Financial Firms Target Investors' $3.4 Trillion Cash Holdings: Cerulli

Financial firms are targeting the $3.4 trillion held by U.S. investors in cash equivalents at banks, according to new research from Cerulli Associates.

“On average, 10.8% of all households’ financial assets are in cash equivalents at a bank,” states Scott Smith, director at Cerulli, in a statement. “This includes money market accounts, savings accounts or CDs.”

Cerulli finds many households accrue more cash equivalents than recommended.

“It is standard recommendation, although not always followed, for households to keep at least six months’ worth of expenses in a savings account for emergencies,” said Smith in a statement.

As Smith and Cerulli’s research suggests, now is the time to educate customers about the range of products available “outside of traditional banking services, which could offer more flexibility to the client and the firm.”

Cerulli’s latest report, U.S. Retail Investor Products and Platforms 2014: Matching Product and Distribution Strategy to Client Demands, examines some of retail investors’ product preferences, product use and product needs. Data from this report comes from an ongoing survey of more than 10,000 U.S. households annually in partnership with Phoenix Marketing International. Interviews with more than 40 executives across the industry provide qualitative insight.

Cerulli found that the average household is interested in making additional contributions to more than 3 types of products, with the highest interest overall in education accounts.

“Providers should not underestimate educational accounts as part of a comprehensive financial plan, especially considering these accounts are the most commonly cited product of interest across all households,” Cerulli states in their report. “These products are often overlooked by advisors because contributions are restricted yearly.”

The age of the investor, also, strongly figures into which and how many products.