IXI Services Case Study for Brokerage Firms
Challenge
Not all a brokerage firm’s
hold significant assets with a
single company. In fact, some
brokerage customers hold
relatively low balances which,
coupled with limited upside
potential, results in high service
costs for minimal return for the
firm.
Solution
A leading brokerage firm
worked with IXI Services to
segment its customer base,
identify low potential customers,
and effectively implement a
new program to offset the costs
of servicing this group.
Results
By incorporating IXI Services’
WealthComplete total assets
estimate into the firm’s
customer management efforts,
the brokerage firm was able
to identify thousands of
low balance – low potential
accounts, resulting in:
 An ROI of over 300%
 $2.5 million in revenues from
newly assigned account fees
 $20 million in new assets
under management (AUM)
Exclusively for IXI
Network Members
Finding value in low potential customers
Challenge: Identify and find value in low potential customers
Some investors begin their relationship with a brokerage firm by opening an account with just several
thousand dollars. This happens for a variety of reasons:
 New investors may have a limited amount to invest
 Consumers sometimes like to test how they like working with a firm or financial advisor (FA) before
deepening the relationship
 It takes time and effort to make investment decisions
 Some investors like to spread out the timing of their investments to avoid potential pitfalls from
market fluctuations
The result is that most brokerage firms have a large number of investment accounts with small
balances. Some of these accounts will grow their balances over time as investors’ wealth increases
and they transfer assets from other firms; these will develop into highly profitable accounts. Other
accounts have limited growth potential; the investors holding these accounts may have few additional
assets to invest and may keep their account balances low for years.
The challenge is twofold: 1) Identify which low balance accounts have significant growth potential and
allocate resources to further develop them, and 2) Identify low potential accounts, prevent FAs from
wasting valuable time and effort on trying to develop these accounts, and instead come up with an
alternative means of finding value from them. IXI™ Services worked with a leading brokerage firm
to address both of these challenges; the below discusses the outcome of addressing the second
challenge.
Solution: Isolate low potential customers and implement
program to offset cost of servicing
IXI Services worked with a leading brokerage firm to help identify which low balance accounts had
minimal growth potential.
The firm compared each of its low balance accounts to IXI Services’ WealthComplete® total household
assets estimate. WealthComplete total asset estimates enable firms and financial advisors to gauge
the additional investable assets a household may have which are not currently invested with the firm.
It provides an invaluable indication of the growth potential of each account.
more
By comparing a client’s existing AUM to the WealthComplete total asset estimate, the firm discovered that there were approximately 100,000
households with low balances and limited additional asset potential. These households comprise the Monitor segment shown in the quadrant in
Chart 1 below.
The firm advised FAs to limit their attention on these accounts given their low growth potential. At the same time, the firm decided to implement a
$50 annual account fee for all accounts with a balance below a specified threshold. The firm and its financial advisors communicated this decision
to customers, and gave them a period of time to either raise their balance or be charged the account fee. The firm allowed advisors decisionmaking authority to waive the fee for some accounts based on relationship development reasons (e.g. the accountholder is linked to a profitable
account).
$50 account fee to be
charged to accounts in
Monitor segment unless
balance is raised
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Chart 1: Opportunity analysis to identify accounts in the Monitor segment
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Results: ROI of over 300%, $2.5 million in revenue, and $20 million in incremental AUM
A targeted marketing effort directed at the Monitor segment combined with implementing the new account fee, or acquiring new assets up to a
minimum account size, resulted in:
 $2.5 million in incremental revenue from 50,000 accounts that were charged the $50 account fee (see Chart 2)
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 $20 million in incremental AUM invested by approximately 2,000 customers that chose to raise their balance by an average of $10,000 to avoid
the fee (see Chart 2)
IXI Services Case Study for Brokerage Firms: Finding value in low potential customers | 2
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Incremental
revenues:
$2.5 million
Incremental
AUM: $20
million
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The end result was an estimated ROI of over 300% achieved within just six months. In addition, FAs were able to shift their focus to those accounts
with high growth potential (Develop segment) and other new account acquisition efforts.
Contact Us Today
IXI Services
7927 Jones Branch Drive, Suite 400
McLean, VA 22102
[email protected]
800.210.4323
www.ixiservices.com
EFX-IXI-0063-6/21/12
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