GARDEN GROVE, Calif. — Carson Wealth Management, one of the industry's most influential planning firms with more than $8 billion in client assets under management and advisement, is luring in big clients and small ones, too.
The strategic shift amounts to nothing less than a sea change pushed by the furious pace of technological progress and the rapid advance of robo advisers.
"Since 2010, we have spent literally spent more than $30 million in driving technology and efficiencies," firm founder Ron Carson told the audience at the annual T3 advisers conference here, "and the difference today is we believe we can now start delivering a great experience for someone who has $50,000."
IN-LINE WITH THE INDUSTRY
The down-market drive is in line with moves by other large players, as more powerful technologies increasingly make it possible to serve clients with fewer assets.
Edelman Financial two years ago dropped its minimum account size to $5,000, but maintains a policy of helping clients with even less to invest. Large RIA Ronald Blue has opened a second line of business to serve smaller clients.
Large banks and wirehouses also have introduced robo solutions, such as Bank of America Merrill Lynch's Merrill Edge Guided Investing, which this year began charging clients a low 0.45% fee, with a $5,000 minimum investment.
At the once decidedly high-net-worth Carson Wealth, the change is also the product of Carson's willingness to admit mistakes and embrace uncomfortable change.
For years, Carson coached advisers through his Peak Adviser Alliance to regularly increase minimum levels of new client assets under management — a practice still common among many large firms. This only seemed to appeal to reason: By definition, larger clients equate to greater growth and higher margins, right?
Not always, Carson said.
'WE LOST THOSE ASSETS'
Recently, he says he's watched young so-called HENRYs — high-earners who are not-rich-yet — go to different firms as their wealth grew.
"We lost those assets," Carson said, adding that the up-and-comers went elsewhere because they didn't see value at Carson Wealth. "These were kids that I knew … That is one of the bigger mistakes that we made."
In response, just two weeks ago, the firm's board approved a new retainer fee model for clients. And, by the fourth quarter of this year or early next, Carson says, clients will be able to work with Carson via a new low-priced automated advice offering.
That's Carson's term for what others would call a robo adviser — a term he eschews, calling it a misnomer, given that he believes that automated advice can't exist without some human involvement.
In a conversation following the presentation, Carson sounded relieved to have the changes in place.
In the past, he’d spent too much energy explaining why clients had to follow the firm's complicated onboarding procedures, Carson says.
Even wealthy clients occasionally balked at a full-planning evaluation, Carson says. "They'd say, 'I don't have time for that.'"
Now they can get started on a simpler basis, he says, and move up and down the service scale, adding components like tax preparation or estate planning for additional amounts, as they need them.
The firm is in the process of determining whether to allow clients to change the terms of their relationship with Carson Wealth annually or on a more frequent basis, such as quarterly, Carson adds.
And now the firm doesn’t have to contemplate firing someone who suddenly can't cover high fees — like the mother of one client who experienced a sudden reversal of fortunes.
"How do you just let somebody go?" Carson asks. "I think that that's just wrong."
'HE DOES EVOLVE'
Joel Bruckenstein, the T3 conference organizer who interviewed Carson from the main stage, says Carson's play for middle class clients would have been impossible five years ago.
"One of the great things about these digital advice platforms is now you can serve a $50,000 client profitably," Bruckenstein says.
Carson is "a forward thinker and he does evolve," Bruckenstein adds.
Carson Wealth has adopted "a philosophy of asking for forgiveness, not permission," he says. "If it is going to serve the client's interest let's do it."
"Now," Carson told the crowd at T3, "I'm open to everything."