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When was the last time someone asked “What’s your minimum?” If you are a financial planner selling professional advice on an hourly basis, this isn’t an issue. If your business model assumes the client will also invest through you, they want to know what you are expecting in assets to be transferred in or funds to be deposited. How do you answer?
Many people answer directly. “My minimum is a million.” In our area I came across a financial firm with something similar printed on their plate glass window. It was something like “Providing financial services to clients with $1,000,000 or more in assets.” Others might say: “$250,000 is my minimum.” They are drawing a line in the sand. The unspoken message is “You count if you can bring in over this amount. If you cannot, don’t count.”
There are ways of responding directly and also softening your answer. A manager in Westchester, New York had a great reply: “We find we can be of the most value to people with investable assets of $2,000,000 or more for the following reasons…” They justified their answer. That might include mentioning professional money management, employing different managers with expertise in different areas and savings on fees because of economies of scale.
Another version of his answer is: “We find we can be of the most value to investors with a combined net worth of $5,000,000 or more for the following reasons…” Those three words, “combined net worth” are magic. Before, they were thinking about how much money needs to be transferred in. Now they are thinking about their total wealth. They mentally add up their real estate. They think about retirement assets. Collectables like art and wine fit in. They are pretty impressed with the total. FYI: (The threshold to enter 1% territory is about $11.6 million.) You have opened the door for conversations about mortgages, IRA rollovers, asset based lending and other areas, without saying a word.
However, I don’t like throwing out a number. It is exclusionary. You fit or you don’t. I like an inclusive response like this one.
“I work with about 100 households. The average net worth is $1.5 million dollars, for a total of $150,000 under management. The smallest accounts are around $500,000 and the largest is $30 million. As I mentioned before, the average is $1.5 million.”
This is inclusive for three reasons:
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The prospect with $600,000. They hear the range. They know they will qualify. They also heat the average is $1.5 million. No one wants to be below average. They realize they can become a client, yet they will feel a need to transfer in additional assets later to cross the $1.5 million mark.
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The prospect with $3,000,000. They realize they are double the average. They might feel like they are a big fish. They can call you at home on weekends. They can make unreasonable demands. They are a big account. However, they also hear your biggest account is $30 million. They will be a big(ger) account, but not your largest. If your largest accounts can “boss you around” they need a lot more money to qualify
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The prospect with $100,000,000. How you got in front of them is a mystery. You are thankful! Why will a person with $100 million want to work with an advisor whose total assets under management is $150 million? Your largest account is $30 million! Here is the answer. They hear your largest account is $30 million. That is a lot of money! They principles for managing $30 million are basically the same as those for managing $100 million. If they chose you, they will be your biggest client, but not your first big client.
This strategy is inclusive because people see where they fit within a range instead of only seeing “You are either out or in.