Financial advisors can have a successful and personally fulfilling practice serving a less affluent clientele than many target, according to Lee Baker, president of Apex Financial Services, Inc. in Tucker, Ga. Unlike other fellow advisors who describe their ideal client base as being high-net-worth and ultra-high-net-worth individuals, to Baker, the perfect client is a school teacher or social worker.

At Apex, “a typical client has between $100,000 to a million in total investable assets,” including retirement accounts, Baker said -- and that’s by choice.


Baker said he decided to become a financial planner after a college job working at an insurance agency turned into full time work in group health benefits. He said clients would often call with other types of questions about their financial picture, which he found intriguing, and led him to start his own business helping these working people sort out the issues in their financial life.


Serving this type of clientele is somewhat of a calling for Baker, but he stresses that it doesn’t have to be charity – with the help of technology, organization and computer models, he’s created a successful practice.  Because he cannot charge the higher fees or get large percentages of assets under management, working with these clients “puts the onus on me to be efficient in delivery of financial planning,” he said.


Baker says that this market of clients has a greater need of good, solid planning advice, and fewer options to get it. And there is no shortage of potential clients to serve, he notes. “The math, quite frankly, works in my favor."

“It’s a market that is vastly underserved that can actually be profitable,” he said. For one, “it doesn’t take a huge staff to service those folks,” which limits his overhead costs.


Part of the draw to working with these clients, Baker said, is really how important good financial advice can be. He said that if you take a client who had a portfolio of $5 million prior to the financial crises of 2008, now that person may have $3 million. That individual will probably not be happy about the loss, but will at least be able to live on that amount.

However, his type of client can face more drastic problems. He offered the example of a client with half a million in a retirement account who now has only $300,000 due to losses. That “starts getting a little close to the bone,” he said, when someone is facing 20 or 30 years of retirement. With that kind of portfolio “you can’t afford many, or perhaps any, more mistakes,” he said.


Baker said the financial planning industry has convinced itself that the only way to make a living is serving the high-net-worth client base, but he feels that is simply not true. He said that as a profession, the industry could do a lot better in letting these lower income people know that they could benefit from just a few hours of good financial planning.


He acknowledged that many people feel they cannot afford fee-only financial planning advice, but for a very simple plan, he charges $1000 to $2000, which spread over a year is similar in cost to other basic luxuries that people willingly buy, such as cable television service and phone data plans.


Like other financial planners, Baker gets most of his new business from referrals. And, he said, if a high-net-worth individual came into the office he wouldn’t turn them away. But his main focus is on developing this underserved market.


Baker said he takes on about two or three new clients a month, but no more, because this client group tends to have most of the work on the front end as he helps them sort out their priorities and goals.


He also said that he uses model portfolios that he’s developed to help him guide investment decisions for clients. This “helps me from an efficiency standpoint,” he said. He also pointed out “with these clients there are limitations into how much you can customize,” because if say, he wants to put a 3% allocation into emerging markets for a client that has $200,000 to invest he will be limited in the number of funds that will take that amount.

However, he stressed that he always takes a client’s specific requests into account when building a portfolio. For example, he said, he had a client who had a lot of stock from a former employer and wanted to keep it, so he built the portfolio around that holding.


The most important advice he can offer for a financial planner looking to tap into this underserved market is to treat all the clients with respect, just as they would any client that walked into the office. “Treat them the exact same way, but understand that they’re not going to have the same needs,” he said.