The Efficiency of “Smart” Client Selection

Recently, The Wall Street Journal reported that J.P. Morgan Chase & Co.’s private banking group went through another layoff as it shifted its business strategy and increased its minimum investible assets from $5 million to $10 million. The rationale, as explained in the article, is that wealthy clients require much more attention, generate more fees, and have less risk than less lower income, middle class clients. The article continues: 

Wealthy clients also typically generate a steady stream of revenue because fees are based on a percentage of assets under management rather than transactions.

Perhaps instead of layoffs, such companies could consider an alternative strategy: consider opening their services up to the market of prospective clients who will be wealthy in the future, but who do not yet meet their strict minimums. A team of advisors, dedicated to helping these high potential clients build their wealth through coaching and development, could transform a business by creating loyal clients who began relationships with their company on their way to building wealth.

Perhaps the advisors who were let go might consider this strategy as they consider their next career move.

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