{"id":12099,"date":"2017-10-25T13:59:54","date_gmt":"2017-10-25T20:59:54","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=12099"},"modified":"2017-11-01T05:21:30","modified_gmt":"2017-11-01T12:21:30","slug":"investor-facts-account-minimum","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/investor-facts-account-minimum\/","title":{"rendered":"Investor Facts: What Is An Account Minimum?"},"content":{"rendered":"

An account minimum is the least amount of money or assets an investor must deposit in order to work with an advisory firm.<\/p>\n

Investment firms and mutual funds<\/a> specify an account minimum for new clients or\u00a0to keep an\u00a0account in good standing. Typically this amount is at least $500. Brokerage firms might set the number lower while\u00a0mutual funds\u00a0often go higher.<\/p>\n

Many financial advisors and firms establish a\u00a0minimum account value to open or maintain a client relationship. The bigger question is, \u201cWhy do firms institute an account minimum?\u201d
\n\"account<\/p>\n

There are a number of reasons, but here are just a few:<\/p>\n

First, there are costs advisory firms incur just to stay in business. These expenses includes\u00a0trading fees<\/a>, technology for account and performance reporting, statements, postage and other business operating\u00a0costs.<\/p>\n

Firms often specify an account minimum in order to set\u00a0a point over\u00a0which they consider a client to be profitable. The revenue earned from the client not only takes care of these expenses but provides positive net cash flow for the firm.<\/p>\n

Some advisory firms aren\u2019t interested in growing their client base. They might be satisfied with their current revenue.\u00a0They might not\u00a0want to take on new staff and would rather remain a boutique firm, with one or two employees.<\/p>\n

In many cases, too, an account minimum is\u00a0implemented as a way to allow only those clients in the door who will make it worth the time and additional work required to serve them.<\/p>\n

Rule of thumb<\/h2>\n

Other\u00a0firms do\u00a0want to grow but must be careful how they grow. As a\u00a0rule of thumb, business coaches tell advisory firms to\u00a0increase their account minimum over time.<\/p>\n

The firm would do this\u00a0to ensure that it\u00a0takes on new clients who have more assets and thus provide more income instead of\u00a0taking on more clients with fewer\u00a0assets. That leads to more work but\u00a0the same or less revenue, an unsustainable proposition.<\/p>\n

Though perhaps\u00a0counterintuitive, in many cases smaller clients require more work than larger ones.<\/p>\n

This is due to the additional effort\u00a0needed to secure\u00a0life insurance, budgeting help<\/a> and oversight of multiple accounts with monthly contributions, services that larger, more established clients might\u00a0not require.<\/p>\n

MarketRiders, Inc. is a registered investment adviser.\u00a0 Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.\u00a0 Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and\/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.<\/i><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

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