Today's most successful advisors recognize a simple but powerful fact of business: It's better to work with a small number of great clients than to serve a huge base of clients who are only mediocre. In other words, in this case less can mean more—a whole lot more.

Consider CEG Worldwide's recent research on advisors' success. We grouped 2,094 advisors using two primary criteria: whether their net income was more or less than $300,000 and whether they served more than 150 clients or 150 or fewer.

One group of advisors—those with net incomes of more than $300,000 and 150 or fewer clients, on average—clearly excelled. This select group, representing a mere 12.8% of all advisors surveyed—earned an average net income of about $416,000. The next best group earned only $386,000, and these advisors had to serve more clients to generate that smaller income.

Clearly, the select group of advisors has figured out how to generate high incomes from relatively few clients. Other advisors would be wise to emulate these top advisors by working with fewer but better clients.

Four Ways to Let Go

To maximize your income with a small client base, you must let go of clients who are inappropriate for your firm—those who are unprofitable and who don't fit your vision of where you want to take your business. There are tremendous advantages to no longer working with less-than-ideal clients.

For example, you'll free up large amounts of both your time and your team to focus on remaining clients and build your business to gain additional ideal clients. Your increased attention will also send a powerful message to existing clients that you are devoted to serving them and their unique needs (thereby creating more loyalty among those clients you most want to keep). Along the way, you'll improve your lifestyle dramatically. Working exclusively with the right clients will leave you feeling energized and inspired-perhaps for the first time in years.

That said, many advisors find it difficult to let go of existing clients—even when they know those clients are holding them back from greater success and satisfaction. One common barrier, of course, is the immediate loss of revenue. But your human capital—your time—is even more valuable than short-term revenue. Nonideal clients are, by definition, an inappropriate use of your time. So how do you stop working with clients who aren't good matches for the type of business you want to build going forward? There are four main options you can pursue:

Option 1: "Quiet file" the inappropriate clients. The most common option, used by nearly all advisors, is to create a "quiet file" of clients they would like to stop working with and whom they hope will just go away. Advisors stop doing any proactive work with these clients, hoping that the clients will no longer contact them, but that their recurring revenue trail will continue. However, the problem with this option is that it rarely works as scripted. Instead, these clients continue to demand time and energy disproportionate to the business they offer. In fact, they often end up being the most difficult clients (particularly for your staff), in addition to being poor referral sources.

Option 2: Hire another advisorto service the inappropriate clients. Advisors also commonly take this route. However, as with the first option, it does not address the fundamental problem. Advisors often hire junior financial advisors whom they then must train and supervise. This costs advisors money and is time-consuming, which costs them even more money—all to service clients who were not profitable to begin with. If you have clients who aren't profitable enough for your marketplace, paying another advisor to service them is won't turn them into ideal clients.

Option 3: Transfer the inappropriate clientsto another advisor in your office. If you own your firm and already have this advisor on staff, this option is not fundamentally different than hiring a new advisor. Actually, you should consider transferring both the inappropriate clients and the advisor if they are not profitable enough to warrant your time.

If you're an employee of a firm, it can make sense to transfer these clients to another advisor within the company. Compensation for this transfer is sometimes accomplished using a revenue-sharing code with another advisor. It is crucial that you choose wisely for your clients' benefit as well as for the compliance exposure of a joint code.

Option 4: Sell the inappropriate clients. This final option is the best solution. By selling all of your non-ideal clients to an outside advisor, you will have complete closure and the opportunity to turn your full attention to your remaining profitable clients and prospects.