Communication Gap in Advisors’ Asset-Consolidation Efforts
Financial advisors may be overlooking a significant growth opportunity because clients are not hearing their message about consolidating outside assets, according to new research from SEI.
Although 95% of advisors said they actively seek to consolidate client assets and 81% tell clients they provide household-level portfolio management, 71% of high-net-worth investors said their advisor has never asked to manage more of their wealth.
“Our research found a striking disconnect between what advisors believe they are communicating and what investors are actually hearing,” said Arthur Worthington, senior managing director of strategic business development and integration at SEI.
The opportunity is substantial. About 88% of wealthy investors keep assets away from their primary advisor, while 47% entrust that advisor with no more than three-quarters of their total assets.
Clients appear willing to consolidate when advisors can quantify the benefits. Tax savings would motivate 46% of investors to transfer additional assets, followed by higher retirement income and lower fees. More than one-third said they would be highly likely to move assets within a year if shown their potential tax savings.
Household portfolio management, also known as a unified managed household, coordinates multiple accounts as one portfolio. The approach can improve asset location, rebalancing, tax-loss harvesting and withdrawal planning.
Delivering those services remains labor-intensive. Advisors spend an average of 48 hours monthly on household-level tasks, rising to 65 hours for those with the largest books and 67 hours for advisors serving the wealthiest clients.
About 30% cited inadequate technology as an obstacle, while only 49% said they could quantify the benefits of every household-management practice. Fragmented data, incomplete account visibility and limited staffing were among the barriers.
SEI’s findings were based on January responses from 518 advisors and an April YouGov survey of 302 investors ages 50 to 70 with at least $1 million in investable assets.