Creating a comprehensive financial planning strategy can be more challenging when a client has frozen assets. If you don’t have complete knowledge of their financial situation, it can tie your hands to a degree when it comes to giving the best advice for their needs and goals. However, there are some things you can do to bring sidelined assets into focus and provide a better customer experience.Thank you for reading this post, don't forget to subscribe!
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Understanding assets kept away
Keep-away assets are assets that are outside the scope of your management as an advisor. Examples of assets taken away may 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
- health savings accounts
- 529 College Savings Plans
- Funds held in individual trading accounts at brokerage
- Assets held in offshore or foreign accounts
- private equity investment
The more complex the client’s financial situation, the more diverse the mix of assets held can be. Clients may hold more assets than necessary, as is the case with investments in employer-sponsored retirement plans. In other cases, customers may choose to keep assets away out of preference or habit.
Why should advisors be interested in held assets?
Your job as a consultant is to provide your clients with advice tailored to their specific situations, needs and goals. Being able to look at the totality of a client’s assets rather than just a piece of the pie can put you in a stronger position to offer the most effective advice and strategies.
For example, it becomes easier:
- Choose the appropriate allocation for your assets to do manage
- Manage risk by identifying areas of the client’s portfolio that are overweight
- Find opportunities to fill gaps in a client’s portfolio or explore investments they may not have previously considered
- Manage tax planning to minimize liability in the short and long term
Being aware of the assets held can also help you communicate better with customers. You can address any concerns they have about certain assets and discuss the benefits of transferring them into your management if they are willing to do so.
How to advise clients with frozen assets
You may or may not know that a client has outside assets. So how you find out about them depends on where you’re starting from.
With that in mind, here are some tips for asking the right questions when managing clients with stranded assets.
The easiest way to find out about any held assets is to ask your customer. You can do this by including a simple questionnaire during the new client onboarding process, asking clients for details of any and all assets they own.
If you’re trying to get to know an existing customer, don’t poke around; Just ask directly. You can use the following questions as conversation starters:
- Have you told me about all your assets? For example, do you have a bank account or life insurance policy that we haven’t discussed?
- What kind of liabilities are you taking on, apart from the ones we’ve already covered?
- Are you satisfied with how your external assets are being managed? If not, then why not?
- Do you have any questions about where those assets fit into our financial planning discussions?
Be prepared to explain why you are asking these questions and how having an open discussion about frozen assets benefits both of you. If your client has some assets that are being managed by another advisor, don’t try to sell them by telling them why they should transfer them to your management. The goal, at least in the beginning, is to lead the discussion so that clients feel comfortable talking to you about those properties.
Once you’ve opened the door, you can explain in detail how you are equipped to help manage those properties. This is where you can emphasize your unique value proposition and why the client should consider entrusting the management of those assets to you.
Using tools to track held assets
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 accounts set up for automatic updates.
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 periodically pull the latest balances and transaction history from the linked accounts.
This type of tool has viewing capabilities only; In other words, you won’t actually be able to transfer money to or from any external customer’s account. However, you will be able to get the latest balance information that can help better inform your decision making when tailoring clients’ financial plans.
Assets kept away can hinder your job as an advisor, but if you are able to convince clients to share those details with you, it can lead to better results. Gaining information about a client’s external assets is also an opportunity to bring those assets under your management and grow your business.
Tips to Grow Your Consulting Business
- Having a website and social media presence is practically essential if you hope to compete in the online landscape. When you’re growing these types of marketing channels, you may want to consider letting a third-party lead generation service do some of the work for you. For example, with SmartAdvisor, you can connect with leads without wasting valuable hours of your day.
- Including a questionnaire about outside assets in any new client’s onboarding checklist is an easy way to find out what your client’s financial picture really looks like. By gathering all the relevant information from day one, you are already better equipped to provide advice tailored to their needs. You can periodically ask them to update you on the status of those assets as well as the status of any new assets they have acquired.
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