Self-Imposed Account Minimums?

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Jun 19, 2007 2:13 am

Mainly for indie guys: What's your current account minimum? Reason for the specific number? If you started out low, did this lead to a lot of unprofitable cusotmer service later on? If you started too high, did this effect your production negatively or increase it in the end?

Jun 19, 2007 10:29 am

If you're just starting out, you should have smaller account minimums; say $10,000-$20,000. This is just to get some cash flow moving in your direction to help you survive.

Once your basic monthly overhead is covered, increase your monthly minimums to $100,000+.

In any event, regardless of your time in the business (newbie or old timer), if a whale presents you with the opportunity to get a piece of their business (that's below your minimum), waive the requirement. Getting your foot in the door, via a small account for a big whale, presents the best opportunity to eventually snag all their assets.

Just sayin'....

Jun 19, 2007 2:38 pm

Also good to accept accounts from "niche" clients, even under your minimum.  You don't want to alienate anyone in a specific group (for example employees of a specific company, organization, etc.).  They are good referral sources and sources of "good will" within your niche.

Jun 19, 2007 3:14 pm

[quote=xbanker]Mainly for indie guys: What’s your current account minimum? Reason for the specific number? If you started out low, did this lead to a lot of unprofitable cusotmer service later on? If you started too high, did this effect your production negatively or increase it in the end? [/quote]

Whatever minimum you quote, remember that it is sometimes practical to make an exception for a good referral source or the friend of a client.

I recruited one FA who needed to change firms because his branch manager was hassling him about a hand full of accounts under the firm minimum.  His production was otherwise good (top quintile for his LOS).  He asked the FA for a “written justification” for the undersized accounts.

He called me that day saying he HAD to find a new brokerage.  It seems that more than one of these accounts belonged to the mistresses of various clients.   One of them was the Mayor’s girlfriend.

Jun 19, 2007 3:22 pm

I usually don't have minimums because I sell lots of insurance, so I can make good bank from someone if they have decent cashflow and no assets.  However, if you are charging fees instead of earning commissions, I would suggest a minimum fee instead. 

If you charge 1% and your minimum is $250,000, just change your minimum to $2,500.  There's no reason to turn someone down simply because they only have $100,000 and are willing to pay you 2.5%.  It's your fee, they can choose to accept it or not.

Jun 20, 2007 1:25 am

I’ve talked to a lot of people about this since posting. Some good thoughts:



Lower minimum for accounts where management is “delegated” such as all mutual funds.



Lower minimum for all income portfolio or other buy/hold strategy requiring little management.



Anonymous: one practical note about your idea is that anything over a certain amount (3%?) needs a written disclosure indicating that it is much above industry norm. I can’t remember the specific regulation but can’t imagine ever getting near that high a fee to begin with.