Dunbar’s Number And Your Financial Advisor

dunbars number and your financial advisorToday I want to talk to you about numbers. For starters, let’s talk about numbers on the calendar . . .

Today is the 19th of December, and there are some people expecting the end of the world just two days from now on the 21st. I’m not in the forecasting business – whether it involves the stock market or the apocalypse – but I absolutely plan to be sending you another weekly email next Wednesday morning. And I plan on all of you being around to read it.

Another number I’d like to talk about is called Dunbar’s number. The short explanation is that Dunbar’s number is a research-based number of “stable social relationships” each one of us can maintain over time. This Wikipedia article suggests the number is somewhere between 100 and 230, but the most often used figure is 150.

I’m not going to declare that Dunbar’s number is an accurate measurement of your personal relationship limit, but I think it’s interesting to consider especially in the age of FacebookTwitterGoogle+Pinterest and other technologies.

And I think another interesting thing to consider is a financial advisor’s Dunbar number. According to this research from CEG Worldwide,

While the typical investment generalist (advisor) serves 269.3 clients, wealth managers serve just 101.1 clients on average.

While we could certainly spend time discussing what kind of an advisor is an “investment generalist” versus a “wealth manager,” I’m more concerned with the numbers.

My interpretation of this research is that on the high end, the average financial advisor has over 250 client relationships while on the low end, the average advisor has just over 100 clients. And while this information doesn’t specify whether these average advisors have partners or a full administrative staff, I think it’s interesting to think of these figures in terms of Dunbar’s number.

If there’s any truth to the notion of Dunbar’s number, and the average advisor has between 100 and 250 client relationships – or an average of 175 – how much of a relationship can you actually have if you’re working with the average advisor and are “competing” with 174 other clients for your advisor’s time and attention?

I could certainly speculate, but instead I’ll tell you what I’ve deliberately decided to do . . . I currently have just over 30 client relationships. Over the next 2-3 years, I want to selectively add new clients to ultimately reach a total of 60 clients. If Dunbar’s number works, at my maximum of 60 client relationships, I’ll still have plenty of “relationship capacity” for family, friends and other relationships while being able to deliver personal attention and care to each of my clients.

If the average advisor has 175 client relationships, it makes me question if all their relationships – including personal – might be under stress or not receiving their full time and attention when they need it most.

If you work with an advisor, I suggest you ask them how many clients they have. It might not reveal anything, but then again, maybe it will.

And if you’d like to learn if you qualify to become one of my 60 clients, please contact me and let’s talk about it.

Thanks for reading. While you’re here, be sure to sign up for my weekly email newsletter where I share tips, advice, and stories about the intersection of money and our lives. Just click here to join the community.

Russ Thornton
Russ Thornton
Hi there! I'm Russ, and I help women in their 50s and 60s achieve and maintain their desired lifestyle leading up to and throughout their retirement years. Imagine being able to look forward to a comfortable and confident financial future...
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