Ever notice how “High Net Worth” and “Wealthy” sounds like “More money than you’ve got?” We use these expressions often. People get scared away. No one wants to be told “You are too small.” Put another way, have you ever gone clubbing, gotten to the front of the line, only to be told your too young for that club? You may be legal, but they have a higher threshold. You don’t feel good. When friends ask: “What’s your minimum?” what do you say?
They may not use those words. They might ask: “What size accounts do you handle?” or “What does it take to become a client?” This is an expression of interest. You should have an answer that keeps them interested.
People in your office talk differently. They might say: “$ 250,000 is the minimum.” or “You aren’t being paid on accounts under $250,000.” Giving clients an over/under number is setting a threshold. You are in or you are out. It’s that “Over 25 Only” sign on the club. A major negative is the implication that the person isn’t important, it’s only the dollar amount that matters.
There might be another question beneath the surface. They may be wondering “Are you important?” If you have a high threshold, they assume that’s the case. At the other extreme is “Are you desperate?” If you say “I take anybody” or “Can you fog a mirror?” it gives that impression. This latter problem is an issue for people offering investments paid into on a monthly basis, like insurance policies or mutual funds. These investments are funded through cash flow, not a lump sum. They may be wondering “Would I fit?”
Five Answers to “What’s Your Minimum?”
You likely have an exclusive practice. You want to come across as (as a firm said years ago) “All things to some people.” You want your answer to keep the door open. You want to be including people, not turning them away. Here are five examples of answers.
Answer #1: Here’s the Range. Where do you Fit?
Your practice has 200 clients. You have 100 million is assets. Average account size is $ 500,000. That’s simple math.
“I work with about 200 individuals or families who have about 100 million dollars in assets with me. The smallest relationship is about $300,000. The largest is $10 million. The average is $ 500,000.”
This is an inclusive approach. The person with $325,000 knows they will fit within the range. They also know the average is $500,000. Psychologically, no one wants to be below average. They might see if they can build that number up down the road.
The guy with $ 1,000,000 knows he’s twice the average. Can he run your life? Call on weekends? No. The biggest account is $ 10 million.
The guy with $ 20 million knows he’ll be your biggest account, but not your first big account. The principles for managing $20 million are pretty much the same as the principles for managing $ 10 million.
Answer #2 We Find We Can Be of the Most Value...
Your friend asked for a number. You want to give one. You don’t want to look like you are evading the question.
A manager in Westchester County explained: “We find we can be of the most value to people with $ 500,000+ in investible assets for the following reasons...” Those reasons might include your smaller than average number of clients and your higher level of service. If money managers require $ 100,000 minimum and you need a few to balance out size and style, that number makes sense.
Here’s the really smart bit: They asked for a number. You gave them one. But you didn’t say you don’t open accounts for under $ 500,000. You left yourself room to be flexible.
Answer #3: Playing the Combined Net Worth Card
This scenario is almost identical to #2, but you want to use a larger number. This person has a Treasury coming due. They are wondering what’s the minimum to become a client. Change the rules of the game!
“We find we can be of the most value to people with a combined net worth of $ 3,000,000+ for the following reasons...”
Those magic words “Combined net worth” get them thinking about their retirement plan at work, orphaned IRAs, college savings plans, whole life insurance policies, annuities and the equity in their home. It’s not just about the value of their investment account or online trading account.
Doing mental addition, suddenly they feel a lot wealthier. You have subtly introduced insurance, lending and other additional services you might discuss down the road.
Answer #4: This is Personal
Now you are mixing in HNW circles. Everyone in this group could easily write a check and become a client. Someone asks “What’s your minimum?”
Avoid the “It’s only about the money” answer. A financial planner in Bucks County would explain: “We try to focus on the person, not the portfolio.”
Here, you are explaining your aim is to help the client solve problems and address issues, not merely manage money. When using this approach, you need to be confident that can easily provide the dollar amount you eventually suggest.
Answer #5: The Tiered Approach
If you work at a large firm, they’ve likely put lots of effort into market segmentation. Smaller accounts use a customer service number leading to a call center. Medium sized accounts are handled locally by people like you. UHNW accounts are handled by your firm’s version of private bankers.
“The firm helps people using three approaches. Relationships under $250,000 are handled centrally via a telephone relationship. Relationships about $ 250,000 are handled locally by people like me. Extremely large amounts of wealth are handled by our private bank.”
You’ve explained segmentation. You’ve kept your tier, the middle tier, wide enough to accommodate them, unless they are exceedingly wealthy. In that case you would likely share in the revenue or receive a referral fee because you referred the prospect.
“What’s your minimum?” It sounds simple, but your answer requires thought.
