Future of advice is wealth planning across the household

MMI report: Advisers will need tech to manage all client accounts together as one

Mar 11, 2019 @ 6:01 am

By Ryan W. Neal

The next big thing for advisers isn't robo-advice startups or cryptocurrency. It's advisers managing all of a household's financial accounts from banking to investing to insurance, across all life stages, in a single platform.

The average investor today owns five or six accounts with a range of registrations and product types, commonly managed by two or three advisers, according to a new report from the Money Management Institute,

This makes it difficult for investors to save efficiently for various goals, manage taxes or optimize withdrawals in retirement. It's also challenging for advisers to offer investors the kind of personalized experience they are increasingly accustomed to with companies like Amazon or Netflix.

(More:Custodians no longer at the center of RIA technology hubs)

But the shift away from product sales in favor of holistic financial planning reveals the opportunity for advisers to offer what MMI calls "optimized, household-level wealth management."

With tightly integrated technology and data integration, advisers could easily and efficiently create a financial plan, customize financial advice, make data-driven investment decisions and become a true "one-stop-shop" for all of a person' s financial needs.

Not only will this help advisers increase their share of an investor's wallet, it will deliver improved client outcomes, said Jack Sharry, chief marketing officer at LifeYield and co-chair of MMI's committee on digitally-enhanced advice.

"What you do is make sure asset allocation is in line, asset location is in line, then decide how to draw-down from those multiple accounts," Mr. Sharry said.

Organizing multiple accounts into a risk-smart, tax-smart strategy from accumulation through withdrawals could add 183 basis points per year in incremental after-tax returns and income, while reducing cost and mitigating risk, said Mr. Sharry, citing Morningstar data.

While advisers have tried to coordinate a client's various accounts in the past, they've often had to rely on pen-and-paper calculations or, at best, an Excel spreadsheet that covers several accounts across dozens or even hundreds of client households.

For most advisers, this "is just too darn complicated to manage it effectively," Mr. Sharry said. "It requires software to do it because quite frankly its too hard to do it on your own."

(More: How to choose good tech, rather than costly and complex tech)

With technology available or in development at some leading firms, household management is quickly becoming the standard for all financial advisers, said MMI president and CEO Craig Pfeiffer. Integrated platforms like Merrill Lynch's ML One, Morgan Stanley's WealthDesk and LPL's ClientWorks Connected are leaving the rest of the industry behind.

"If they are not playing in the game that's being played today, they are going to lose future business," Mr. Pfeiffer said.


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