Managing the growth of a small financial advisory firm is tricky but important as planners face decisions about growing the client roster, adding staff and maintaining work-life balance.  

For Christopher A. Lamia, of Lamia Financial Group in Thousand Oaks, Calif., keeping the size of his firm manageable is an important part of his philosophy. Since his firm is a partnership between himself and a small accounting firm, it includes two full-time CPAs, one part-time CPA and one staff person. But as the firm grows he is faced with decisions about adding additional staff.

“It’s also about having the right chemistry for a small office,” Lamia said.

Despite the fact that he just went out on his own in 2009, Lamia said his practice is “very mature,” and that the average client has been with him for ten years.

Now Lamia said he is moving his minimums up to become more selective, and transitioning some clients to other planners. His minimum fee is now set at $12,500 a year, though some of his legacy clients are not at that level.

Being more selective is part of maturing as a financial planning firm, Lamia said. “When you first start out, in the beginning you think everyone who can fog a mirror is a prospective client,” he said. In hindsight, planners often feel that they would have benefited by being more selective up front.

Lamia highlighted an interesting problem for financial planners who get most of their clients by referral – what if it’s not a good fit? Rejecting a client that was referred by an existing client or a center of influence in the community could damage both relationships if not handled well.

Lamia said that he will always conduct a discovery meeting with a referred client. “I’ll let them know at the discovery meeting that it’s a chance to figure out if it’s a good fit, and if it’s not we’ll find them a good home,” he said. Since he has become more selective he’s also developed relationships with planners who are happy to work with someone with less than $1 million in investable assets, so he can help the clients that don’t fit with him find someone who will be able to serve their needs.

Lamia said that just preparing for a discovery meeting with him can be beneficial for prospective clients because helps them get organized and then provides him with the information to make a targeted referral. He said he has had clients who did not fit with him but were happy enough with the experience that they went on to make subsequent referrals.

Referrals are also delicate when it comes to the CPAs in the office. Since both side of the business had their own client lists and community relationships prior to joining together, Lamia said they are very careful about not making referrals that could be problematic – for example, he said he would never market the firm’s CPA services to a client who was initially referred by another CPA in the community. “We’re very low pressure in terms of cross-selling,” he said. But being able to provide full tax services is a plus for clients, because of the importance of tax planning in wealth management.

While Lamia is a number of years away from retirement, he said the development of new financial advisors and succession planning are key concerns for the industry as a whole.

“It’s an industry challenge – how do you develop new talent?” he asked. The amount of time and effort to train someone at the beginning of their career means it’s difficult for a small firm to take on the task. And if there is any turnover, the process must begin all over again.

He suggests that a system where an older planner, approaching retirement, could transition their business to a younger planner over a period of a few years could help both new and veteran members of the industry.

Lamia said that for his firm he is considering more outsourced solutions because that limits the need of going through the hiring process, and then you only pay for the work that is needed as opposed to a full-time salary. “I’d rather be spending time with clients than managing staff,” he said.