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Why You Shouldn't Be Disappointed When A Financial Advisor Says, "You Don't Meet My Minimum Assets"

I’m sorry.  I’d love to work with you.  But our clients usually have at least $1 million.

Perhaps when you have at least $500,000 to work with, we can be of more service to you. 

It’s been great to work with you.  But we’re going in a different direction.

Have you ever heard that before?  Unless you’re in the top 1%, you probably have.  And that’s okay.  Here are three reasons why. 

Reason 1:  It’s not you, it’s me. 

Here’s the typical career trajectory of a lot of financial planners (or advisors, or whoever it is that you’re talking with): 

  • Phase 1:  I’m going to hustle really hard.  I will work with anyone who will meet my ridiculously low standards.  Basically, anyone who can fog a mirror and pay me for the work I do.   
  • Phase 2:  Wow.  I’m doing a lot of great work for people who are paying me like a social worker.  Hmmm.  If I raise my fees, I’ll start to weed out people who can’t pay me what I’m worth. 
  • Phase 3:  It’s not just the fees anymore (although it almost always is to some extent).  I’ve developed an area of interest.  My focus is on that area of interest.  That is where I plan to establish my expertise.   Or, I’ve really identified that group of people who I click with.  If someone falls outside that group, then I’m not really as interested in working with them.  In the industry, we call that a niche.  For many planners, a niche focus becomes an area of expertise.  A good example is doctors.  Many financial advisors specialize in working with doctors.  They spend time learning the ins and outs of a doctor’s financial life:  how residency works, student loans, physician compensation & benefits, etc.   They’re not interested in working with other folks.  But, if you’re willing to pay their ever-increasing fee (for which they’re not raising their service level), then they might let you in.  But since they specialize in doctors, they might not know as much about YOUR situation.  But who cares—you hired them, they’re getting paid, so it’s all good!  In other words, financial advisors who develop a niche will primarily want to work with clients who fall within that niche.  And if you don’t, then they might not want to work with you. 
  • Phase 4:  I ONLY work with people who I like.  I’ve designed my practice so that 100% of my time is spent working with clients who make me happy.  While I’m paid pretty well (or VERY well), I don’t have to take on that mega-account for someone whom I know is a big jerk.  I’ve closed my practice to new clients.   

Before we go further, this is a very broad generalization of financial advisors.  Many financial advisors work very hard to get to Phase 4.  These folks design a practice around their personal goals, achieve those goals, and have no more interest in taking on new clients.  They’re not interested in working with any new clients regardless of that person’s planning needs.  Let’s call these folks ‘lifestyle practice advisors.’   

And many successful advisors never get past Phase 2.  Why?  Because they don’t develop a niche -- they like to serve people from all walks of life.  If this occurs, they might raise their minimum fees.  Establishing a minimum fee allows that financial advisor to establish what their time is worth.  For a lot of advisors who charge a fee based upon assets, this usually ends up being translated as a minimum amount of assets.   

Let’s take, for example, Firm A that charges 1%, but only accepts new clients who transfer $500,000 in assets.  Their minimum fee is $5,000 per year.  In other words, the firm has decided that the work they perform for their clients is worth $5,000 per year.  But because of how they charge, they have a very awkward time of turning away clients who might only be willing to pay them $3,000 per year.  So they fall back on the tried and true statement: “I’m sorry, but you don’t meet our minimum asset requirements.” 

Would Firm A work with a client who was willing to pay $5,000 per year, even if they only had $250,000?  Maybe.  Maybe not.  But would it be worth your while as their client?  Perhaps not.  In other words, Firm A might gently be telling prospective clients that it wouldn’t be worth their while to hire Firm A.   

Why?  Because Firm A feels that their minimum fee might be too much for the value they could deliver to a client who doesn’t have $250,000.  But instead of just saying that outright, they tell you in a roundabout way: I’m sorry, but you don’t meet our minimum requirement.”   

Why?  Probably because of Reason 2. 

Reason 2:  You probably wouldn’t want to work with that firm, anyway. 

Let’s imagine that Firm A tells you that their fee is $5,000 per year, instead of 1% of $500,000.  And let’s imagine that you’re the client that only has $250,000.  But you really want to work with Firm A.  In fact, you want to work with them so badly that you’re willing to pay $5,000 per year.  That fee represents not 1%, but 2% of your investable assets.   

Before you’ve even started, you’re already paying twice as much as Firm A’s ‘normal’ clients, as a proportion of your net worth.  As you sign the agreement, here are some of the considerations from Firm A’s perspective: 

  • I’m probably not going to deliver as much of a ‘Wow!’ experience to this client as I do with my normal clients.   
  • Because there’s just not as much cash at stake, I don’t know if I can demonstrate a clear financial value to this client. 
  • But there’s something about this firm that has this client interested.  I’ll bring this client onboard and see if they’re satisfied. 
  • After a while, this client probably will realize that there’s a firm willing to do what I can do for them.  And for less. 
  • When they realize this, the client will leave.  And I’m okay with that. 

That last part is the most important.  If a firm’s fee schedule seems high compared to their other clients, it’s because they don’t really want to work with you. 

Their interest is elsewhere.  Their focus is elsewhere.  And their expertise, which is established by focusing on areas of interest, that too is elsewhere.  Which leads us to Reason Number 3. 

Reason 3:  The right firm is out there.  And it’s important to keep looking. 

Just because Firm A turned you down doesn’t mean the end of the world.  And even if you hit walls with Firms B & C, and Firm D seemed a little too creepy that’s okay, too.  Because there probably is a right firm for you.   

I say probably, because there are a lot of people who cannot afford proper financial planning.  If you’re struggling to make ends meet, or if you’re choked with debt and you don’t make a whole lot of money, then watch out!  You’re probably in need of financial counseling, not financial planning.   

If that’s the case, then your first stop should be to the National Foundation for Credit Counseling (NFCC).  NFCC is the country’s largest and longest-serving non-profit financial counseling organization.   If you’re in the military and not able to take advantage of NFCC’s member network, then you should go to your installation’s financial counseling center.  There, you can work with an Accredited Financial Counselor (AFC) to get your finances on track.  At some point, you may be in a better financial position, where working with a fee-only financial planner will be of more benefit to you. 

However, as long as you’re committed to the financial basics, like living beneath your means, saving for retirement, and avoiding consumer debt, then there is a right financial planning firm for you.  This is true, regardless of where you fall in a ‘niche.’   

For example, there is a financial planner who specializes in working with bass fishermen.  Since his father was a professional bass fisherman, he grew up in the bass tournament world.  As a result, when he got his first bass fisherman client, he realized that they had a lot in common and that they worked well together.  After a while, the referrals came in, and he became the ‘go-to’ financial planner for bass tournament pros.  He knows just about everything there is to know about those folks.   

So, if there’s a ‘niche’ financial planner for bass fishermen, there’s probably a ‘niche’ that you fit into.  Whether it’s your profession, marital status, religion, age group, or some other affiliation, there’s a financial planner who specializes in working with those people.  And wouldn’t you feel more comfortable talking with a planner who knows YOU, not just your finances?   

So, keep looking.  There’s a planner out there for you.  If you’ve served in the military, or live in the Tampa area, give us a call!  And even if you don’t, give us a call anyway so we can help you find the right fit for you. 

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