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Embracing small client accounts: Using a digital wealth management platform to serve a new market segment

“What’s dangerous is not to evolve.” Jeff Bezos

Over the past few years, my perspective on serving smaller balance relationships has changed. Whereas I once saw them as cumbersome and expensive to serve, I now view them as a high potential growth area for wealth managers

Over the last 20+ years, many advisors moved upmarket in large part by raising account minimums and pushing off smaller balance accounts. 

I myself subscribed to this strategy - it was a smart, disciplined way to achieve profitable growth.  But the marketplace has changed. Now, by using smart segmentation and digital wealth technology, advisors can profitably cultivate smaller balance relationships.

Answering the ‘growth question’

Early in my career in the mid 90’s, I recall a lunch meeting with a Registered Independent Advisor client who was wrestling with the challenge of capacity, growth and profitability. Their high-touch model had been geared toward 40 to 45 relationships per advisor - and now, each of the principals had reached maximum capacity. 

A fundamental question arose - do we grow revenue by:

  • Adding a Partner advisor
  • Raising our minimums?  

This particular firm made the prudent decision at the time - they raised their minimum account size. At first, they lost a few clients. But to their delight, other clients brought in new money to meet the new minimums and then they began getting referrals for larger clients. In every way, it was a win. The firm stayed true to its knitting, added assets and increased revenue. 

Legacy thinking

Registered Investment Advisors (RIAs), Independent Broker-Dealers, banks, full-service and national firms have all wrestled with the question of capacity and growth and, until recently, most decided to avoid small accounts or move them to a lower service tier or call center in order to focus on those more profitable, larger relationships. As a result, the small end of the investor market has been underserved. 

Most smaller, mass affluent clients have had to either “do it themselves” through a call center, a self-directed client portal or work with an advisor spread too thin to provide a proper planning-based wealth management process.  

Small accounts are now a big opportunity 

Times are VERY different today. Small accounts don’t have to be the burden they once were. Advisory firms and small-balance investors have more options thanks to digital wealth technology platforms.

Currently many innovative wealth management firms - both large and small - are using technology to deliver their clients an automated digital wealth management solution. When the “robo” movement began, the industry had a binary view of either digital or human advice. Today, the uncontested view of the future is clients will engage both digitally and with humans.

Leading digital wealth management platforms can support both a “low-touch” robo model and a “high-touch” advisor engaged model.  

Advisors have been slow to respond to these technology-driven changes. Most firms continue to serve their original client demographic. And while some are looking at new tech for their client’s next-generation offspring, few advisory firm principals have revisited their business strategy to consider the opportunity of leveraging their investment process, reputation, brand, scale and knowledge to profitably support a lower net worth segment of new clients.   

Why now? 

Advisors have an opportunity to utilize technology and embrace small accounts by thinking of them as a unique segment.  

FinTech providers have created:

  • Elegant, easy-to-use, digital onboarding workflows
  • Client led goals-based planning tools
  • Interactive advisor dashboards
  • Portfolio Reporting
  • Automated trading and model management platforms

These elements allow investors to experience a simple, yet personalized wealth management process and access quality investment portfolios designed to support the client’s desired outcomes.

These digital wealth solutions can be implemented, customized, branded and made operational for advisors quickly - often within 8 weeks. Advisory firms can control the client experience and define their own service model. 

Today is different. There is a client segment in need - for growth-minded advisors - who are considering how to use technology to transform their business, increase assets, enterprise value, and impact more clients’ lives. There is a real opportunity today to embrace technology to evolve.

Discover a wealth management technology that will help grow your firm.SCHEDULE A DEMO

This blog is sponsored by AdvisorEngine Inc. and CRM Software LLC. (“AdvisorEngine”) The information, data and opinions in this commentary are as of the publication date, unless otherwise noted, and subject to change. This material is provided for informational purposes only and should not be considered a recommendation to use AdvisorEngine or deemed to be a specific offer to sell or provide, or a specific invitation to apply for, any financial product, instrument or service that may be mentioned. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor. Opinions and forecasts discussed are those of the author, do not necessarily reflect the views of AdvisorEngine and are subject to change without notice. AdvisorEngine makes no representations as to the accuracy, completeness and validity of any statements made and will not be liable for any errors, omissions or representations. As a technology company, AdvisorEngine provides access to award-winning tools and will be compensated for providing such access. AdvisorEngine does not provide broker-dealer, custodian, investment advice or related investment services.  AdvisorEngine and Junxure are registered trademarks of AdvisorEngine Inc.

Brad Hales

Brad Hales

As a Business Development Manager at AdvisorEngine, Brad delivers technology solutions with a client-centric approach. His goal is to help financial advisors gain a competitive advantage to deepen client relationships and efficiently scale their practice. Brad has been a part of the financial services industry for over 13 years. He proudly served in the U.S. Marine Corps, where he flew Presidents Bill Clinton and George W. Bush as a Marine One crew chief.


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