Wirehouse Execs Tout Brokers’ Success in Sniffing Out Assets Held Away
Wirehouse executives have been extolling the virtues of digital tools that help brokers view assets held away, as the ability to peek at where else the wealth lies potentially can help boost wallet share.
Since November 2020, the bank’s wealth management unit’s clients using a digital tool known as “My Financial Picture” have shared $180 billion of outside assets with their advisors, Tyrie said at a June 1 Deutsche Bank Global Financial Services and FinTech online conference, according to a transcript provided by research platform Sentieo.
Brokers’ ability to aggregate assets has been increasingly important to traditional brokerage firms as they seek to build wallet share often with a smaller salesforce, according to consultants. Firms like Merrill Lynch, which froze veteran recruiting in 2017, are also leaning on consolidation to drive growth without paying large signing bonuses to woo veteran brokers with a big book.
“The importance of seeing your entire financial picture is critical to the job of an advisor and much more part of the value proposition today than it was 20 years ago,” said Patrick Kennedy, a co-founder and associate partner of PriceMetrix, a McKinsey & Co. subsidiary and provider of wealth management data analytics.
Merrill clients, for example, who use the “My Financial Picture” tool have 80% higher balances with the company than non-users, according to a company spokesperson. The spokesperson declined to say what portion of that $180 billion that brokers have actually brought onto the Merrill platform but said that customers who used the tool increased their balances year-over-year in 2020 by 25% and report higher satisfaction with their brokers.
Managers at rival Morgan Stanley Wealth Management began rolling out its asset aggregation tool three years ago. In September 2019, Jonathan Pruzan, CFO, told an audience the firm had uncovered $60 billion that their customers keep in their other accounts and had the ability to find another $2 trillion more.
Fast-forward to the post-E*Trade and company stock plan manager Solium deals, and Morgan Stanley says it’s potential client wallet share has skyrocketed to $8 trillion, according to Andy Saperstein, co-president of Morgan Stanley and head of the wealth division.
“That’s just with our existing relationships,” Saperstein told an online audience during the mid-June Morgan Stanley U.S. Financial, Payments & CRE Conference. “We’ll continue to consolidate those assets to Morgan Stanley and all the while these channels will continue to grow and replenish.”
A Morgan Stanley spokesperson similarly declined to provide an updated figure for how many additional assets its advisors have discovered or ultimately transitioned with its asset-aggregation tool.
To be sure, adoption is key, and some veteran brokers dismiss the new technology saying that it’s easier for them to simply have a conversation with customers or that many of their longtime customers have already consolidated assets.
But others said they find them useful, a feeling that may not be surprising given that among individual investors who had an average account balance of $135,000 there were on average 1.5 adviser relationships per household, according to a 2020 report from Boston-based research firm Cerulli Associates.
“It’s a really good tool because it keeps you cognizant of assets held at contra firms,” said a veteran Merrill advisor in Florida, who did not want to be identified. “When we do a review, we run two separate asset allocations—one with and one without external assets.”
PriceMetrix’s Kennedy says advisors who persuade clients to show held-away assets “are more likely to be the primary advice giver to the client,” he said. “The relationships between primary advice givers and clients last longer and are deeper, and clients pay more for that.”
“If I’m in a position where I need to know those things, then I’m the one that’s building the plan and that’s evidence that there’s just a healthier relationship,” he said.
When his clients resist sharing the information, the same Merrill advisor as above tells them that a doctor wouldn’t prescribe additional medicine without knowing what the patient is already prescribed–with the implication that he needs to know where their other wealth is invested.
Abacus Planning Group advisors sets as entrance-gate rule for becoming its client the necessity to share all assets held away from the Columbia, S.C.-based registered investment advisory firm, which manages more than $1.3 billion in client assets.
“We’re very, very upfront about that,” said Charles Flowers, an Abacus advisor. “We want to be able to see it all. We’re comprehensive planners, and it’s hard to be a comprehensive planner when you can’t get a hold of the whole picture.”