Small accounts (although there’s no formal definition, many advisors refer to accounts under $100K as “small accounts”) can seem like a losing proposition with whisper-thin profit margins, if any at all. Time spent on portfolio management and client meetings are all part of your service, but with minimal financial reward, the work may come at your cost. And now there may be even more time required to manage these accounts with the Department of Labor’s fiduciary rule and its new record-keeping standards.
The Small Account Challenge
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Taking on small accounts can be challenging because:
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Small accounts typically require the same amount of attention as large accounts;
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There may be more time spent on account management as advisors attempt to comply with the Department of Labor’s fiduciary rule;
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Administrative costs and operational inefficiencies could potentially make them significantly unprofitable;
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Time spent managing small accounts could take away from time spent on larger, more profitable accounts.
Advisors struggle to give full attention to all their accounts, regardless of size. Providing small account owners the same quality of service as large account owners therefore may seem unrealistic—unless the right technology can be used to streamline management.
The Problem With Ignoring Small Accounts
Applying your best thinking to each and every account is a key tenet of your service model. That kind of attention to a small account can result in a twofold gain: