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Do away with minimum asset requirements

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Time is money, the saying goes, but when it comes to clients with less in assets, RIA firms should take the time to treat them with care and offer help, not just send them away.

Some in the industry warn that setting minimum asset limits for new clients, or worse, assigning a low-level person to do preliminary client interviews as a kind of gatekeeper, could be bad for business in many unanticipated ways.

“Advisers who have a book of wealthy clients will often say they don’t want to waste time meeting with prospective clients who aren’t qualified. That attitude can be a mistake,” says Dan Solin, a sales coach to advisory firms and principal at Solin Consulting.

Consider, for instance, that a potential client with just $200,000 in investable assets, might well have friends who have $1 million or more in assets, and that is a possible referral, Solin says.

“What would be so horrible about meeting with someone who came in to see you and offering to help them maybe with setting up a financial plan or steering them to someone who could help them?” he says.

Even worse is when firms have an employee who isn’t an adviser do intake interviews with potential clients with limited assets, Solin says.

“This is a terrible idea,” he says. “It starts the whole relationship process off in a bad way, kind of like you’re seeing if the person is good enough for you.”

Rick Rummage, founder and chief executive at adviser training firm The Rummage Group in Herndon, Virginia, agrees.

“My rule is don’t ever turn away business. That never makes sense,” Rummage says.

“There are so many firms fighting for business, that to turn any away is just absurd,” he says.

Rummage suggests that advisers who can’t afford to take the time to interview every potential client, should hire “a junior adviser with a small book and only a couple years of experience … to do initial screening, and have that person take on the clients with fewer assets.”

However, that junior adviser must be trained to conduct interviews.

This story is part of a 30-30 series on smart strategies for RIAs.

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