In the film The Shining, a ghostly bartender tells Jack “your money’s no good here,” as other ghosts plan to do away with Jack and his family.
Last week it was Wells Fargo doing the “ghosting.” Urging its brokers to get rid of clients with a minimum balance of less than 65,000, Wells Fargo Advisors sent a clear message to younger investors that, going forward, their money is “no good” at Wells Fargo.
In a company statement quoted by Janet Levaux in Think Advisor, Wells Fargo, which is the most valuable financial institution in the world according to the WSJ,* said that, in 2016, “bonuses will be awarded to FAs with 75% of their client households at $250,000.”
Wells Fargo isn’t the only large institution effectively ignoring Millennials and other smaller and entry-level clients.
Most of the corporate institutions prefer high-net worth clients because it creates “efficiencies of scale” and a higher profit margin on larger trades.
As frustrating as the requirement for a high minimum balance is for first time investors, it has also inspired a new breed of smaller independent RIAs, like Sherman Wealth Management (“SWM”), as well as the the new “robo-advisor” firms.
Younger, breakaway firms like SWM aren’t looking for “efficiencies” or working for sales commissions on the products we recommend. Our focus is different. We strive to help investors build a strong foundation then grow with them, not by profiting off the trades, good or bad, we recommend for them.
Where large brokerages currently see a “revenue problem,” we see a growth potential and are building long-term lasting relationships.
By the time Wells Fargo and the other firms with traditional models get around to investing their time and attention in younger investors, it may just be too late.
Those Millennial clients will be growing their wealth with firms that didn’t “ghost” them and, like Jack – spoiler alert! – may end up being “frozen out” of the largest wealth transfer in the history of the world as capital shifts from Boomers to Millennials.
7 Pieces of Real Life Sales Advice Everyone In Sales Should Know
Women: Not All Professional Storms Are In The Forecast
Change the Way You Think About Finding the Right People
3 Free Resources That All Small Companies Should Be Using
Are Your Clients Going to Pay More for Medicare?
How to Overcome Common Business Mistakes
5 Startup Friendly States Worth Relocating To
What Was Working in Sales, Isn’t Working Anymore
Work Ethic Isn’t Something That Can Be Turned on and Turned Off
If You Can Do This, You’ll Be In An Optimal Position
Let's Solve It18 hours ago
Is Inflation Really Dead?
Markets18 hours ago
Could Cyclicals Make a Comeback in 2019
Equities18 hours ago
US Technology Sector is Setting Up for A Momentum Breakout Move
FinTech3 days ago
The Next Global Financial Meltdown Is Just Around the Corner
Advisor3 days ago
Stay Away From Dumb Money: The Crowd Is Rarely Right
Markets3 days ago
We’re in a Danger Zone for Investors Over the Long-Term
Markets4 days ago
Long-Term Investors: The S&P 500 Is Not Your Friend. Here’s Why.
Development4 days ago
Again, and Again, and Again: The Way to Build a Great Advisory