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06/28/2019

Most Advisors Don’t Enforce Minimums

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June 17, 2019

By Diana Britton

Traditional financial advisors often struggle to serve small-account clients because the preparation and execution of their financial plans is barely, if ever, profitable. Yet, a study by Facet Wealth shows that many advisors are still serving these small accounts, with many not enforcing their firm’s account minimums.

The survey found that nearly eight in 10 advisors spend 10-20% of their time on unprofitable accounts, with 15% spending 21-35% of their time on these accounts. Further, two-thirds of RIAs either do not enforce minimums or forego them altogether.

The data is based on a survey of 360 advisors at North American RIAs, conducted by CanAm Research on behalf of Facet Wealth.

“Profit is not an advisor’s sole motivator: Many serve unprofitable clients because they know these clients still need and deserve financial planning services,” said Lisa Rapuano, chief financial officer of Facet Wealth.

More than half of RIAs (52%) indicated they don’t have a formal process for transitioning clients who don’t meet their minimums, while just 36% do have a formal process.

The results indicate a need for advisors to better prioritize their time and segment clients; 45% say time constraints are their biggest pain point, while 42% site growth as a top pain point for their practice

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