I might have offended some investment advisers recently.
The story begins with a reader wondering where investors can turn to find an adviser if they have less than $500,000 in their accounts. She’s turned off by bank financial planners because many of them are now limited to offering only their own corporate mutual funds, not a wider selection that includes third-party products.
She finds the banks’ full-service brokerage divisions are off limits because they typically prefer clients to have larger accounts, and the same applies at some independent firms. What should people who want an adviser and have less than $500,000 do, then?
I asked advisers and financial planners for their thoughts on my LinkedIn page and got 83 comments, plus some direct messages. The general drift was that there are many advisers out there willing to accept smaller accounts. Happy, even, to do so.
Some advisers even got a bit huffy at the very idea of an investor not being able to find someone to handle a smaller account. She must not have tried hard enough or done enough legwork.
I have to push back on this. An appropriate grade for the job the advisory community does in attracting and welcoming smaller clients would be a D-minus. There are some search tools to find advisers and planners, but I saw none that helped investors be confident their portfolio would be welcomed.
This puts investors in the position of having to engage in a demeaning show-and-tell exercise. “Ms. Adviser, is my account significant enough to catch your interest? Do you work with clients like me?” What a perfect business model – for the 1950s.
It’s great to see so many advisers speaking up on LinkedIn to say they accept smaller accounts. The next question for this group: How, exactly, are clients supposed to find them?
A great start would be for advisers to be more upfront about who they work with. How about a website that says something like, “My clients include people of all ages with portfolios of $100,000 and more. I charge this much to work with them, and I provide these services. Let’s discuss your situation.”
The advice industry has made solid headway in being more open about fees. Now, it’s time for some frank talk about who advisers will take on as clients.
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Rob Carrick