Advisors' assessments of their high-net-worth clients’ cash holdings can diverge wildly from the reality of those held-away liquid assets, which could spell a massive untapped opportunity, according to new research by Flourish.
The fintech firm’s study, done in partnership with Wealth Management IQ, draws from a survey of 750 advisors primarily from independent RIAs, which was conducted from August 20 to September 5. All in all, the advisors surveyed managed over $1.5 trillion in assets.
The report, Client Cash: Mapping an Unexplored Opportunity, found that while advisors estimate their clients keep 7 percent of their net worth in cash, the figure actually exceeds 30 percent.
Despite recognizing the critical nature of discussing cash management – with 95 percent of advisors acknowledging it as part of their professional duty – just 5 percent said they actively offer solutions or engage in conversations about their clients’ cash reserves.
Interest among clients in earning higher yields on their cash is strong, with an overwhelming 92 percent of advisors reporting their clients' interest in high-yield savings accounts.
A smaller majority of advisors believe providing cash management services would enhance their competitive edge not only against other advisory firms (71 percent) but also against wirehouses (68 percent) and robo-advisors (62 percent).
“The crucial insight of this survey lies in the significant disparity between the number of advisors recognizing the responsibility to advise on cash and those actually providing solutions or engaging in discussions with clients,” Flourish CEO Max Lane emphasized in a statement.
According to Lane, 70 percent of surveyed advisors are convinced that the chance to earn 4 percent to 5 percent in an FDIC-insured account would pique their clients’ interest. That hunger for cash, underpinned by an emotional need for liquidity and safety, represents “a ripe opportunity for advisors to bolster relationships and client earnings through cash management solutions.”
That demand rang loud and clear last year as Flourish’s cash management platform for RIAs, Flourish Cash, saw a 161 percent surge in its client base. According to the firm, clients on the platform earned more than $130 million in interest on their cash holdings.
With many cash vehicles to choose from, including money market funds, Treasury bills, and certificates of deposit, among others, Flourish’s report estimates nearly nine-tenths of clients often (52%) or occasionally (34%) ask for help in determining the best one for their needs.
“Rather than try to persuade clients that their fears or concerns are not justified, advisors should meet them where they are and aim to serve their needs with the safest and highest- yielding cash instruments possible,” the report said.
LPL Financial and Raymond James also add independent advisors from Osaic and Edward Jones in Michigan and Arizona.
The SEC-registered RIA advises on more than $1 billion in client assets, with no advisory fee through 2027 and no human financial advisors.
95.8% of house trades were winners. For clients? The SEC says just 14.9%.
The complaint says Duolingo added friction on purpose, then lied about it.
The four wirehouse firms lost 1,449 experienced advisors and recruited 932 in the first six months of the year, according to Diamond Consultants.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
