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Unlock client profitability: Flipping the 80/20 principle

July 6, 2023
clock 5 MIN READ

In business, the Pareto principle, also known as the 80/20 rule, suggests that 80% of your profits likely come from 20% of your clients.

However, what about those clients who seem to drain resources without yielding substantial returns? This “Ideas from the Lab” blog explores three operative strategies to flip the Pareto principle and drive profitability from your entire client base, not just your 20%.

Segment by opportunity

We often hear firms segmenting by AUM or revenue, providing premier services and privileges to their top handful of largest clients. Try this instead.

Recognize your clients’ profitability potential. In order to maximize your service offering where it will give you the most return on investment, we recommend segmenting into three categories:

  1. Current value. How significant is the current revenue the client is generating?
  2. Future value. Are there any future revenue-generating opportunities?

    •  Contributions made up to 5.4% of growth on average in 20231 preceded by 4% in 2020.2 Deliberate who is eligible and capable to grow with you through contributions.
    •  Remember the “great wealth transfer.” Lots of money may be in flux in the coming years. Do you know who in your book is set to benefit?
    •  Lastly, does the client have a high net promoter score? If they have referred you in the past, they may do it again. Are you treating your potential referral generators in a way that encourages them to tell their friends about you.

  3. Fit. Is this the type of client you wish you could replicate? You may find that some of your current B or C clients are actually hidden A clients, based on their segmentation scores.

Here's an example:

Sally has been a client for years. She accounts for 2% of my current revenue and is a good cultural fit for my firm (while not an ideal client, per se). However, our receptionist recently learned that Sally has elderly parents with substantial wealth that no one is currently managing. She may have the potential to either:

A.) Refer her parents to me

and/or B.) Trust me to manage those assets once she inherits them

By this calculation, Sally qualifies for the A segment.

Take action:

Design your offering

With clients segmented by opportunity, you can start to identify who in your book of business is currently underserved and determine how you can provide more value to them, so they stick around.

  • Find commonalities and patterns. We recommend looking for commonalities and patterns in B and C clients and building a service offering around them. For example, do you have a considerable number of clients aged 40-45 in the greater Chicago area?
  • Document their needs, values, and the reason they need help from an advisor. Send surveys, or just ask: “What were your greatest needs when you first came to me?” and “What are your needs now?”
  • Develop an offering to solve those problems with your services and expertise. This may be an excellent opportunity to add scalable services, or ideally, refine existing services.

Here's an example:

Need Value Offering
Having a financial plan   

1. Understands my financial needs and goals

2. Explains concepts in a manner I can understand       

3. Provides personalized services


Models, tax-loss harvesting, SEI Estimated Taxes Saved Report

Financial planning:

Digital financial plans

Client service:

Task reminders, to-dos, online booking

Take action:

Make sure it’s scalable with technology and operations

Servicing clients is expensive. The best use of your human capital, time, and energy is on your 20%. Lean into partnership and integration to scale your 80%.

  • Leverage efficient workflows so everyone knows what needs to be done, when, and by whom in a streamlined process. You don’t want to spend more time than you have to.
  • Add technology. Find technology that can streamline and even automate tasks. There are many technology vendors that provide valuable services to clients at a low cost, such as estate planning, tax planning, or even one-page financial plans.
  • Make sure it’s seamless. Double-check that your technology integrations are turned on and that you’re taking advantage of automation capabilities that can take tasks off your plate.

Here's an example:

Need Value Offering
Having a financial plan 

1. Understands my financial needs and goals

2. Explains concepts in a manner I can understand       

3. Provides personalized services


  • IRA contribution workflow

Client tags:

  • Communication preference
  • Financial aptitude: Low, medium, high 
  • A "who matters?" tag

CRM features:

  • Opportunities (inheritance)
  • Reminders (milestones)
  • Know your client

Take action:

Stephanie Reilly

Practice Management Consultant

1 2022 InvestmentNews Pricing and Profitability Study

2 2021 InvestmentNews Pricing and Profitability Study

Tax loss harvesting is the timely selling of securities at a loss to offset the amount of capital gains tax owed from selling profitable assets. Source:

Neither SEI nor its subsidiaries provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.

Investing involves risk including possible loss of principal.

Trust & Will, Holistiplan and Asset+Map are not affiliated with SEI Investments Company (SEI) or its subsidiaries.

Dimensional and the Dimensional logo are registered trademarks of Dimensional Fund Advisors LP. Dimensional funds are offered by DFA Securities LLC, member FINRA. Neither SEI, nor its subsidiaries is affiliated with DFA Securities LLC, or Dimensional Fund Advisors LP.

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