When picking a financial planner with stated investable assets minimums, what should I include as part of my investable assets?
"This may vary from planner to planner, so be sure to ask this question when you are interviewing financial planners," said FPA member Larry Pon, CPA/PFS, CFP®, of Pon & Associates. "Generally investable assets are assets that the financial planner can manage. It is the assets that they can charge you a fee for managing. For example, if you have an account with $100,000 in it and a planner manages it for you, that planner can charge a fee on the $100,000. If you have a house or rental real estate, even though it is part of your overall assets, the planner cannot charge a fee on these assets because they are not managing it."
Other planners agreed. FPA member Michael Randolph, M.S., CFP®, of Randolph Managed Assets, said the following: "In general, most financial planners define 'investable assets,' as the total amount of money an investor has available to invest, or has already invested, for example, assets in retirement accounts. Personal property, collectibles and an individual's personal real estate are excluded, as well as business interests."
"So, when you see a financial planner that has a [dollar] minimum, that is generally the amount you can let them manage on your behalf," said Pon. "If you don't meet the minimum, the planner might make exceptions, such as you are a child of an existing client, an employee of an existing client or you might have assets in the near future that can be invested — such as stock options or company stock."
"When it comes to fees, please make sure you understand the expected fees and how you are being charged," Pon said. "The fee rate may drop when you have more money invested in one firm. Therefore, it does not make a lot of sense to have many small accounts and engaging multiple advisors. Most financial planners have other experts that can help you on your case."