
Financial advisors often seek to scale their practices by investing in technology, hoping efficiency gains will allow them to bring on more clients, and thus unlock greater profitability and capacity. While this may alleviate some demands on the advisor's time, it may not have the scale of effect advisors are looking for. In fact, according joint data on the latest Kitces Research on The Technology Advisors Use And Like and How Advisors Actually Do Financial Planning, investing in technology has a limited yield in advisor productivity. When productivity is measured by revenue per advisor or per employee, the dominant is how much clients are able and willing to pay. In other words, advisors working with a higher number of clients paying a lower fee are unable to match the productivity of advisors who serve a lower number of high-paying clients – even if they leverage technology to increase their day-to-day efficiency.
In the 172nd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the limitations of advisor productivity relative to technology and how advisors can scale up instead. In practice, productivity gains through technology tend to yield relatively incremental results compared to that of client affluence. The data shows a steep curve: revenue per advisor accelerates dramatically as client affluence increases, because wealthier clients both need and can afford more comprehensive services – and are willing to pay premium fees for them. While servicing high-net-worth clients may require more time, it does not scale linearly with revenue. Instead, advisors working with affluent households tend to earn much higher hourly rates, which compounds the financial leverage of moving upmarket.
On the other hand, scaling through client volume – adding more clients to an advisor's book – often hits practical limits that are difficult to overcome, even with well-integrated tech stacks. In contrast, the most productive advisory firms adopt a “one on / one off” model, replacing each new, more affluent client by graduating a less profitable one. This approach allows firms to increase average revenue per client while maintaining or even reducing total client count, thereby enhancing profitability without increasing workload. Over time, this incremental upgrading strategy results in leaner, more profitable practices with deeper client relationships and stronger service capacity. The firms that scale best don't expand capacity to serve more clients – they narrow focus to serve fewer, higher-value ones better.
Interestingly, advisors who approach technology primarily as a tool for efficiency and cost-cutting tend to have lower productivity than those who use technology to deepen the client experience. When tech is deployed to enhance advice quality, communication, or engagement with top clients, it acts as a force multiplier. But when it is used mainly to manage the complexity of serving too many clients, it fails to meaningfully expand advisor capacity. This suggests that the most effective use of technology is to elevate the advisor's value, rather than to increase the number of clients they can serve.
The broader implication is that if the goal is to grow a financially successful advisory business, the clearest path is to work with increasingly affluent clients. Like in medicine or law, some specialties pay more than others – not because the work is more virtuous, but because the market rewards certain kinds of value. While this may conflict with a desire to serve a broader population, the math is difficult to ignore. Each financial planning firm must determine for itself how to reconcile the tension between accessibility and scale. Advisors must decide for themselves how to balance service and economics. The good news is that many advisors have built profitable, enduring practices servicing 'average' clients – but for those who aim to maximize profit, the best path likely involves moving upmarket!