As their practices gain more wealthy investors, many financial advisors eventually decide to set a minimum asset limit for new clients, but doing this may hurt growth prospects, industry experts and experienced advisors say.

“It’s insane to turn any business away,” says Rick Rummage, principal at the Rummage Group, a Herndon, Va., career consulting firm for advisors and an advisor himself.

He says that those who come in with smaller amounts of money to invest can end up being major clients, adding, “Remember, most millionaires didn’t start out as millionaires. They got that way over time.”

Other small investors may be the children of wealthy clients, Rummage says.

“It makes sense politically and probably financially to handle those accounts,” he says. “After all, eventually they’ll be inheriting the parents’ assets.”

Busy advisors whose high-net-worth clients leave them no time to deal with smaller clients, “should hire a junior advisor to do that job,” Rummage says.

“If the company you work for won’t let you do that, you probably should consider moving to another firm,” he says.

Jordan Berlin, a 40-year veteran of the advisory business, started his own now five-member financial management firm Optimize Capital Management LLC in Bedford Corners, N.Y., a year ago.

His view on the issue of whether advisors should set a firm asset minimum for new clients is a bit more nuanced.

“It all depends on where you want your business to go. If you want it to grow, my feeling is you shouldn’t set a minimum asset requirement, especially if you think taking on a small client could lead somewhere,” Berlin says.

“Could taking on a client with limited assets introduce you to a whole new niche group?” he asks, by way of example.

“For instance, suppose you take a client who is a young doctor just opening or joining a practice. That could open the door to getting a lot of doctors as clients,” Berlin says.

“There are small accounts, and then there are small accounts,” he says. “If a small account isn’t going to go anywhere, I wouldn’t want it, but if it will be growing a lot or will lead to other clients, that would be different.”

The other consideration is the client her or himself.

“If it’s someone who doesn’t need a lot of attention, then it’s no problem taking on a small account,” Berlin says. “But if the person is calling 10 times a week to ask about how it’s doing, that’s no good.”

Berlin also agrees that even if an advisor has so many big accounts that there is no time left to deal with small clients, there is always the option of bringing on someone new to handle the smaller accounts.

“Taking a new client on is always a business decision,” he says. “It shouldn’t ever be just a matter of the client’s investible assets.”

Dave Lindorff spent five years as a China correspondent for Businessweek and has written for The Nation and

This story is part of a 30-day series on how to prosper as an advisor.

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