Snobby advisors may be right

Snobby advisors may be right

Snobby advisors may be right

The firm says that whales and minnows don’t mix, and an advisor's productivity can significantly improve by reducing a high concentration of small households and focusing on higher-income clients.

In its review of HNW households that have advisor relationships, the firm found very little evidence of upward mobility. Among HNW households holding $2 million or more in assets, 75% were already HNW category before beginning a relationship with an advisor. Another 18% of these began the relationship while holding $1 million - $2 million. Only 7% of HNW households began a relationship with less than $1 million in assets and a mere 3% began with less than $500,000 in assets.

Many advisor portfolios are concentrated in small households, those with under $100,000 in investable assets. But the average small household pays their advisor around $30 per month, which does not justify the expense of maintaining or servicing them, PriceMetrix said.

The survey also found that advisors would build relationships with HNW households – and decrease reliance on lower-income clients – as they gained experience.

Advisors with less than five years of experience averaged one HNW client providing a median of $6,000 in revenue. Advisors with 5-15 years averaged three HNW clients providing $50,000. Advisors with 15-25 years averaged five HNW clients providing $92,000. Advisors with more than 25 years of experience averaged eight HNW clients providing $123,000 in revenues.


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