The Folly of Client “Minimums”

Using an arbitrary minimum asset level for clients unduly limits the market for financial services providers to those who have already “made it,” and ignores the substantial number of prospects that are ultimately headed for financial success. For advisors, using minimums often means excluding the coveted Millennial group because they do not meet asset requirements . . . yet. So why does the industry continue to focus on current asset levels?

Defining target markets by easy-to-measure criteria is a problem that continues to plague financial services. Forty years ago, financial services institutions were convinced that the way to find the next generation of clients was to examine conspicuous signs of wealth, believing that high-net-worth Americans drove luxury sedans, shopped at high-end stores, and wore Rolex watches. Of course, that was before Dr. Thomas J . Stanley’s research into how self-made, financially independent individuals became wealthy.

Minimum asset levels, while important and easy to measure, are not the only criterion by which firms and advisors should gauge a prospective client. Some talented advisors already know this. One of our consultant advisors shared with us that he lowers his client minimums if he can tell that the prospect has the potential for building wealth. This allows him to expand the number of clients he works with while also providing the opportunity to build a relationship with a client as the client builds wealth over time.

Financial services firms and advisors can use technology to reach this large and untapped segment of the market and be a part of high-potential clients’ journey to financial success. For example, we estimate that approximately 30% of 135 million households in the U.S., or about 41 million households, fall into the mass affluent category – but the potential for building wealth spans across net worth levels. We created the Predicting Wealth™ platform so firms can target prospective clients that demonstrate high potential for building wealth regardless of their net worth today.

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