With a retail price north of $200,000, Aston Martin produces less than 2,000 Rapides per year. By contrast, Honda produces one hundred times that many Accords. While most of us would rather have the former, we must acknowledge that both companies perform a valuable function by giving a group of individuals what they need, and both companies thrive financially as a result. In a similar vein, serving the mass affluent can be just as enjoyable and profitable as serving the ultra high net worth. Ultimately then, every advisor must choose which model fits him best, and then build the appropriate infrastructure to support that model.

Let’s assume you run your practice like an army of one -- answering phones, scheduling appointments, greeting clients, writing financial plans, conducting reviews, rebalancing portfolios -- doing everything required to keep your business running. In this scenario, you can’t afford not to put a minimum in place. Without a minimum, you will soon find yourself overwhelmed and unable to take on new clients. In a perfect world, an advisor who wants to run her practice this way could have 100 $1 million households, work part-time, and make a great living.

Now compare an advisor who has capable assistants handling day-to-day operational details. This advisor’s team handles everything that happens behind the scenes, leaving the advisor to do nothing but meet with clients at pre-determined intervals. In addition, this advisor is a technology guru, leveraging powerful online tools to help him manage the wealth of his clients and to automate his communications. In this scenario, it may not be necessary to put a minimum in place, and if there is one, it could be much lower than the aforementioned advisor.

Granted, these examples are on opposite ends of the spectrum, and most advisors fall somewhere in the middle, but the decision-making process needs to be partly based on such factors.

Related questions you need to answer honestly: How well does your business utilize technology to create scalability? Are you a good delegator, or do you tend to hold onto things? When you look down the road, where do you envision your practice in 10 years -- as a boutique firm serving a select few, or as a giant organization serving thousands?

Are you ready to put a plan in place?

The advisors who successfully implement a minimum account size don’t do so arbitrarily. A significant amount of forethought and planning is required to ensure they pick the right number, communicate it properly, notify their clients in the correct way, and ultimately, improve their business as a result. If this is something you are considering in your practice, take some time to analyze your current client base, your community, and the additional areas mentioned above to see if this is something that will truly work for you. And remember, if you decide that having a minimum is right for you, don’t be afraid to take the leap. No great reward comes without a measure of risk.

Robert Sofia is COO of Platinum Advisor Strategies, a marketing firm that helps independent financial advisors attract and retain high net-worth clients. The next article in this series will discuss the specific steps that need to be taken once you decide to implement a minimum.

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