Cerulli Associates Inc. has spent a full year studying relationships between clients and advisors and the results of its study show that 70% of clients spread their assets among multiple advisors or direct investment accounts.
Only 17% of advisors thought their clients held assets elsewhere. So if you thought you had all of your clients’ assets, it’s quite likely you are mistaken.
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Roger Stamper, an analyst at Cerulli says the situation has more to do with the lack of awareness by advisors than clients’ purposeful desire to spread the assets around.
Some investors do want to keep some of their assets separate from their advisors. Stamper says it’s OK to have a conversation about that and make your client feel comfortable about disclosing that fact.
Holding assets away is not necessarily a bad thing but it does make it easier if a client at some point decides your interests are not as closely aligned with theirs as they would like.
Increasing numbers of investor-focused brokerage firms are springing up, giving investors more do-it-yourself options.
The offerings at these firms are becoming more sophisticated and have been a factor in the growth of multiple accounts since the financial crisis.
What can you do? First and most important, you can confirm to your clients that your interests are fully aligned with theirs.
This may mean digging deeper and finding out more about the personal aspirations tied to their investment objectives. It may mean finding out more about their families and your clients’ dreams for them.
Your clients’ investment policy statements and financial, estate, tax, and insurance plans should be constructed to fulfill those deeper desires.
Then, you might offer to keep track of their other accounts to ensure that they are being managed in a way that is in alignment
with their overall objectives.