Episode summary
The Temptation To Take On More Clients To Build (3X) Enterprise Value - Kitces & Carl Ep 198
Financial Advisor Success (Kitces)
· · Hosts: Michael Kitces · Guests: Carl Richards
Summary
The discussion centers on why some advisory firm owners feel newly tempted to keep growing even after they have already reached their original financial and lifestyle goals. The catalyst is the changing way growth is framed: a new million-dollar client may look like a few thousand dollars of near-term profit, but at a three-times-revenue valuation it can suddenly feel like $30,000 of enterprise value. That shift, the host argues, can re-anchor an advisor’s thinking and make it harder to decide whether more growth is actually worth the added work.
Carl Richards says there is nothing wrong with wanting to build more value, but the real issue is whether that desire aligns with what is actually important. He argues that advisors, like clients, need a financial plan that creates an anchor for decisions, because goalposts tend to move once numbers get bigger. He suggests revisiting what was originally enough, and asking what has changed.
The conversation keeps coming back to fear: fear of slowing down, fear of losing identity, and fear of not knowing what comes next. Carl describes using a simple written statement — “time with my family, mainly outside” — to re-center himself, and recommends similar exercises for advisors who are wrestling with whether to stay, grow, or exit.
Key takeaways
- Carl Richards says the enterprise-value lens can make a routine new client feel like a much bigger decision than the cash flow alone would suggest.
- The host argues that advisors are especially vulnerable to resetting their goalposts when private-equity-style valuations make growth look more valuable.
- Carl Richards says a written statement of what is truly important can serve as an anchor when an advisor starts drifting from earlier goals.
- The episode frames the real question behind “just two more years” as whether the added enterprise value actually serves the life the advisor wants.
- Carl Richards recommends simple exercises like the overnight test and writing down the goal now so future decisions are made eyes wide open.
Notable quotes
“And I'm starting to guess depending on the person struggle with, feel guilty with, feel like obligated as a good steward of my family”
“the question just becomes why. What is it”
“time with my family, mainly outside exclamation mark”
How the episode opens
Well, greetings, Carl. — Hello, Michael. What's what's what's new today? — What is What is new today? I don't know if there's a lot new. Um, some new video games coming out that I'm getting to play with my with my son. So, we're we're enjoying we're enjoying the gaming time these days. New season of Gunfire Reborn and new season.
Is that that's that's that's a thing you guys do?
Yes. Yeah. I was uh I was a hardcore video gamer when I surpris I grew up in the era where my parents said like don't just play video games all day because someday you're going to need a real job where you can make a living.
And who knew esports was going to become a thing? feel like I my my parents like snatched my my future livelihood away from me. So I had to to satisfice by being a financial planner instead.
Otherwise otherwise I would probably would have been a a gaming streamer at this point. So perfect.
Now I I like I still enjoy my my roots of it by getting to play play video games with the kids now. — So good. So good. Yeah. — I was so close. I was I was — You were right there.
Not even a full generation off. is like a fraction of a generation off. — That's right. That's right. That's right. That's right. — So for today's discussion, I realize indirectly this kind of ties to the theme we covered last episode around
Figuring out what's important to us, aligning capital. But this this week I wanted to talk not in the context of clients but back to us as advisors. So I've I've heard this issue cropping up more lately.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- client growth temptation
- enterprise value multiples
- capital alignment to values
- firm growth slowdown
- private equity valuation anchors
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
