Just about all financial advisors want wealthier clients because they produce more revenue than clients with smaller asset amounts. And, the profit margins can be off the charts because financial advisors have few or no variable expenses when they add new clients.
But, wealth is a relatively vague term because it includes liquid and illiquid assets. For example, an investor has millions of dollars but the assets are tied up in their homes, businesses, investment real estate, and 401k plans.
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What counts are assets that are available for investment now or in the near future. This makes liquidity a major issue when financial advisors market their services to investors on the Internet.
How does this impact the production of financial advisor leads? The ideal lead will have the following characteristics:
- Investors have available assets that meet or exceed the minimums of financial advisors
- The assets are liquid now or in the near future (90 days)
- Investors will be adding more assets to their accounts
- Investors are seeking financial advisors who provide planning and investment services
Why is High Net Worth not enough?
Many advisors identify their ideal types of clients as HNW, VHNW, or UHNW on their websites’ Who We Serve page. They are sending a message that they only work with wealthy individuals and their families. They want investors, who visit their websites, to make the observation that the advisors work with investors like themselves.
Why are these designations not enough? Most investors do not think of themselves as HNW. Instead, they are business owners, executives, pre-retirees, retired, etc. Their careers and current financial circumstances determine how they identify themselves.
How can financial advisors reach more millionaire investors?
Who are the millionaire investors who have the $250,000, $500,000, or $1,000,000 available for investing? The keywords are “available for investing”. Illiquid assets do not help investors meet the minimum asset requirements of financial advisors.
Financial advisors should focus on money that is in motion. That is, the money is liquid and the investor is looking for a financial advisor. You need both if the investor is to be considered a viable prospect for your financial advice and services.
Following are 16 examples of investors who may be seeking financial advisors:
- Business owners who are selling to retire
- Executives changing jobs (rolling assets from 401ks to IRAs)
- Men or women who are recently divorced
- Men or women who are recently widowed
- Has a spouse who has suffered a catastrophic illness
- Is relocating to a new city and wants a local advisor
- Is getting close to retirement (another rollover opportunity)
- Is recently retired and is seeking planning and investment help
- Professionals who don’t have time to invest their own assets
- They are unhappy with their current advisors’ results
- They are DIYs who no longer want to manage their assets
- They have other needs (estate planning) that are door openers
- They have inherited substantial assets and need help
- They have multi-generational asset transition issues
- They are real estate investors who want diversification
- Starting their careers and need financial help
The Who We Serve page should be designed to describe the types of clients financial advisors prefer to work with. This may reflect the demographics of a market area. For example, large numbers of investors who are retiring and relocating to Florida.
What is a realistic minimum asset requirement for financial advisors?
What about financial advisor minimum asset requirements?
A lot of people are millionaires, but they don’t think of themselves as millionaires because their net worths are tied up in their homes, businesses, or 401ks. And, these numbers are subject to change as we are experiencing right now.
There are five considerations that impact the answer to this question:
- What is the minimum amount of assets financial advisors need to execute their investment strategies?
- What are the advisors’ assets under management?
- Can you reach the investors who meet your minimum?
- What percentage of your AUM is your minimum?
- Do you have a hard or soft minimum?
More astute investors do not want to be a big percentage of a financial advisor’s AUM. For example, an advisor with $100 million of AUM could have a $1 million minimum or 1%. On the other hand, there are more smaller accounts using the Internet to find financial advisors than larger accounts, so this advisor may prefer $1 million plus accounts (soft minimum), but accept accounts down to $500,000 (hard minimum).
How important is the “Who We Serve” page on financial advisor websites?
Our data show “Who We Serve” is one of the most visited pages on financial advisor websites. Investors want to know if financial advisors provide services to individuals and families like themselves.
This answer lends itself to a second question. Do investors prefer generalists or specialists managing their assets? Our surveys show, given a choice, 72% of investors prefer specialists. It is their belief that these financial advisors have specialized knowledge that will benefit them.
Why are all investors not the same?
Let’s assume the Who We Serve page on financial advisor websites makes the case that all investors are not the same. In fact, most of the time they are different based on several important variables: Ages, circumstances, risk tolerances, investment horizons, inheritance, heirs, and goals.
Ideally, the financial advisor website will have a gated (registration required) eBook that describes differences that impact financial advisors’ advice and services. This is an effective way to communicate this message and obtain the investors’ contact information at the same time.
There is one additional consideration. Most investors believe their situations, needs, and goals are unique so they want advice and services tailored to their individual needs.
Conclusion
There is a lot of strategy that goes into marketing the advice and services of financial advisors on the Internet. Advisors do not have a problem describing who they serve on their websites. Liquidity should be part of their descriptions.
However, very few advisors disclose their minimum asset requirements on their websites. This begs the question, what do they do with leads that do not meet their minimum asset requirements?
Who We Serve and minimum asset requirements are just two of the key elements that will have major impacts on the financial advisors’ online production of high-quality leads that they want to work with.
