As the major investment firms woo the millionaires and billionaires, they are working to drop the “smaller” investors. There are several ways they do this.
It begins with account fees that make it prohibitively expensive to open small accounts. Second, they won’t pay brokers on account that don’t meet their minimums. For example, Merrill Lynch does not pay brokers on accounts under $250,000. At these firms there is pressure from management to transfer accounts for the middle-market investor to call centers where they receive the kind of impersonal service you get when you call an 800 number. This breaks the personal bonds that investors and advisors need to work well together.
The account minimums that the majors impose on their advisors may help the megabank-owned brokerages compete for high-net-worth clients. But the requirements also means that modest investors cannot get the kind of personal guidance that they need to reach their goals. It was a factor that caused us to form our own independent RIA firm because there’s more to client relationships than account size.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.