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How to Manage Client Assets Held Away

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Financial advisors creating a questionnaire about assets held away for new clients.

Creating a comprehensive financial planning strategy may be more challenging when a client has assets held away. If you don’t know the full extent of their financial situation, that can tie your hands to a degree when it comes to offering the best advice for their needs and goals. There are, however, some things you can do to bring assets held away into focus and deliver a better client experience.

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Understanding Assets Held Away

Assets held away are assets that are outside the range of your management as an advisor. Examples of assets held away can include:

  • Cash balances in bank accounts, including savings, money market and CD accounts
  • 401(k), 403(b) and other workplace retirement plans
  • Individual retirement accounts
  • Treasuries
  • Health Savings Accounts
  • 529 college savings plans
  • Funds held in individual trading accounts at a brokerage
  • Assets held in offshore or overseas accounts
  • Trusts
  • Private equity investments

The more complex a client’s financial situation is, the more diverse the mix of assets held away might be. Clients may have held away assets out of necessity, as is the case with investments in an employer-sponsored retirement plan. In other cases, clients may choose to hold assets away out of preference or habit.

Why Advisors Should Be Interested in Assets Held Away

Your job as an advisor is to provide your clients with advice that’s tailor-made to their unique situations, needs and goals. Being able to see the totality of a client’s assets rather than just a slice of the pie can put you in a stronger position to offer the most effective advice and strategies.

For example, it becomes easier to:

  • Choose the appropriate allocation for the assets that you do manage
  • Manage risk by identifying areas of a client’s portfolio that are overweight
  • Find opportunities to fill in gaps in a client’s portfolio or explore investments they may not have considered previously
  • Manage tax planning to minimize liability in both the short- and long-term

Being aware of assets held away can also allow you to have better communication with clients. You can address any concerns they might have about certain assets and discuss the benefits of moving them to your management if they seem inclined to do so.

How to Advise Clients With Assets Held Away

A financial advisor adding a questionnaire about assets held away to her new client onboarding process.

You may or may not be aware that a client has outside assets. So how you approach finding out about them can depend on where you’re starting from.

With that in mind, here are some tips for asking the right questions when managing clients with held-away assets.

The simplest way to find out about any assets held away is to ask your client. You can do this during the new client onboarding process by including a simple questionnaire asking clients to detail any and all assets they have.

If you’re trying to feel out an existing client, don’t beat around the bush; simply ask directly. You can use the following questions as conversation starters:

  • Have you told me about all of the assets you have? For example, do you have any bank accounts or life insurance policies that we haven’t discussed?
  • What kinds of liabilities are you carrying, other than the ones we’ve already covered?
  • Do you feel satisfied with how your outside assets are being managed? If not, then why not?
  • Are there any questions you might have about where those assets fit into our financial planning discussions?

Be prepared to explain why you’re asking these questions and how having an open discussion around held-away assets benefits both of you. If your client has certain assets that are being managed by another advisor, don’t try to give them a hard sell on why they should move them to your management. The goal, at least in the beginning, is to get the discussion going so that the client feels comfortable talking to you about those assets.

Once you’ve opened the door, you can elaborate on how you’re equipped to help with managing those assets. This is where you can emphasize your unique value proposition and why the client should consider entrusting the management of those assets to you.

Utilizing Tools to Track Assets Held Away

If you’re using financial planning software to manage client accounts, you may have the option to add accounts that are outside your management. Depending on the type of software you’re using, you may need to add and update them manually or you may be able to sync held away accounts for automatic updating.

This is the model that robo-advisors and similar platforms use to gather client data. Investors can link their bank accounts and other financial accounts to the advisory platform by providing their login information. Account aggregators then use that login information to pull the latest balances and transaction history from linked accounts periodically.

This type of tool has view-only capabilities; in other words, you wouldn’t actually be able to move money in or out of any outside client accounts. However, you would be able to get the latest balance information which can help to better inform your decision-making as you mold clients’ financial plans.

Bottom Line

A financial advisor reading client responses to a questionnaire about assets held away.

Assets held away can add a wrinkle to your job as an advisor but if you’re able to convince clients to share those details with you, it can lead to better outcomes. Gaining insight into a client’s outside assets is also an opportunity to bring those assets under your management down the road and grow your business.

Tips for Growing Your Advisory Business

  • A website and social media presence are practically must-haves if you hope to compete in the online landscape. While you’re growing those types of marketing channels, you may consider letting a third-party lead generation service do some of the work for you. With SmartAdvisor, for instance, you can get connected with leads without tying up valuable hours of your day.
  • Including a questionnaire about outside assets in a new client onboarding checklist is an effortless way to find out what your client’s financial picture truly looks like. By gathering all of the relevant information from day one, you’re already better equipped to offer advice that aligns with their needs. You can periodically ask them to update you on the status of those assets as well as any new assets held away they might have acquired.

Photo credit: ©iStock/Jacob Wackerhausen, ©iStock/VioletaStoimenova, ©iStock/KucherAV

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