Live from FPA Financial advisers ignore the middle class

So many more people need help than are receiving it

Sep 30, 2012 @ 1:41 pm

By Mark Schoeff Jr.

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Investment advisers should reach beyond high-net-worth clients into the middle class to build their businesses, according to advisers at the Financial Planning Association annual conference.

“The majority of people are not among the wealthy,” Neal Solomon, managing director of WealthPro LLC, said in an interview on Sunday after conducting a session on the topic at FPA Experience 2012. “As a profession, we need to be reaching these people.”

There's no definition of the middle class. Investors in that range probably fall short of the $100,000 in investable assets that is the lower limit for mass affluent.

Advisers should play a role in expanding the number of people who can move up through the income levels, rather than just concentrating on those at the top, according to Robert Whitman Brimmer, president of Brimmer Financial Group Inc.

“The need in America to build a middle income-income and middle-asset group is very important financially,” Mr. Brimmer said after attending Mr. Solomon's presentation.

Advisers who set minimum-asset requirements are closing themselves off to a large market, according to Mr. Solomon.

“What you're saying to middle class clients is that you're not welcome here,” Mr. Solomon said.

When talking to school teachers and other modest earners, Mr. Solomon said that it's not necessary to jump right into complicated discussions of asset allocation. Rather, sitting down for an hour over coffee can illuminate some basic financial moves they should consider.

“A lot of work can be done with simple conversations,” Mr. Solomon said.

Usually, advisers derive their income by charging a fee for assets under management. When clients have modest investments, it's necessary to diversify revenue streams. Mr. Solomon is a hybrid adviser, who collects investment-management fees, transaction fees, insurance commissions and hourly charges for financial-planning sessions.

“You can make a good living as a financial planner serving the middle class,” Mr. Solomon said. “I've done it for 30 years.”

The psychological rewards also can be great when working with middle-income clients. They often have urgent asset-accumulation needs, while the affluent are just trying to add to an already thriving financial se.

“[The wealthy] may appreciate it, but it's not going to change their lives,” Mr. Solomon said.

Mr. Brimmer prefers middle-income clients.

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