Many advisors spend a lot of time building their client books, hoping small-time clients will become big ones. But a report by Toronto research firm PriceMetrix suggests they shouldn’t even bother with households that claim less than $250,000 in investable assets.
“[Advisors] need to set aside the belief that relationships with small households, properly cultivated, will mature into relationships with high net-worth households," the firm’s latest report stated. "Such occurrences are too uncommon to merit an advisor’s attention and resources.”
Advisors often seek to acquire and keep small households in their books, believing that at least a few of them will acquire significant wealth in the future. However, PriceMetrix says the analysis in its report "Big Fish: The Behaviors and Characteristics of the High Net Worth Client," confirms that “the probability of a small household growing into a large one was minimal.”
PriceMetrix data is based on a review of more than 200 million transactions across 20,000 advisor books in North America. The firm found no significant differences between the US and Canada and all data are combined.
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