Traditionally, Wall Street firms have rolled out the red carpet for wealthy investors and shown a whole lot less interest in young ones who are just starting out. Small accounts have often been saddled with high fees or barred altogether by high minimums.
But the barriers to younger, poorer investors have been falling. Established firms and startups alike are coming up with cheaper ways to offer advice and investments to people who used to be turned away.
This month, for example, the online investing startup Wealthfront dropped the minimum amount to open an account from $5,000 to $500. It already charges no fee on the first $10,000 it manages.
It's a strategy inspired by other Silicon Valley startups, said Will Trout of research firm Celent: Get lots of customers in the front door with free services and then come up with ways to make money off them down the line. It’s “predicated on the idea that the millennials of today are going to be the high-net- worth investors of tomorrow,” he said.
So how does an ambitious novice investor get started?
We asked a variety of investing firms what they offer to investors who don’t have much money yet. Many say they're happy to take even the tiniest accounts. But you need to be careful about extra fees on small accounts.
You also might not be able to access all the firm's offerings; many funds on offer will have their own minimum- investment requirements. A managed account, in which a firm puts together and manages a portfolio for you, often requires at least $10,000. For the privilege of hiring your own personal financial advisor, you may need hundreds of thousands of dollars or more. Advisors are often paid by a percentage of the assets they manage, and a typical fee is 1 percent per year.
Here are some of the options available at key investment firms:
AllianceBernstein
You’ll need $2,500 to invest in an AllianceBernstein mutual fund. Subsequent investments must be at least $50. Funds purchased through financial advisors have no minimums.