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How to Grow Wallet Share By Targeting Held Away Assets

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A financial advisor convincing existing clients to bring held away assets under his management.

If you’re looking to grow your business as a financial advisor, often the best place to start is within your own shop. While recruiting new clients is important, developing your relationship with existing clients is also crucial for your advisory business. By increasing the amount of each client’s assets that you manage, you can both improve your bottom line and provide more holistic financial services in the process. This is what’s called “increasing wallet share.” Here’s what you need to know. 

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What Is Wallet Share?

Wallet share, also referred to as share of wallet (SoW), is a metric that measures the relationship between a business and its customers. Briefly, this is the percent of a customer’s spending or consumption that is dedicated to the given business as opposed to its competitors.

For example, say that you run a burger restaurant. If someone spends $100 per week going out for lunch and spends $40 of it at your restaurant, you would have 40% wallet share with them.

Typically, you use wallet share to measure existing spending. That is, you would not include potential spending if the customer could be convinced to consume more, just your share of their current spending on your industry and direct competitors.

Expanding on the example above, this would mean that you measure the wallet share of your burger place when compared with a customer’s spending at the pizza place across the street. You would not measure how much they spend on rent and at the local craft store, as you aren’t competing with those businesses.

However, financial services measure wallet share slightly differently. A financial management firm would generally consider any form of cash holdings as potentially competitive.

For example, you would compare your wallet share against the customer’s bank account, privately managed portfolios, 401(k) plan and all other financial arrangements.

Increasing wallet share for a financial firm often involves convincing clients to hand these assets to you rather than dedicating them elsewhere. 

What Are Held Away Assets?

Unlike wallet share, held away assets (also referred to as “assets held away”) is a term generally used by financial institutions to refer to assets that are not managed by a financial advisor or an advisory firm.

Held away assets can therefore refer to money that your client holds in any other form, including bank accounts, self-directed investments, competing brokerage accounts and employer retirement accounts, among other types.

And, as explained earlier, advisors would convince clients to bring held away assets under their management as part of a wallet share building strategy.

How Can You Target Held Away Assets?

Financial advisors discussing a strategy to increase their wallet share with existing clients.

As a financial manager, wallet share refers to the percent of your client’s money that you manage. And you can increase that share by targeting the money you aren’t currently managing.

Many financial managers believe that it’s important to target, or at least discuss, held away assets as part of their financial management strategy. They would like to make a holistic financial plan for the clients, one that can anticipate future needs, current spending and the entire spectrum of personal finance. That’s easier to do when you can see all of your client’s finances instead of just part of the picture.

Some financial managers can address this by charging their clients based on held away assets, a practice that has grown more popular over the past 20 years. In this practice, you would bill your client based on their total assets, not just the ones under your management. The idea here is that, as a financial manager, you are accounting for all of a client’s assets in your planning and advice even if you do not control them directly. As a result, you need to account for their additional complexity in your own strategy.

Growing wallet share, though, means managing these assets for your client, not just billing for them. It means reducing your client’s proportion of held away assets by convincing them to move that money into your portfolio.

Often, the first step here is to understand your client’s thinking: Why are those assets held away? In some cases, it may be due to products and services that you simply don’t offer. For example, as a financial manager or brokerage, you may be unable to offer depository accounts. So some proportion of your client’s assets will almost certainly remain held away for liquidity purposes. Other assets may be held away in an employer-sponsored 401(k) plan, which provides a tax asymmetry that you likely can’t match.

Nevertheless, there are many areas where you can talk to your client about their needs and best practices, and how you can help address them: How much money does your client hold in cash? Do they have a self-directed IRA or portfolio? Do they invest with other brokerages, or have they sought out specialized advice from other practitioners?

Additionally, you may want to gauge which services you can provide by asking yourself these questions: If they want specialized advice, can you provide it? If they want spendable cash, can you build a more liquid section of their portfolio? If they want security, can you help them feel safe?

For a financial manager, by definition building wallet share means targeting held away assets. From there, the first step is all about communication: What does your client need, and how can you help them get it?

Bottom Line

A financial advisor explaining to a client the benefits of bringing in held away assets under his management.

Wallet share refers to the percent of a customer’s business that you can receive. Held away assets refers to the money that a financial manager’s client keeps outside of the practice. To increase your wallet share with clients, then, you need to figure out why they have assets held away and what needs you can help meet.

Financial Management Tips

  • Potential clients are increasingly relying on internet searches to connect with financial advisors. Using an online lead generation tool can give you an instant visibility boost, which may be helpful if you’re still building out your advisor website or growing your social media following. With SmartAdvisor, you can get leads sent to you and get access to the tools you need to follow up on them quickly.
  • Automation tools can also help you make it easier to manage a marketing campaign for your advisory services. Some of the tasks you can automate include scheduling social media content, scheduling blog posts, if you have a blog component on websites, and scheduling email newsletters.

Photo credit: ©iStock.com/FG Trade Latin, ©iStock.com/Easy_Company, ©iStock.com/AzmanL

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