Skip navigation
financial data computer

Don’t Charge for Reporting on Outside Assets

This additional service pays for itself, many times over.

By Matt Sonnen

Advisors looking to grow their business must constantly grapple with client acquisition costs. As advisors struggle to differentiate themselves and the services they offer, many have concluded that providing a higher touch to existing clients and working to gain a larger percentage of their investable assets is a more profitable way to grow, rather than constantly chasing after new business. I agree.

While this is a general business phenomenon that all entrepreneurs face, in the wealth management industry, data aggregation can solve for this.

Through our work with breakaway advisors contemplating a move from a traditional wirehouse to the RIA space, we always tout the benefits of data aggregation. Advisors’ eyes light up when we paint the picture of having the ability to say to clients, “I know you have a relationship with another advisor. We don’t have a problem with that, but if we are to be your holistic financial advisor, we need to take into account the investments that outside advisors are making for you, so your overall asset allocation is correct.”

Once you get a data feed established on those outside assets and begin to incorporate those into quarterly reviews with clients, the game totally changes. First of all, from a sales perspective, you can now say, “That other advisor … they keep zigging when they should be zagging.” But more importantly, when that client sits down with you a few times a year, you can speak to their entire financial situation; the other advisor can only speak to the assets they are managing. It is almost subliminal, but the client starts to walk away from their meetings or phone calls with you thinking, “I just feel like our meetings go deeper. My advisor (you) really seems to understand what my total financial picture is. I don’t have this same connection with my other advisor.”

It’s a simple technology solution, but it becomes an extremely valuable tool. Over time, the client starts sending more of their wealth to you. By offering this reporting service, you are now able to ask in a very nonconfrontational way whether your clients have assets held elsewhere, which provides you insight into any potential new assets you may be able to manage on their behalf. You can simply say, “Many of our clients have assets with more than one advisor; there’s nothing wrong with that. But starting this quarter, we are offering full transparency into your financial picture. If you have assets elsewhere, we can work to get those assets onto our [RIA firm name] statement.”

Are data aggregation tools perfect? Absolutely not. The integration of the data feed can break; the client can change their password, thus creating an error in the screen-scraping automation; the assets may or may not show correctly every quarter on the aggregated client statement. For some financial institutions, there may be no automatic solution at all. You may need to have the client regularly send statements, and you will need to manually add these assets to your reports. This often requires a dedicated resource at your firm to manage this process.

And that is why many RIAs default to charging for this service. I understand the thought process; you are totally justified in wanting to recoup the administrative costs this data aggregation imposes on your business. But we have seen so many advisors gain incrementally more of their current client’s wallet share by offering this service. And as discussed, not only are you adding revenue to your firm based on these additional assets, but you are saving on marketing and business development expenses. And, by becoming the holistic advisor in your clients’ minds, your conversations and meetings will become that much more meaningful. Their assets are now stickier and less likely to leave. Even after accounting for the added operational expenses, this additional service pays for itself, many times over.

Matt Sonnen is the founder and CEO of PFI Advisors, an operations and technology consulting firm dedicated to the RIA industry. You can follow him on Twitter at @mattsonnen_pfi.

TAGS: Technology
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.