There’s an old joke in the financial planning industry that the ideal client is “anyone with a pulse”. For advisors just starting out, that sentiment often rings true – every prospect willing to pay for their service feels like an opportunity. However, as their firms mature, advisors often notice a divide manifesting between newer clients paying higher fees and ‘legacy clients’ from the early days paying discounted rates. Continuing to serve these legacy clients can strain firm resources, limit profitability, and slow growth. Which can leave advisors grappling with the trade-off between gratitude for early supporters – clients who were willing to ‘bet’ on them during the firm’s fledgling days – and the increasing demands of running a sustainable, profitable business. This balancing act becomes even more demanding as advisors’ services and fees evolve, creating a growing gap between legacy client contributions and the cost of maintaining those relationships.
In this 153rd episode of Kitces and Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can navigate the challenge of managing underpaying clients. They explore why financial ‘spreadsheet’ metrics often fail to account for the emotional realities of these decisions – such as the loyalty advisors feel toward long-standing clients – and how advisors can approach this common business dilemma with greater balance and thoughtfulness.
For many advisors, determining what to do with legacy clients paying discounted rates can feel at odds with their purpose: helping people. Yet every client relationship demands resources – from staff time to infrastructure to meeting hours – and taking on too many underpaying clients can leave advisors stretched too thin. This strain doesn’t just affect business growth and service quality. Over time, it can even affect the advisor’s well-being, as the demands (and stressors!) take a physical and emotional toll.
Advisors facing “too much work for too many clients for too little dollars” can start by assessing the trade-offs. Saying “yes” to underpaying clients often means saying ‘no’ to higher-paying opportunities, greater work-life flexibility, or long-term firm growth. What matters most is making this decision consciously, with clarity and intention. Advisors who take the time to reflect on their choices can better align their decisions with their goals and values. And, in many cases, legacy clients may be willing to adjust their fees to match current service levels, providing the firm with resources to serve more clients without stretching thin.
Ultimately, there’s no one-size-fits-all solution. The key point is that whichever path an advisor chooses – graduating clients, right-sizing fees, or even making no adjustments – what matters most is that the decision is made intentionally. After all, there is a lot of power that comes with ‘choosing’ that course of action. Every path brings its own challenges – and its own rewards – but by taking ownership of the decision, advisors can move forward with clarity and confidence!
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