Holistic views of a household’s investment picture, across custodians, asset allocations, styles, product types and platforms—are enabling leading-edge advisors to view and manage more of their client's’ assets.
Advisors who have 20-20 vision across a client’s entire household can compare performance of assets held away vs. assets under their management, see the gaps and manage accounts across the entire household. This can help advisors deepen the relationships with clients as well as grow their asset base.
It’s an evolution from “product solutions to advisory solutions,” says Andrew Clipper (left), director of Investor Services, Citi Markets & Banking. This may be especially important as registered reps move from a transaction and product-suitability orientation to an advisory orientation.
As financial reforms progress, there is the real possibility of a requirement for fiduciary advice. Seeing an investor’s full picture—all of the assets across the household—can be an enormous help there, and not just for “reps as advisor” or “rep as portfolio manager,” according to Clipper, but for compliance purposes, he says.
Dr. Jonathan Tiemann, founder and president of Tiemann Investment Advisors, and Matthew Radgowski (left), vice president of Wilshire Associates joined Clipper for a webcast on Tuesday to discuss trends in how advisors are using data aggregation to help grow assets under advisement. This editor moderated the panel.
The trends they see are changing the way financial advisors interact with their customers or clients.
- Portfolio optimization and personalization
- Tax optimization
- Cost control
- Rebalancing across the household
- Asset location to optimize and deliver cash flow/income
- Movement from unified managed accounts to model portfolios
- Migration to independent financial advisor status
- Alternative investments
- Principal protection
- Hedging strategies
- Risk management across accounts
Using Data Aggregation in Practice
In large part, viewing the household holistically is about being able to create an “overarching portfolio strategy,” for a household. “Suppose you have a client that inherited a large position in IBM with a low cost basis,” proposes Tiemann. An advisor may not want to sell it all at once because the client would realize a giant capital gain. But if an advisor can see a client’s entire household portfolio, they can provide “tax optimization, wealth harvesting, deferring gains,” by matching sales of the appreciated position with losses.