As financial planning firms grow more efficient, especially with the use of technology, it becomes possible for planners to manage an increasingly large number of clients. The only limitation, it would seem, is the time it takes to service them.
However, research in psychology and anthropology suggests that there may be another limit to the maximum number of clients–the physiological limit of our brain’s neo-cortex that constrains the number of social relationships that can be actively maintained. This threshold–called “Dunbar’s number”–is estimated to be about 150 people on average, and corresponds not just to the average size of many ancient tribes and villages, but also the military unit size of the Roman army, and even the average number of Facebook friends or engaged Twitter followers.
The implication of the research is that even as firms continue to become more efficient, there’s still a physiological brain-based limit to how many clients we’ll ever be able to manage, which allowing for some personal relationships as well may never be much higher than 75 to 125 for any planner regardless of the new tools and technologies we create in the future.
The inspiration for today’s blog post was some recent reading I was doing about “Dunbar’s number”–named after British anthropologist Robin Dunbar and based on his research–an idea that has direct pertinence given the depth of relationships we try to maintain with clients as financial planners.
The origins of the Dunbar number was an observation that because social groups require ongoing social contact to be maintained, the maximum size of a social group may be limited by the size (literally, the volume) of the neo-cortex, the part of the brain most responsible for our social interactions. Accordingly, Dunbar looked at a range of 38 nonhuman primates, the average size of the neo-cortex for that species, and the average group size, and extrapolated an estimate of the maximum group size for humans. That estimate, as published in 1992 in the Journal of Human Evolution, was approximately 150 people.
Having identified an estimate for the maximum size of human social groups, Dunbar then searched through history to try to identify how humans have self-organized through history, to see if the 150 estimate could be validated, and indeed it was; approximately 150 people was consistently observed from the typical size of early tribal villages, to the basic unit size of professional Roman armies (and still approximates the size of a Company unit in most modern militaries).
Simply put, even when humans needed to stick together for safety and survival, they can typically only handle group sizes up to about 150. Beyond that, and our brains just can’t keep track of everyone, and we tend to split off and form new groups.