Do you think it is better to
Do you think it is better to have 25 clients with $100,000 accounts, or 1 client with a $2.5 million dollar account? and why?
Do you think it is better to have 25 clients with
$100,000 accounts, or 1 client with a $2.5 million dollar
account? and why?
What do you think?
How about 5 clients with $500,000 accounts, or 10 clients with $250,000 accounts.
Tricky question...if they are people I get along with and listen to me, then I'd
rather have 25; more referral chances, presumably more growth potential,
etc. However, I'm sure others will point out it may cause a lot less brain
damage to GET one 2.5m vs. 25 @ 100k.
My answer is based on the word "have" in the question. In other words, if
you're handing them out, I'll take the 25 for diversification's sake--plus
usually you have higher margins (ie can charge more) on a smaller account.
If you have only one client that represents the majority of your book you are asking for trouble. If they leave you for any reason, including death, you are now dead in the water and back to square one.
Babs is correct...I worked with a broker like that. When the big, day-trading client got margined out as the market was falling, the broker's production went south and the broker ultimately left the program.
If $2.5 million was my entire book, I'd take the 25 $100K clients. With my book currently just over $30 million, I'll take the one client at $2.5 million.
If my goal was to work as little as possible, I'd take the one client.
If my goal was to build a practice, I'd take the 25 clients. That is 25 clients who are investing on a monthly basis. It is 25 clients who will ultimately have lumpsum rollovers. That is 25 clients who need life insurance and disability insurance. That is 25 client who can refer me to one $1,000,000 client each.