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As financial planning practices grow and become more focused, they generally establish a minimum for new clients. Depending on the nature of the firm, that might be a minimum of investment assets, a minimum net worth, or simply a minimum fee amount; the fundamental purpose is to ensure that the firm can generate an appropriate minimum amount of revenue per client to maintain its financial viability and profitability given its costs. Yet many firms do not actually state their minimums on their website or other marketing materials; instead, advisors wait until a prospect comes in to the firm for a first meeting or "approach talk" and then assess on the spot whether the potential client is "qualified" to work with the firm. While this may seem like it makes the process easier and affords the ultimate flexibility for the advisor to make a judgment call about whether the prospect is a good fit, the reality is actually the opposite. It's an extremely expensive and wasteful process for the firm, it discourages new prospects from contacting the firm, and perhaps worst of all, it makes referral sources less willing to refer prospects at all!

The inspiration for today's blog post was a recent challenge I had in trying to make a referral myself - a friend asked for a recommendation to a financial planner in their local area, and knowing that I have relationships with planners all over the country, asked me to refer them. After having a dialogue with my friend to better understand the kind of services she was seeking, I went through my financial planning contacts in her area to try to find 2-3 recommendations that would be appropriate.

There was just one problem: my friend is still building her net worth, and consequently while she does have some capacity to pay financial planning fees and some assets to manage, I know she would not necessarily meet the minimums (by assets or fees) for some of the firms I knew. Thus, in an effort to ensure that I would be referring her to firms that actually could work with her, I went to their websites to try to determine if my friend was appropriate to refer. Unfortunately, though, none of the first six firms I found listed their minimums on their website! The end result: not one of those six firms got my referral.

Ambiguous Minimums Make For Ambiguous Referrals

This last point may be a surprise for many advisors, but the reality is that it often is the biggest problem with not being clear about the firm's minimums. The key to understanding why this is such a problem is to put yourself in the shoes of your potential referral sources, whether a center of influence or an existing client.

From the perspective of the person doing the referring, making a referral is a somewhat risky proposition. If you as the advisor are referred, but don't provide good service or results, the referrer may be implicitly or explicitly blamed. In other words, when someone refers you, they stake their reputation on their referral having a good experience with you.

Yet unfortunately, one of the most awkward and unfavorable experiences possible is the situation where the referrer recommends someone to the advisor, only to have the advisor reject that person for not meeting a minimum. The experience can be very negative and belittling for the person who was referred, who quite literally has been judged to be "unworthy" - which in turn reflects badly on the referrer. It's like setting up a friend on a blind date, only to have your friend be told "I'm sorry, you're just not good enough for me; your friend shouldn't have set us up together." The end result: your friend feels hurt, and it's your fault as the referrer for putting them into the situation.

Because the reality is that a referral gone bad can put the referrer in an awkward position with the friend or family member that was referred, the person who's going to potentially refer business to you wants to minimize the risk that anything goes wrong. A good relationship between the referrer and the advisor can enhance the trust and comfort that anyone who is referred will be well taken care of. But it does nothing to eliminate the concern that a friend or family might be referred, and then be rejected for failing to meet the advisor's minimums! Which means that even if your referral sources like you and trust you, if they aren't certain whether you will accept the referrals they send you (because your minimums aren't stated, public, and clear), you just won't get the referral in the first place.

Ambiguous Minimums Make For Awkward First Meetings

A similar problem arises when the prospective client comes to your website directly, and cannot find any information about your minimums. Without any other information to go on, the prospect may have absolutely no idea whether he/she is "eligible" to be your client. If the prospect hasn't already worked with other advisors in the past, he/she may have absolutely no clue what to expect. From the advisor's perspective, the solution is simple: just come in for an introductory meeting, and we can evaluate on the spot.

From the prospect's perspective, though, it sounds more like "come in for a meeting and we'll decide whether or not to reject you." Why would a prospect want to put themselves in a position like that!? The reality is that a normal person wouldn't... which means you lose a prospective client before they ever contact you and before you ever knew it was a prospect in the first place!

Ambiguous Minimums Often Just Wastes Everyone's Time

And then, of course, there's the approach meeting itself, which in reality is an incredibly "expensive" way to market the firm. As many advisors think of it, the approach talk is "free" and a comfortable opportunity to get to understand the prospect's situation better - especially to determine if it's someone who might be below the firm's stated minimums, but should qualify anyway (e.g., a client who doesn't have enough assets for an AUM minimum, but is young and saving aggressively).

But the reality is that your time is money and productivity in your business; time you spend with unqualified prospects is time you can't spend with current clients, or bona fide prospects, or training and developing your staff, or otherwise working on your business. If you value your productive time at $250/hour, then a dozen one-hour client approach talks with people who may not have met your minimums anyway costs you $3,000! Suddenly that "free" marketing approach talk is more expensive than at first glance... you're wasting $250 per prospect for the privilege of rejecting them for not meeting your minimums anyway!?

Advisor-Centric Versus Client-Centric

The reality is that being ambiguous about your minimums, in the hopes of meeting with everyone and finding that occasional "diamond in the rough" client (who wouldn't meet your publicly stated minimums but may be a worthwhile client in the long term anyway), is an entirely advisor-centric way to approach referrals and prospective clients. It's all about putting the advisor in the position of control, and letting the advisor be the one who rejects people to their face.

