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Dan Richards

When I talk to successful advisors about their business objectives, for most increasing assets is at the top of their list.

Some advisors believe that winning a greater share of assets from existing clients is driven by performance.

And while that may be true in some cases, research with 50,000 investors pinpoints eight advisor activities that lead to increased client assets – none of which relate directly to performance.

A starting point on increasing client assets           

Research shows that the majority of clients with multiple advisors had never been approached about consolidating assets, even though many have made a conscious decision to work with more than one advisor.

They may have developed strong relationships with multiple advisors, like to get multiple perspectives, work with more than one advisor to diversify risk, or seek out different advisors for different skill sets.

And in a few cases clients are reluctant to consolidate assets with one advisor because they’re concerned they may lose some control over their money.

That said, clients making a conscious decision to work with multiple advisors were a distinct minority. Most often this was a historical accident which just evolved over time.  In those cases, the first advisor who approaches a client about consolidating assets has an advantage.

Just approaching clients about consolidating assets isn’t enough, however – you have to demonstrate the benefits of doing this, whether it is reducing overlapping positions, improving the overall risk-return profile of a portfolio, improving the client’s tax situation or simplifying reporting.

New research on share-of-wallet drivers

In May, I conducted a webinar sponsored by Northern Trust and Advisor Perspectives, discussing some of the issues in moving a financial advisory business forward.

During that webinar, I talked about findings from Corporate Insights, a Vancouver based research firm that has collected information from over 50,000 investors on behalf of some of Canada’s largest investment dealers, financial planning firms and private banking operations.

For the typical advisor, his or her largest clients make up 25% of households and 65% of existing clients – but those largest clients make up almost 80% of the assets with clients that existing advisors don’t currently hold.

The good news is that advisors can do specific things to increase their assets among their largest clients. Corporate Insights has identified eight share-of-wallet drivers. If those drivers are in place, the percentage of client assets goes up; if they aren’t the share of assets goes down.

If none of those eight drivers is in place, share-of-wallet is under 20%. If four drivers are in place, share of assets is about 50%. And if seven of those drivers are in place, percentage of assets is over 80%.