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?

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