Diego trainer and coach for financial advisors who worked with Little on his transition. "One is to 'right size' their businesses. And the other is bad client behavior."