Top questions independent advisers can ask to win overlooked clients from the wirehouses

For years now, firms across the industry have been raising client account minimums. This is especially true for wirehouse firms, where minimums have risen from around $100,000 to as high as $250,000. There’s even talk that those levels may be too low, with $500,000 now the standard at some firms.

None of this is really news to industry observers, yet as a longtime financial adviser it’s hard to imagine a world in which an individual with $450,000 in net investible assets is someone not worth talking to. The upshot of this trend is that millions of investors across the country will not be getting the financial advice they desperately need. They’ll get priced out.

Most of the blame for this, of course, is pinned on new regulations, including the latest Department of Labor fiduciary rule, as well as lingering low interest rates, which have cut into profit margins. To the industry, therefore, it’s a simple matter of dollars and cents.

Whatever the cause, this is the message outsized account minimums is sending retail investors: We don’t care about you.

It’s terrible for the future of our industry. If nothing else, think of the long-term consequences of abandoning today’s 35-year old investor with, say, $200,000 to $300,000 in investible assets. Fifteen years from now, that same investor will probably have more than $1 million. Passing on the next generation of growth for your business is essentially committing professional suicide.

This is an opportunity for independent advisers with the right facilitating partner — one that has built the requisite scale and professional support infrastructure — to effectively and profitably serve account balances of varying sizes, even those well below wirehouse account minimums.

Indeed, let the wirehouses’ losses be your gains. Consider the following key questions next time you sit down with a wirehouse prospect:

1) How much contact do you have with your financial adviser? Some investors simply don’t want to work with a financial adviser.They are do-it-yourselfers, and nothing will ever change that. Others, though, prefer the expertise and human touch of a real life adviser. But investors need to know that many firms will migrate clients who do not meet account minimums to an in-house robo offering or to a green registered rep working in a call center. That means the frequency of contact will abate or in some cases come to a complete halt.

2) When’s the last time you had access to an experienced adviser? Note that when an account gets offloaded, investors are deprived of access to an experienced adviser — one far more capable of serving a wider spectrum of their financial planning and wealth management needs than any digital platform or neophyte staffing a 1-800 number. Also, be sure to remind potential clients that even after this migration occurs, their fees will more than likely go unchanged.

3) Do you have access to a wide range of investment products? Ask the client if they have exposure only to proprietary products. Stress that investors, in order to attain all their goals, need — and deserve — the widest possible selection of investment products, encompassing the broader marketplace.

4) How responsive is your current adviser? If a client has had his or her account shuffled to a robo offering or call center, the answer is likely to be “not very responsive at all.” Think about the most recently concluded tax season: How likely is it that anyone reached out to help prepare the client’s returns, or, perhaps, even more important, to implement longer-term tax planning strategies?

Some have said the retail financial advice business will make human advisers obsolete. I don’t believe that. But it’s easy to see why a large portion of the investing public would feel this way.

A big part of the industry has essentially told millions of people, “We don’t want your business.” This is how industries die, and if we don’t start pursuing every opportunity and continue to work with clients that need our services the most, maybe the doomsayers will be proven right in the end.

Steven Dudash is the president of IHT Wealth Management, a Chicago-based team of experienced wealth management professionals with more than $750 million assets under management. Alex Papadopoulos serves as senior vice president at IHT.