smaller-goldfish

The situation

A prospect approaches you with only $200,000 in investable assets. He doesn’t reach your minimum of $750,000, but he’s a close friend of one of your biggest clients.

How do you let him down gently, yet leave the door open so he feels like coming back after building his assets?

By being honest and transparent.

As your business grows you may choose to have an asset minimum for new clients to ensure you earn what your time is worth. When conveying this to clients, be transparent about your fees and commission structure, and what kind of products and services you offer. The benefit of full disclosure allows new clients to compare you to your peers and determine the best fit.

By discussing the client’s short- and long-term goals, you segue into what you can do for him. You may be a better fit for his long-term goals, like when he decides to downsize his home or sell a family cottage and needs an estate or retirement plan.

Describe how he would fit into your book down the road, for example, if he has a pending inheritance, or when he’s ready to sell his business. Tell him you’d be happy to meet then to discuss what he’d like to do with those assets. Also, show your value so he feels like coming back—answer questions or point him to a referral (e.g. accountant, lawyer, realtor). Leave him with the option to contact you when he feels the time is right.

Also ask if you can follow up with him in a month. You could offer to add him to your e-distribution list so he can receive your newsletters.

If there’s no way he’ll ever fit, tell him the minimum amounts the firm requires, and the dollar limit for orders, such as GICs or mutual funds. Also, if he wants to buy a small quantity of stock, explain how much it has to move up just for him to break even due to your commission structure.

Before you dismiss a client for being too small…

Ask

Would you like me to explain how my commission and fee structure will affect your returns?

Not

Don’t you know what my firm’s asset minimums are?

Ask

What’s your vision of an ideal working relationship?

Not

Are these the only assets you have?

Ask

Are you looking for a cost-effective way to manage your assets?

Not

Have you thought about managing your own money?

Resist the temptation to give free advice but offer yourself as a resource. For example, you could show him what online trading platforms are available.

It’s not you, it’s me

Here are five phrases that will let the client down gently:

  1. I’m sure you’ll be happier with this alternative.

  2. I really appreciate meeting you and look forward to working together when the time is right.

  3. Thanks for understanding that we have firm minimums.

  4. I’m honoured that you took the time to meet and hope I can be a good resource for you.

  5. If we have the opportunity to work together in the future, I know I’ll be able to provide you great service and value.


Rosemary Smyth is a Victoria-based coach with Rosemary Smyth & Associates and author of 101 Success Tips and Strategies for Financial Advisors.

Originally published in Advisor's Edge

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