Managing Profitablity Through Client Segmentation

June 22, 2011 No Comments »

Schwab Launches Consultative Program to Help Advisors Manage Profitability Through Client Segmentation

Intensive Program Includes One-on-One Consultations, Group Workshops, and New Schwab Tool for Modeling Client Profitability

Schwab Advisor Services announced a new consultative program, “Managing Client Profitability,” designed to help advisors manage profitable and scalable businesses through effective client segmentation. The new program is part of Schwab’s Business Consulting Services, a comprehensive practice management offering for advisors. Through an intensive eight-week program, advisors are guided through developing, evaluating and preparing to implement customized segmentation strategies for their firms.

“We have found that advisors who take a strategic and proactive approach to client segmentation are often the best poised for future growth,” said Nick Georgis, vice president at Schwab Advisor Services. “Core to our consultative philosophy, our program pairs advisors with a Schwab relationship manager and immerses them in work sessions both in-person and online over a series of weeks, providing resources and counsel along the way to enable each firm to build an effective, customized segmentation strategy and plan to serve their clients.”

Leveraging proven practices from the Best-Managed Firms1, the program also includes an introductory webcast, in-person workshop and follow-up. Schwab relationship managers, along with a consultant, work one-on-one with individuals from each firm to:

Help pinpoint which clients drive a firm’s profits and to better align resources to serve a range of clients effectively.
Explore ways to segment their client base and tailor services to those segments—all with an eye toward aligning revenue and cost to serve while maintaining great client service.
Leverage tools and ongoing consultation from Schwab to help them reach their goals.
Schwab’s new proprietary Client Profitability Modeling Tool2 helps to determine client-level profitability and provides advisors with visibility into their firm’s economics and revenue mix.

According to Schwab’s 2010 RIA Benchmarking Study, a small minority of an RIA firm’s clients account for a significant share of revenue: 7 percent of firms’ clients account for 38 percent of firm revenue on average.

“Throughout the consulting process, Schwab relationship managers support principals while they develop the best segmentation strategy specific to their firm’s clientele and business goals,” said Scott Slater, managing director of business consulting for Schwab Advisor Services. “It’s an intensive process that helps advisors determine levels of service that meet specific client needs while improving the firm’s business performance.”

The program has been rolled out to a target group of RIAs in Chicago, St. Louis, Minneapolis, Dallas, Newport Beach and Seattle and will include several other regions across the U.S. throughout the course of the year.

Last year, the company published the Schwab Market Knowledge Tools® (MKT) report, Best-Managed Firms: Client Segmentation Strategies. Based on interviews with over 15 Best-Managed Firms, the report is an in-depth examination of how client segmentation strategies can help RIAs serve a diverse client base while also managing a profitable and scalable business. Advisors interested in the study or the program should contact their relationship manager.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.1 million client brokerage accounts, 1.4 million corporate retirement plan participants, 736,000 banking accounts, and $1.7 trillion in client assets as of May 31, 2011. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. Independent investment advisors are not owned, affiliated with or supervised by Schwab. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at and (0611-4028)

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1 The RIA Benchmarking Study from Charles Schwab comprises self-reported data from advisory firms that custody their assets with Charles Schwab. The Best-Managed Firms are the top 20 percent in productivity, profitability, and revenue growth, calculated after removing those with less than $1 million in revenue.

2 The Schwab Advisor Services Client Profitability Modeling Tool (“Model”) is confidential and proprietary and includes the intellectual property of Schwab. It is inherently limited and intended for general informational purposes only. The outcomes simulated by the Model do not reflect, and are not guarantees of, actual or future results. Schwab makes no warranty of the accuracy or completeness of the Model or the simulated outcomes. You are solely responsible for your use of the Model. Experiences reflected are not a guarantee of future performance or success and may not be representative of your experience.


Charles Schwab
Anita Fox, 415-667-1308
Makovsky + Company
Janet Yoo, 212-508-9606

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