The 3 Layers of Clients
Amar Pandit
A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.
August 6, 2021 | 3 Minute Read
There are 3 broad layers of clients in our profession according to Dennis Moseley Williams.
The first layer comprises people who want something special and will invest more time and money. The middle layer is where people want something unique. The third layer is the one that is focused on costs.
Most US Wealth Firms (including solo RIAs) focused on the first layer. This also meant that every client had a certain account minimum for a certain level of service. They have fewer clients, a high AUM per client household and thus a decent revenue per client.
Indian distributors and advisors on the other hand have a portfolio of clients with 10-20% in the first layer, 10-20% in the middle layer and 60-80% in the base layer.
They have too many clients, a low AUM per client household and a low revenue per client. In most cases the top 10-20% of the clients subsidize the base layer clients. Too many clients mean increased costs, inability to give personalized attention to everyone (most of the time is taken by the base layer clients) and many clients who are not happy with the overall service.
The client portfolio is completely skewed towards the base layer of clients. A rebalance of this portfolio is the need of the hour.
A few points to ponder.
- The best firms have the attention of the first layer clients.
- The value of your firm is dependent on whose attention you have.
- If you need to operate in the base layer, you need huge volumes to make this work else your best clients will subsidize them. The key part to remember here is that no one has yet figured out how to work with the base layer profitably (despite spending billions of dollars to acquire users and customers). Needless to say, operating in this space will require huge investments in people, processes, and technology.
- The value for most firms lies in the first and middle layer.
What does your client portfolio look like?
Where do you want to operate?
Similar Post
Nano Learning
A Few Expensive Things
While I can write an entire longish essay on this subject, the objective of this Nano is to get you to think about a few expensive things in your business.
12 January, 2024 | 2 Minute Read
Nano Learning
Something Powerful to Learn from Air Pods
I saw this chart sometime in 2021. It absolutely blew my mind.
Did you know Apple’s revenue from AirPods was $23.05 billion in 2020? This was as high as Netflix, 25% lower than T ....
Read More
8 April, 2022 | 2 Minute Read
Nano Learning
The Cheque Book and Calendar
Carl Richards says, “The cheque book and the calendar never lie.” This is a pretty insightful line as it has an application in every aspect of our life.
He says do not tell me ....
Read More
3 September, 2021 | 2 Minute Read
Nano Learning
The Leverage in Business
This is a key topic that again has an impact on your overall business model.
You are a service provider who is delivering a service to a prospective client who has Rs.10 Crore ....
Read More
7 May, 2021 | 3 Minute Read
Nano Learning
Are you getting your Expensive Questions answered?
I truly consider asking meaningful questions as a Key Skill that all of us need to develop.
However, I see a lot of focus and sometimes obsession on asking only technical question ....
Read More
3 July, 2020 | 1 Minute Read
Nano Learning
The True Measure of Your Success
I have experimented with a different format for this Nano...I have attempted a poem on the work that you do...It’s about the power of the work you do...The inspiration for this w ....
Read More
19 July, 2024 | 2 Minute Read



- 0
- 0
0 Comments