I remember the day I crossed the threshold of managing more than $100 million in client assets. It was a personal milestone that validated my success as a financial advisor. I had to be part financial advisor and part sociology major to ensure my perseverance paid off. It took more than just knocking on doors and networking, I had to understand my target audience.

Financial advisors today face several headwinds that may make it tougher for an advisor to break through the $100 million mark. Consider:

• Nearly 40% of financial advisors, who collectively control roughly $10.4 trillion in assets, are expected to retire in the next decade, according to Cerulli Associates.

• An average of 11,000 Americans will turn 65 each day by the end of December 2024.

• An estimated 90% of advisors who enter the industry do not stay more than three years.

On paper, these factors should work to the advantage of independent advisors looking to grow their business, especially independent NextGen advisors. Here’s why it’s not a slam dunk:

Dunbar’s Number And Diminishing Returns
Anthropologist Robin Dunbar determined there is a limit to how many meaningful connections (not social media connections) one person can have and that’s 150. I would argue that managing 150 clients is too many, but it can be possible with the right support.

Economic theory tells us that after an optimal production level is reached, any additional time or labor to increase production could erode efficiency. We’ve all experienced this as advisors. There’s a point of diminishing returns when too many clients affect the overall client experience and stalls growth.

Then how does an independent advisor break the $100 million barrier without affecting efficiency and client experience?

Retirement Wave
The dual retirement wave could be a boon for advisors who want to grow their business if they capture the demand correctly.

The fact that more than one-third of financial advisors are expected to retire from the industry in the next decade creates an opportunity for NextGen advisors to inherit clients and their portfolios. In addition, an estimated 4 million Americans will turn 65 this year, the most ever.

Clients with accumulated wealth are ideal for getting past the $100 million mark, but those in retirement or near retirement may hesitate to work with less experienced advisors. These potential clients want to ensure their retirement funds never run out and the traditional portfolio withdrawal method carries a higher risk of that happening. Focusing on individual, income-generating securities that generate earnings from interest and dividends, is an approach I have found to be successful in preserving retirement principal.

There are ways to engage those with accumulated wealth to grow your business and not trigger Dunbar’s number or diminishing returns.

Finding The Right Partner
The financial services industry continues to evolve and offer advisors options on how to reach $100 million without sacrificing their independent status. It’s important to find a partner with a strong investment team to conduct research and portfolio management in addition to trading, compliance and even assist with client communications. Outsourcing the investment activities allows an advisor to focus on recruiting new clients and managing existing relationships more efficiently.

Finding a partner that understands how to leverage interest and dividends, not just capital appreciation, to meet your clients’ retirement cash-flow needs is also important.

It’s a delicate balance since few advisors want to relinquish a material amount of their revenue or control over making investment decisions to another party. But, with the right partner, a beneficial relationship can be achieved.

Breaking into the $100 million club is possible for NextGen advisors and it can be easier with a thoughtful approach. The potential is there with the dual industry and client retirement waves, you just need the right support to keep you afloat.

David Scranton is founder and CEO of Sound Income Group, a diversified financial services company that operates RIA Sound Income Strategies, Advisors’ Academy and Retirement Income Source.