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How to Solve the 'Problem' of Legacy Client

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Sometimes I come across a new idea so good that it makes me want to slap my forehead and exclaim: Why didn’t I think of that?! Happily, I came across just such an idea the other day, when a friend suggested that I contact Anders Jones, the CEO of, in Baltimore.

FacetWealth is a relatively new company created to solve a problem that has plagued the independent advisory business for decades: what to do with less affluent clients who have been referred by a firm’s best clients, but who are too small to be served profitably now and yet could become good clients someday. FacetWealth appears to have come up with a workable — and novel — solution for both themselves and for partnering independent firms.

By way of background, Jones is a technology guy. Two years ago, Brendan Weiss, his good friend who was a CFP at large advisory firm, had a problem. It seems that Weiss’ parents had reached the point where they wanted the help of a financial advisor, and he was happy they wanted to work with him.

However, it seems Weiss’ parents weren’t wealthy enough to meet his firm’s minimums, and rather than waive the minimum, his boss told Brendan he couldn’t take on his parents as clients. Shortly after, he related this story to Jones, who remarked that given the relatively basic services that most smaller investors require, today’s technology should be able to provide a cost-effective solution.

After some research, Jones and Weiss found that the parents’ dilemma represented a rather widespread problem, and they began working on a solution. What they came up with is half technology, and the other half, extraordinary business savvy.

On the tech side, I won’t bore you with the details, (and I’m sure the FacetWealth folks would be happy to give you a demo).

On the advisory side, they did some very smart things. First, they staffed their firm with CFPs (like Weiss) to create a financial plan and investment portfolio for each client and registered the CFPs under an RIA, which has a fiduciary duty to all clients, all the time.

Also, the firm does not charge for asset management (they use low-cost ETFs). Instead, the clients pay the firm a flat fee, ranging between $500 and $5,000, depending on the level of assets. Mainly, the group is looking for clients with assets between $50,000 and $500,000 (but will take clients with up to $1 million).

Bottom Feeding

The best part is how FacetWealth gets its clients. The firm works with independent RIA firms that have clients they can’t serve profitably, and FacetWealth buys these clients’ portfolios. That’s right, it buys these clients for whatever each client’s annual fee will be at FacetWealth (again, from $500 to $5,000).

There’s more. As Jones told me: “We are set up [to use] technology to leverage our CFPs to efficiently work [with] smaller clients. We don’t really want to deal with the complexities of clients once their portfolios [top] $1 million.” In the past three months, Jones says he has “bought” 300 clients.

What does the firm plan to do with these clients once they outgrow FacetWealth? Sell them back to their original advisory firms for the same price that Facet Wealth originally paid for each client!

Thus, FacetWealth isn’t really “buying” the clients at all. It is simply “renting” them until their assets grow to the point where a full-service advisory can serve them profitably.

This is the proverbial unicorn of business transactions: a win/win/win. The advisory firms win, because they don’t have to work with their smaller, unprofitable clients until they become larger, profitable clients. FacetWealth wins, because it gets to work with the smaller clients it is set up to service. And the clients win, because they get advice tailored to their needs at each stage of their financial lives.


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