Dealing with the little guy
It is a question with which every financial advisory firm must grapple: what to do with clients who…
It is a question with which every financial advisory firm must grapple: what to do with clients who aren’t profitable — or are barely profitable?
The vast majority of survey respondents, 88%, reported offering less profitable clients a limited service model, while 42% reported that they simply give them the boot. Meanwhile, 39% of respondents cope with less profitable clients by charging them more, the survey found.
“Our biggest clients are subsidizing our lowest clients and it’s not fair,” said Tom Reynolds, co-founder of CRA Financial LLC of Northfield, N.J.
Acknowledging that he and his brother and co-founder, Matthew, need to spend more time with clients with larger accounts, Tom Reynolds said they will hire a junior adviser to service the needs of clients with less than $500,000.
They said that they recognize the need to spend more time with larger clients to make sure that they don’t go elsewhere.
The Reynoldses also plan to raise the minimum fee for those with smaller balances.
— Liz Skinner
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