Except the reality is that people don't enjoy being rejected, don't want to be rejected, and will often go to great lengths to avoid being rejected, especially in person! Which means if your minimums aren't clearly stated on your website, and your prospects or referral sources aren't certain who will get rejected and who won't, most will simply not contact you in the first place. Which means in your effort to not rule out that occasional too-small-but-still-worth-it client, you could be losing lots of real, qualified prospects, too.

Yes, it's true that I could have gone through the trouble of contacting each of these six firms, and engaged in a series of correspondence with them about my friend's financial situation, their minimums (in terms of assets, fees, or however they are structured), and then made a determination of whether my friend was a good fit. Yet the reality is that means the firms are essentially making me, the referrer, do even more additional work, just for the "privilege" of trying to send them business and help my friend! It also means that I have to wait many additional days for responses from all the firms, and any follow-up questions that may arise, especially since my friend asked me the question on a Saturday when the thing "open" for information was the firm's website. So instead of making it easy for me to refer the firm, they placed the burden of a whole bunch of additional work on me to refer them. The bottom line: it took me less time to find another firm to refer, than it did to initiate correspondence with each of them and wait several days for a response, so not a single one of those firms got my referral.

Solving The Problem Of Ambiguous Minimums

Fortunately, the solution to all of this is quite straightforward: your minimums should be clearly stated on your website (and in your marketing materials). No, you don't need a flashing banner at the top of your page that states "If you don't have a million bucks, just leave now" but the information about your minimums should be easy to find, whether in a "FAQ" (Frequently Asked Questions) section, or a page about "Who We Serve" as a firm.

If your primary concern is about scaring off clients who might be close to your minimums, a good alternative is to state a minimum fee, instead of a minimum amount of assets or net worth. For instance, if your fee is 1% of assets under management, you might state a minimum fee of $7,500, instead of minimum assets of $750,000. If a prospect has only $650,000 but feels your services are worthwhile for the $7,500 cost, a minimum fee leaves the door open for the prospect to become a client. Alternatively, a client who's close simply based on assets, who really wants to work with you, can always ask for an exception. But at least that leaves the prospect feeling empowered about whether they want to push the situation - not sticking them in a meeting where at the end, they are judged not worthy and politely asked to leave.

The bottom line is that by being clear and open about your minimums, you can eliminate one of the most common unstated fears of your prospects and referral sources - the risk that they won't find out until the approach meeting that they don't have enough to meet your minimums or afford your fees, and have to be awkwardly rejected.

As a result - and contrary to the sometimes popular belief - being clearer about your minimums can actually increase the frequency of referrals and potential prospects contacting you. Most advisors underestimate how many clients they lose because the prospect or referral never contacts them in the first place. After all, those six firms will never know that they didn't get my referral, because it was far easier for me to just move on to the next prospective firm than contact them. Nor will I ever go back to refer them another potential client in the future, after having a poor experience going to their website the first time. One wonders how many other referrals and prospective clients those firms have lost out on because of this.

And of course, the additional benefit to clearly stated minimums is that the advisor enjoys increased productivity as well, by eliminating the number of approach meetings and calls conducted with prospects who ultimately didn't qualify anyway, saving the firm thousands of dollars of economic value.

So what do you think? Are your minimums clearly stated on their website? Are you considering adding them now if they weren't already? Do you state your minimums as an amount of assets? Net worth? A minimum fee? What works for you?

  • Robert Henderson


    One of the problems I experience sometimes is that many of my clients’ assets are weighted heavily towards their 401K plans. As such, many clients may have 500K-1mm in 401K assets, but possibly very modest amounts beyond that.

    So if a client is still a few years away from retiring, they may only be viewing their NQ assets as “investable assets”, where many advisors would take on a client like that for the opportunity to work with their 401K money down the road.

    However, I have run into the “minimum” issue several times, where someone is sent to me that really needed “counseling” more than anything else. That ends up being somewhat awkward when all you can do is give a little free advice and send them on their way.

    I suppose adding qualifiers in your literature to include 401K assets in your minimums could help alleviate that, but I’m not sure there’s a way to avoid the problem entirely.

  • Suzanne


    Thank you for your well written article on disclosing asset minimums. Prospects are looking for specific information when they visit an advisor’s website. The top two most important are: 1. Does the advisor “look” like the kind of person I want to hire? 2. How much will this cost me?

    Finding out how much something costs in financial services can require detective work which is why I wrote an article about what prospects want to learn when they visit an advisor’s website. As your article points out, discussing fees is a win-win all around. The advisor doesn’t waste their time on clients that are not right for them and the client finds the kind of information they are looking for. Why not make it easier for all involved?


  • Joe Alfonso

    I can’t agree more. When I relaunched my website I made sure to state my minimum fee in my top FAQ response. Now I have more reason to feel that prospects who contact me after viewing my website have a clearer expectation about my service. The chances of there being a fit are therefore greater. Definitely a win-win.

  • http://www, Jim Ludwick

    That’s why we have price ranges for all services we provide whether hourly or project right on our website.

  • Sophia

    Michael, such a great point! It looks like others thought so as well. But I find it interesting that the two people that commented, (#3 Joe) didn’t list their fees under “fees” on their website and instead I had to search for it under FAQs. The other (#4 Jim), didn’t provide the proper link to his website.

    I’ve always found it interesting that advisors talk so much about transparency but aren’t very transparent on their websites. They are so focused on having that initial meeting, but if your website is clear about your target market and who you’re ideal client is, then you’ll get referrals that are a good fit for everyone and both parties won’t waste their time. It’s such a simple thing to list your fees and minimums yet so many advisors don’t do it. Thanks for shining the light on this issue. Hopefully, more planners will go this route in the future.

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Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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