A provider of technology solutions for registered advisors andindependent brokers is seeing more financial firms inquire aboutdeveloping in-house robo solutions to address the needs oflow-account balance IRA accounts.

In a call with analysts, Judson Bergman, CEO of technology-basedportfolio and practice management provider Envestnet, said thefinalization of the Department of Labor’s fiduciary rule has ledto mounting interest from clients and prospects “looking todigitize a solution which would comply with the new rules” thatwill allow them to continue to service lower IRA account balancesin a “profitable way.”

The rule’s Best Interest Contract Exemption is expected toencourage advisors to IRAs that are compensated on commission-basedsales of investments to move to a fee-based model ofcompensation.

Doing so will facilitate advisors’ and brokers’ compliance withthe BIC exemption, which requires all investment recommendations bemade solely in clients’ best interest.

Critics of the DOL rule have long argued the rule’s strongpreference for the level-fee compensation models already common inRIA practices will make servicing accounts with low balances tooexpensive.

That in turn will encourage advice providers to move accountowners with smaller balances to a robo-advisor, or automatedplatform, to make those accounts profitable.

Bergman’s assessment to analysts during the company’s recentearnings call seems to support that prediction.

“There is an acceleration for exploring more of a digitaloffering for a segment of their clients,” said Bergman. “This isnot going to be a huge grower for any of them, but we expect thatthere will be, in some cases, thousands—and with larger firms maybeeven tens of thousands—of commission-based IRA accounts that aretoo small for a fee-based advisor to get interested in.”

In a recent report, Goldman Sachs said $5 trillion of the $7.3trillion in IRAs will not be affected by DOL’s rule, as thoseassets are already in fiduciary-managed accounts or self-directedby investors who do not use advisory services.

In 2013, the average IRA balance was nearly $95,363, accordingto the most recent data from the Employee Benefits ResearchInstitute. The median balance was $25,438.

But EBRI’s data shows the average IRA balance is much higherwhen contributions were from a rollover from an employer-providedretirement plan. That average balance was $142,587 in 2013.

The DOL rule is expected to affect 401(k) rollovers to IRAs, asmany are predicting more assets will remain in 401(k) plans. Anyadvice to roll over assets will be considered fiduciary in nature,meaning even RIAs operating on fee-based compensation models willbe required to prove why recommending the rollover is in a client’sbest interest.