Finance Food

Can financial advisors decline your business based on assets, or lack thereof?

If you call a financial advisor, can he legally pass you off to a junior advisor based on the amount of your assets (i.e. he only accepts new clients if their assets are, say, $250,000 or more)? Is that not discrimination?

Public Comments

1. Of course. No one is "legally obligated" to accept your business. Just go elsewhere.
2. Discriminating against asset level is not illegal. Only race, sex, age, etc. can not legally be discriminated against. Personally, as a financial advisor, I see no reason to turn away clients regardless of the asset level. I simply structure the fee around that level and if the client accepts the fee, I will service the account. Ron, ChFC Financial Advisor
3. Nope. You might not be worth a high level financial advisors time since they would probably have to pull in more. if you feel disrespected go to someone else. Charles Schwab is all about the small time investors lately.
4. Just like any other business, they are not obligated to accept your business. If you went into a car dealership and wanted to buy a new car for $500, they are not obliged to do business with you if they have no vehicle within your price range. So it is with Financial Planners - if your assets do not fall within the scope of his or her planning models and allocation strategies, he/she can and will decline your business. In your case, a junior adviser will have knowledge of more basic investment strategies that would fit your asset size. Absolutely not discrimination at all.
5. It's not discrimination. He merely tried to get you in touch with an adviser that they have in place to handle accounts related to your monetary value. Accounts with a net worth of 20k aren't handled the same as accounts with a net worth of 20 million. If you had 20 million you would not want a junior adviser on day one managing your money. As the stakes get higher, the complexity increases and the amounts get steeper you need a more experienced adviser. A more experienced adviser will be performing a more complicated function than just making sure you have a retirement plan, an emergency fund and debt management. They will specialize and get compensated more for that increased work and experience. Don't worry, you'll be up there soon if you stick with it.
6. An advisor can pass you off to someone else at anytime for any reason. Having been in the business I can't say that is a good idea because you never know what someones future financial situation is going to be.