71% of U.S. households fall below the $100,000 asset threshold for advisers

Almost three-quarters of Americans don't have enough savings to be worth the while of most financial advisers, but they may find a home with robo-advisers or some combination of both. Almost 90 million, or 71%, of U.S. households have investible assets of less than $100,000, a segment served by only 8% of financial advisers, according to a research report released Wednesday by Cerulli Associates. Firms are taking a hard look at evolving wealth-management technology to help fill that void. Combining human and digital advice can help firms scale their practice to profitably manage the smaller accounts of mass-market consumers, according to Cerulli. “We all have a heart to serve,” said Jessica Searcy-Maldonado, vice president of Searcy Financial Services Inc., whose clients have on average about $1.4 million to invest. “We don't want them out there floundering by themselves, but how do you do that profitably?” Ms. Searcy-Maldonado also serves as chief compliance officer at the Overland Park, Kan.-based firm's subsidiary Allos Investment Advisors, which works with households that typically have around $70,000 of assets. Allos clients tend to be under the age of 50 and come to the firm for advice on retirement plan savings they've accumulated when they change jobs, according to Ms. Searcy-Maldonado, who is keeping an eye on the development of digital advice and the possibility of using it at her firm. Firms with managed accounts rank small, less profitable accounts as the most important motivating factor this year for providing digital advice, according to Cerulli's research report. Engaging millennials was the second most important factor followed by the need to offer inexpensive managed accounts because of the Labor Department's new fiduciary rule. The regulation, also known as the conflict-of-interest rule, was released in April and will require financial advisers to put their clients' interests ahead of their own when servicing retirement accounts. The ruling is “going to force people to really pull back pieces of the onion” and review the value of the services offered by their firms, said Ms. Searcy-Maldonado. “We'll have to defend what we're charging.” The regulation is pressuring fees across the industry while opening up an opportunity for robo-advisers, independent broker-dealers and registered investment advisers to grab new business. That's because insurance-based broker-dealers, which are the most likely to serve the the middle market now, may decide to leave the business, as they typically sell high-commission annuities seen as problematic under the Labor Department's fiduciary rule, according to Cerulli. Historically, RIAs collect a fee tied to the percentage of managed assets. “A small pile doesn't even leave the lights on,” said Ms. Searcy-Maldonado. But evolving technologies can “create some scalability to help preserve more clients and with greater efficiency at a lower cost,” she said.