Welcome again to “Ask an Advisor,” the recommendation column the place actual monetary professionals reply questions from actual individuals. The subject will be something on the earth of finance, from retirement to taxes to wealth administration — and even recommendation on advising.

For monetary advisors, consumer referrals are a tough enterprise. In a single sense, the extra shoppers, the higher. Even when a brand new buyer does not have a lot cash, by working with them the agency reaches extra individuals, its popularity grows and the advisor earns the goodwill of each the brand new consumer and the one that referred them. 

Alternatively, assets are restricted, particularly at a smaller agency. A brand new consumer — whether or not it is a relative, buddy or colleague of a present buyer — might not usher in sufficient property underneath administration to justify the money and time they require.

Not that cash is the one motive to advise somebody. Many wealth managers say probably the most fulfilling work they’ve ever achieved has been professional bono. In actual fact, a latest examine by the Basis for Monetary Planning discovered that 99% of wealth managers who do volunteer work are motivated by the “satisfaction I get from serving to individuals in want.”

READ MORE: Ask an advisor: How ought to I make investments if rates of interest come down?

However is advising the kid of a consumer the identical as volunteer work? Is it an advisor’s accountability to avoid wasting their time and power for present shoppers? Or are there good causes — together with for the agency’s long-term backside line — to welcome the brand new enterprise, no matter its worth?

John Bovard, a CFP and the proprietor of Incline Wealth Advisors in Cincinnati, is grappling with this query. This is what he wrote:

Pricey fellow advisors,

How do you deal with a referral from a consumer that will not be the most effective match in your apply? 

I run a small agency, composed of simply me and a consumer service affiliate. We will solely serve a sure variety of buyers, and we’re near that quantity now. We really feel that taking over smaller shoppers at the moment would take time away from different buyers, in addition to limit our skill to convey on bigger shoppers sooner or later. 

Now a retired consumer of ours desires us to advise his younger son, who solely has about $25,000 to $50,000 to speculate. 

I do not wish to tackle a smaller consumer, however I additionally do not wish to upset his father. How do I navigate this?

Sincerely,

John Bovard, CFP

And here is what monetary advisors wrote again: