This time we hear from Patrick Healey, financial planner at Caliber Financial Partners in Jersey City, N.J. He recalls a client experience that taught him to only accept clients willing to meet his minimum investment policy upfront.

As a financial planner in the New York metro area, I have a lot of competition — large financial firms, wirehouses and other independent financial advisors like myself. It’s common for clients in this area to test the waters, investing assets with different advisors to see which ones perform before they fully commit.

The challenge in the beginning of my career was that the amount of money most first-time clients were willing to invest made it very difficult for me to diversify and focus on investments that would prove beneficial in the long run. Clients wanted to see quick results with small sums of money, which often required me to invest in simple products as opposed to alternative investments that may have been a better fit. I found myself spending an inordinate amount of time trying to earn their trust, and making uncomfortable, risky decisions — all in an attempt to win their entire portfolio. Despite the stress of these competitive situations, when I first started my career, I felt like I had no choice but to take all interested prospects with whatever amount of money they wanted to invest.

During my second year in the business, I had a client couple who I could tell were really testing me out. It was the first time they had hired a financial advisor, and they gave me $50,000 as a trial investment. During our first few meetings, we discussed the steps that I’d like to take with this investment. Because this was right after the recession, I decided that a combination of investment products and insurance protection was suitable for their needs, and we agreed on a plan. A few days after the meeting, the wife called and expressed her apprehension about our decision, and I spent two more meetings going over the products in great detail to reassure her.

I am always willing to answer clients’ questions because I want them to feel comfortable with their path; however, this couple was asking the same questions repeatedly. It was as if they did not approve of my answers, or appreciate my understanding of the business. In the back of my mind, I knew I was spending way too much time with these clients who had invested fewer assets than were appropriate for their goals.

We finally moved forward with the plan, and I thought it would be smooth sailing from then on. However, the clients continued to question my decisions and asked me to come to their home to discuss the details — again. Against my better judgment, I ended up conducting five home meetings with them. With each meeting, I hoped this would be the discussion that gave them a complete understanding of the investment decisions and would lead them to trust me enough to move forward with more of their assets.

In the end, the investment vehicles we used did not meet this client’s expectations, and when I prepared to switch firms a few years later, the couple decided to move on to another advisor. Not only had I spent many hours explaining the same concepts to these clients, the amount of money they were willing to invest made it impossible to generate the returns they wanted.

Patrick Healey

As I’ve grown my practice, I’ve implemented a firm minimum investment so I have the resources to diversify and invest in alternative products that will provide the best returns for my clients. The first year I implemented the minimum, I decided on $100,000. The second year I increased it to $250,000, which is where it sits now. This minimum enables me to prospect only clients who are prepared to commit right away. Even if clients have money with other advisors, $250,000 is enough for me prove both short- and long-term growth.

I’ve also developed a three-step onboarding process. I meet with the prospect three times, and if they are not ready to sign on after the third meeting, I kindly tell them that we are not a good fit. I’ve learned that if I’m going to invest my time and energy, I must be met with the same level of commitment from the client in order for the relationship to be mutually beneficial.