NOTE: I have provided some upcoming speaking engagements and additional resources of my own below in case you are interested in supplementing your learning. And, as always, if you have written work you would like featured on the Friday Reading Club, please reach out.
Article
Dunbar’s Number And How Many True Financial Planning Client Relationships You Can Really Have, Kitces.com, published 10/10/2012
Discussion
While this article is from 2012, it hits especially close to home to me. I have recently been working on a piece on how the AI and tech revolutions fit in to the human side of planning. From my perspective, wealth transfer professionals of all disciplines are perpetually being sold tech solutions - often with a stated or unstated goal of serving more clients.
What if more isn’t the answer?
I was curious about the effect of Dunbar’s Number - the brainchild of British anthropologist Robin Dunbar - which theorizes that our brain only has the cognitive capacity to keep track of 150 relationships. However, I was tickled to see an article on this exact subject posted this week by Michael Kitces on LinkedIn. While Dunbar’s Number is often used in the context of friendships and non-work relationships, my curiosity was whether this could spill over to work relationships. After all, if we are asked to serve more clients through time compression, at what point might our returns begin to diminish?
There are trickle-down effects as well, which I believe could explain a certain level of the current conditions of burnout and loneliness felt by many. If we are routinely exceeding our Dunbar equivalent in terms of work relationships and/or social media relationships, how much capacity remains to maintain meaningful relationships outside of work?
In this article, Michael Kitces argues that financial planners may be limited to 75-125 meaningful client relationships before hitting the Dunbar’s limit. However, as I’m sure many advisors in my audience can attest, you are routinely pressed into serving clients well in excess of this number. Many CPAs handle returns well in excess of this number each busy season. Mature estate planning law practices often have 2,000+ clients (based on my anecdotal research). And, things will continue to get worse as AI reduces the time spent on non-client facing tasks - with the implication that the remaining time should be spent on client-facing activities.
While it is common for many professional advisors to desire more client-facing activities, there can be too much of a good thing. At a certain point, a full meeting schedule may start to have a detrimental effect on one’s overall health.
While this was written 12 years ago, Michael’s conclusion is perhaps more relevant than ever:
Of course, there are only so many paying customers available. This becomes a double-edged sword, because to serve fewer clients means charging more per client. That outcome is also not sustainable, especially when your competitors are also seeking to charge more.
And, as I will discuss in my own upcoming article alluded to above, it is hard to get someone to participate in a broccoli-eating contest when the prize is more broccoli. This can make it hard to find successors for professional firms following traditional business models. As I have referenced before, the accounting industry is facing this issue, and it is a matter of time before it trickles down (to the extent it hasn’t already done so) to other wealth transfer disciplines.
Office Hours
As a reminder, I have standing office hours for Tuesdays and/or Thursdays from:
10 am - 11 am PT
11 am - 12 pm PT
12 pm - 1 pm CT
1 pm - 2 pm ET
To register for a session in August, you can sign up by clicking here.
Upcoming Speaking Engagements
I am privileged enough to get invited to speak in various capacities, often due to your support and patronage of my content. In order to also support those who extend these invitations, please consider any of these upcoming learning opportunities if you are interested:
WealthCounsel Symposium: September 23-26, 2024, Las Vegas. I will be speaking at the Precursor program, with one session on GST tax and another on Forms 706 and 709.
IWI Strategy Forum: September 30 - October 2, 2024, Chicago. I will be speaking on planning at the intersection of asset protection and tax planning.
The Tax & Estate Planning Forum: October 21-25, 2024, Virtual. I will be speaking on powers of appointment and their utility, along with common issues in exercising powers of appointment.
Colorado Bar Association, Gift and Estate Tax Series: October 29, 2024, Virtual. I will be speaking on GST tax planning, from the perspective of three Dickensian ghosts: past, present, and future.
Ultimate Estate Planner: While details are pending, Ultimate Estate Planner will be hosting some upcoming sessions with me in September - one on the current state of Crummey notifications, and the other on deferred GST tax issues and reporting in trust administration. Stay tuned to sign up through them.
In addition, I occasionally offer live and prerecorded CPE presentations through MyCPE and Strafford Publications. Please check out their resources.
And, if you are in charge of programming for an estate planning council, FPA chapter, bar association, or conference in need of a speaker, please feel free to reach out. This is what I love doing.
In the meantime, I continue to work on ways to offer CE content through this newsletter. Please stay tuned.