BALTIMORE–(BUSINESS WIRE)–Time management and growth are two of the biggest priorities of any
growing RIA. Yet almost two thirds of registered investment advisor
(RIA) firms either do not enforce account minimums for their clients, or
forego minimums altogether, according to CanAm Research’s 2019 RIA
Capacity and Segmentation Practices Survey commissioned by Facet
Wealth (“Facet”), a next-generation financial services company.
The survey of more than 360 advisors at North American RIAs offers a
revealing glimpse of the challenges modern advisors face when
prioritizing their goals and managing their valuable time, and how these
challenges are inextricably tied to the need to serve clients who will
help RIAs grow their businesses. Yet profit is not an advisor’s sole
motivator: many serve unprofitable clients because they know these
clients still need and deserve financial planning services, said Lisa
Rapuano, chief financial officer of Facet Wealth.
“At the end of the day, advisors want to do right by their clients, and
some who might not be considered ‘ideal’ from a business growth
perspective may also be among their earliest and most steadfast
relationships,” Rapuano said. “As our industry trends toward
professionalization, a majority of advisors are reluctant to let these
clients go or relegate them to inferior tiers of service, even as the
same advisors face flatlining growth and loss of their time.”
The survey respondents reveal this hesitance in their answers: 44% said
they do not enforce their firm’s stated minimums and 17% have no
minimums at all. What’s more, 52% of respondents have no formal process
for segmenting and then transitioning clients who do not meet their
minimums.
The survey uncovered more insights into the ways advisors prioritize
their time and clients, with consequences for their future success:
- 45% said time constraints are their biggest pain point
- 42% said growing their book of business was their biggest pain point
- 50% serve more than 75 clients per advisor
While many RIAs segment their client base to solve their time and growth
challenges, 71% of those who segment do so to provide clients different
tiers of service. Client segmentation offers RIAs a way forward, but
tiered service can sacrifice client experience and brand integrity, said
industry analyst Bob Veres.
“Advisors can maximize their profits when they commit to high-quality
services for accounts that fit their profile and develop a process to
replace the revenue of non-strategic accounts without sacrificing the
high-touch, human service they’ve come to expect,” Veres said. “Recent
advances in machine learning and productivity-boosting technology have
created a way for RIAs to segment their books both profitably and
responsibly.”
The full survey results, with additional insights on addressing capacity
and segmentation, as well as a webinar analyzing the survey results, are
available here.
About Facet Wealth
Facet Wealth is a next-generation financial services company providing
comprehensive, transparent service at an affordable price to the mass
affluent households that need it most. Facet Wealth is a SEC Registered
Investment Advisor (RIA) that offers human-first, technology-enabled
financial planning services through a dedicated team led by CFP®
Professionals. Facet Wealth is a fiduciary, acting in the best interest
of our clients. Based in Baltimore, Maryland, with a nationwide reach,
Facet Wealth is a partner to financial services firms looking for a
better solution for their mass affluent clients. For more information,
follow Facet Wealth on Twitter at @FacetWealth
or visit www.facetwealth.com.
Contacts
Jimmy Moock
Gregory FCA for Facet Wealth
[email protected]
610-228-2125
