Should you do away with minimum account levels?

One specialist explains why targeting the affluent with minimum account levels could be a mistake

Should you do away with minimum account levels?

Financial advisors seeking wealthy clients would understandably want to focus their prospecting efforts with a minimum account level. But based on one firm’s research, that might be a short-sighted strategy.

“It’s often been said advisors need to establish a clear minimum account level when targeting the affluent,” said Matt Oechsli of the Oechsli Institute, a US-based financial advisor marketing consultancy, in a piece for “However, when it comes to today’s affluent, how they started working with their financial advisor tells a different story regarding minimums.”

Oechsli cited his organization’s recent findings from a study of clients worth US$1 million or more. It was found that 12% first started engaging their financial advisor with less than US$100,000 in assets; 9% did so with assets between US$100,000 and US$249,000; 16% from US$250,000 to US$499,000; and 17% between US$500,000 and US$999,000.

“[M]aybe the new client was upwardly mobile but had yet to accumulate $1 million to invest or maybe this new client simply wanted to give his new advisor a trial run,” Oechsli said.

Instead of following a strict new client minimum, he said establishing an ideal client profile would be much more effective for advisors. The profile could be incorporated naturally into conversation (“Most of our clients are busy professionals, such as yourself, juggling the dual challenges of managing a career and raising a family”).

“Regardless of the scripting, citing minimums can be off-putting (arrogant or disingenuous) and/or misinterpreted — all of which leads to lost opportunities,” Oechsli said, adding that affluent clients will be comfortable leaving all their assets in the hands of an advisor who’s earned their trust and respect over time.


Related stories: