Advisors bent on serving the rich might consider taking an occasional look at the middle-class market. Consider this: Median net worth from 2001 to 2004 rose only 1.5 percent to $93,100, according to the Fed’s Survey of Consumer Finances, and the future appears gloomy. Last year, the country had a negative savings rate—minus 0.5 percent—for the first time since the Great Depression.
Russell Wild, an independent advisor who runs the one-man Global Portfolios out of his home in Allentown, Pa., spends much of his time with middle-class clients. He finds working with them much more gratifying than advising the rich. “I have trouble sitting across from people who can’t get by on less than $150,000 a year,” he says.
Wild offers clients with less than $500,000 a portfolio review for $800 or consulting for $150 per hour. For example, a teacher with $15,000 came in to his office wanting to invest her money, but she also had $30,000 in credit-card debt. “She was going to just sit on the debt, so I sent her home to begin paying it off,” he says. “With some minimal counseling, we can help out tremendously.”
He charged her $75 for just a half hour of work. It’s not much, and it doesn’t add up. He grosses just over $60,000, but isn’t complaining. “It goes a long way in Allentown,” he says. “I live in a beautiful four-bedroom house.”
John Sestina, owner of John Sestina & Company, a fee-only financial planner in Columbus, Ohio, is another advisor who doesn’t always set his sights high. While most of his 325 clients are in the high-net-worth category, he goes out of his way to serve those with less—sometimes much less.
Instead of his usual $3,500 annual fee, Sestina, the son of a coal miner, charges his hard-pressed clients just $200, or a monthly fee of $20, to access a financial planner at his firm or online to get help building a financial plan. Sestina also teaches a course on personal financial planning at Ohio University that’s open to the public, and has written an investor education book called Managing to be Wealthy (Dearborn, 2000). He won’t go so far as to call it a moral obligation for advisors to help less affluent Americans, but he does say it’s part of the job: “Every real professional does some sort of pro bono work.”
Alvin Sanders, an advisor with Ameriprise Financial in San Diego, says his clients are not the big fish being sought by the wirehouses. As a Gold Financial Services Advisor with Ameriprise, Sanders specializes in planning for investors with between $100,000 and $500,000 in assets, but some have less. Fees for his services range from $500 to $3000 for comprehensive planning, depending on the complexity of the plan, he says. “Whether or not they have children, if there are trusts, maybe divorce proceedings, all those things factor into the fees,” he says. In the business for eight years, Sanders says it’s gratifying to serve the middle market. “I think everyone should be able to gain access to a planner, no matter what your financial situation is.”