This Broker Monitor Report revisits client segmentation, a topic last covered late in 2011. We look at the ways that brokerage firms segment their clients by offering various benefits and services to different groups. In this report, we review tiered programs, reduced commissions, active trading benefits, rewards programs and managed accounts.
All Broker Monitor firms offer some type of client segmentation based on a client’s account balance or trading activity. Both discount and full-service brokerages offer a variety of fee waivers and other discounts for their affluent and high-net-worth clientele. Three full-service firms offer benefits to clients with assets of $250,000+, and another firm offers fee waivers for households with $1MM or more. Among discount brokers, two offer premium accounts to capture assets from clients who maintain a $50,000+ banking and brokerage relationship. Of the eight full-service firms covered in this report, we found that only two automatically segment clients based on asset level. One firm’s tiers require investable assets of $100,000 and $500,000, respectively; another firm requires $1MM+.
Brokerage firms also segment investors through managed accounts. As a whole, 73% percent of Broker Monitor firms offer discretionary brokerage account programs that are generally offered to affluent clients. All firms in this report offer some type of separately managed account that generally requires a $100,000 minimum initial investment. At the other end of the spectrum, smaller accounts are sometimes serviced through a call center – this service is offered by four firms.
Additional Key Findings:
- Eight Broker Monitor firms offer active trader services, six of which offer additional incentives to trade more frequently.
- Three firms implement free trades within their pricing schedule.
- Four firms are currently running promotions for new or existing clients to earn cash bonuses when opening a new brokerage or retirement account.