The short answer
There is no legal minimum. No statute says you need a certain balance before you may hire an adviser. Each firm sets its own rules, often in the brochure's description of clients and account requirements. An AUM firm, one that charges a percent of assets, may decline a small account because the percent does not cover the time. An hourly or flat-fee planner can work with a smaller balance because the bill is not a slice of that balance.
Ask for two numbers before you send a statement: the minimum, if they have one, and the annual fee in dollars at your balance. A firm that will not write both numbers does not have an offer yet.
| What you heard | What you still need in writing |
|---|
| "We have a minimum" | The dollar amount, and whether it is assets, annual fees, or both |
| "We charge 1%" | 1% of your balance, in dollars, and any minimum fee that replaces it |
| "We work with anyone" | The hourly rate or the project fee, and a cap |
| "Send your statements and we'll see" | The minimum first. The statements can wait |
What to do
- Open the firm on Search and read the brochure section on types of clients. That is where a stated minimum usually appears. Item 5E tells you the fee method. It does not print a legal minimum, because there isn't one.
- If Item 5E(1) is Yes, ask: "What balance do you decline? If my balance is $X, what is the fee in dollars, and is there a minimum fee that is higher than the percent?" A 1% quote on $100,000 is $1,000. A minimum fee of $2,500 would replace that $1,000. Those are illustrations of the math, not a survey of minimums.
- If the percent firm says no, ask an hourly or fixed-fee firm for a price on the actual job. Hourly vs AUM is why the second firm can say yes when the first says no.
- Do not invent a "usual" minimum from a headline. We do not publish one, because firms differ and a made-up floor would be a lie. The brochure in front of you is the source.
- If your balance is mostly a workplace plan in a target-date fund, read that page before you move the plan to meet someone's minimum. Meeting a minimum is not a reason to roll.
- Get the two numbers by email. Then decide. How to hire is the rest of the sequence once the dollars are real.
What to look for on Best Investors
- The brochure, not Item 5E alone. Item 5E is the method. The brochure is where account requirements are described in sentences. If the PDF is missing on the profile, download it from IAPD for the same CRD.
- Item 5E(4) and Item 5E(2). Fixed fees and hourly fees are the methods that do not need your account to be large for the bill to make sense to the firm. Item 5E(3) is the newsletter category. A monthly planning fee is often 5E(4).
- A minimum fee hiding under a percent. The schedule can say 1% with a floor. The floor is the real price on a small account. The 1% page shows how to turn a rate into dollars.
- Item 5G. A firm that only manages portfolios may have a higher practical minimum than a firm that sells a single plan. The service list explains a "no" that the homepage will not explain.
Common mistakes
- Believing a legal minimum exists and waiting years to ask a planning question. The barrier, when there is one, is the firm's policy.
- Moving a 401(k) into an IRA so the balance clears a minimum, without a written cost comparison. That decision can cost more than waiting. See 401(k) rollover adviser.
- Treating "no minimum" as "no fee." Ask for the dollars.
- Using a stranger's minimum as your number. Their brochure is not this firm's brochure.
- Sending full statements, with account numbers, before you have the minimum and the fee. Start with a rounded balance.
Related questions
What if every percent firm says no?
Buy the job by the hour or at a fixed fee. Or use a digital portfolio program for the holding, and a person for the question. Financial advisor vs robo-advisor is the scope difference. Named programs there are examples, not a ranking.
Is a smaller account a bad client?
It is a client some firms will not take, because the math of a percent does not pay for the meetings. That is their business choice. It is not a rule about your right to get advice. A planning session can still be worth it. See am I too young? if the issue is age and a new balance, not only the dollars.
Should I wait until I hit their number?
Wait if the only product they sell is an ongoing percent and you do not want that product. Do not wait to ask a question you could buy by the hour. The number is their door, not a finish line you owe them.
Do both spouses' accounts count?
Ask. Some firms add household accounts. Some count only the account they will manage. The answer changes whether you are over the line. Get it in the email with the dollar fee.
Limits
This page does not state a minimum you should meet. It says there is no legal one, and that each brochure may set a business rule. It is not investment advice, and Best Investors is not the SEC.
We do not know the firm's floor until the brochure or the email says it. Do not treat an example on this page as that floor. The $1,000 figure is 1% of $100,000. It is not a typical fee and not a typical minimum.
If our copy and IAPD disagree, use IAPD.
Sources
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