Whether or not to institute a minimum account size in your practice is a decision that deserves careful consideration. On one hand, it seems purely logical: Put a minimum in place and you’ll have fewer, larger clients, thus working less and earning more. On the other hand, you risk the chance of losing vital revenue, as well as the opportunity to help great people who need your services.

In working with hundreds of the nation’s top financial advisors, I have found that both models -- minimum or not -- can be equally effective. Just as Bloomingdale's and Wal-Mart are both extremely successful retail stores but cater to different markets, advisors can develop a business model that will thrive, regardless of whether they hold to a minimum.

If you’ve been considering the idea of instituting an account size or household minimum of some kind in your practice, here are some questions that can help you decide if it’s right for you.

Will it work in your community?

One of the first things you need to evaluate is whether the community where your practice is located has enough households with the investible net worth to meet your minimum while generating sufficient revenue for your practice. If, for example, you live in a city like Arlington, Virginia, where 14 percent of the residents are in the top 5 percent and have a median income of $86,000, sticking to a minimum should be no problem. If you live in a place like Milwaukee, Wisconsin, however, where 26 percent of the residents are below poverty level and the average income is $40,000, you may want to think twice about trying to cherry-pick your clients. Remember, too, that the averages don't tell the whole story. You also need to analyze the population size and number of competitors you have. Even if 50 percent of local residents are dripping with wealth, you could still find yourself in a bad spot if there aren’t enough quality prospects to go around.

Are you prepared to back it up?

One key to implementing successful minimums involves defining your reasons for doing so. Clients and potential clients will both need to understand how your minimum provides them with extra value. If your explanation for having a minimum comes across as self-serving, it can turn people away. Be prepared to support your rationale with a litany of benefits your clients receive because you are selective about the families you work with. These could include more face time with you, highly customized and creative wealth management solutions, the chance to network with elite professionals at private social events hosted by your firm, decreased fees and enhanced services, or any number of benefits. In short, don’t have a minimum just for the sake of it; have a minimum because of the extraordinary service you provide.

It is also imperative to stick with the minimum you set. If you make frequent exceptions by taking on clients who don’t meet your minimum, you will weaken its effectiveness to nothing more than a second-rate sales pitch. This is not to say you can never make exceptions. It’s just that if you do, you need to have a good reason for doing so, and you must explain these reasons to the client so they feel like they are receiving special treatment. This is because one major benefit of having a minimum is that, as word spreads, you will earn a reputation for it. When the community learns that you only work with families of a certain net worth, those who fit your criteria will be attracted to you. Where minimums are concerned, you must be prepared to make short-term sacrifices in exchange for long-term gain.

Related questions you need to answer honestly: Does your business have the financial strength to turn revenue away? Do you personally have the foresight and emotional fortitude to turn clients away? Can you explain how your services are different or superior from your competition that doesn’t have minimums?

Who do you want to be?

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.