Capturing Trillions in Held-Away Assets: A Lucrative Opportunity for Wealth Managers
When it comes to the world of wealth management, the potential to tap into held-away assets is a goldmine that major financial institutions like Morgan Stanley, Citi, and Bank of America are eyeing with great interest. Estimates from these Wall Street giants suggest that there is at least a $5 trillion opportunity, with Merrill Lynch even pegging it at a staggering $10 trillion.
Understanding the Significance of Held-Away Assets
These “held-away” assets refer to client funds that are currently held at rival firms, presenting a prime opportunity for wealth managers to consolidate and grow their client base without the need for extensive client acquisition efforts. As the industry shifts towards focusing on increasing “wallet share” with existing clients, the potential for growth through held-away assets becomes increasingly attractive.
According to a survey conducted by Financial Planning, a significant number of advisors see their biggest growth prospects in deepening relationships with existing clients and expanding the number of households they work with. This trend underscores the value that wealth managers place on leveraging held-away assets to drive business growth.
The Strategies of Major Players: Citi, Morgan Stanley, and Merrill
Citi, under the leadership of Wealth Head Andy Sieg, has identified a $5 trillion opportunity in existing client assets held at other institutions globally, with an additional $3 trillion “off-us opportunity” in the U.S. market. Sieg emphasized the importance of deepening client relationships to unlock the full potential of these assets, rather than focusing solely on new client acquisition.
Morgan Stanley’s CEO Ted Pick and Merrill Wealth Management President Eric Schimpf have also outlined ambitious plans to capture held-away assets, with estimates reaching $5 trillion and $10 trillion respectively. By tapping into these assets, these firms aim to not only drive revenue growth but also enhance client outcomes by providing comprehensive wealth management services.
The Client Perspective: Benefits and Considerations
From a client standpoint, consolidating held-away assets can offer several advantages, including a more coordinated approach to asset management and a clearer understanding of overall portfolio performance. Scott Bishop of Presidio Wealth Partners highlights the potential pitfalls of scattered asset allocation, such as the risk of duplicative investments and missed opportunities for tax optimization.
On the other hand, some clients may have valid reasons for holding assets at multiple institutions, such as diversification, legacy relationships, or the desire to access specialized investment opportunities. Wealth managers like Mitch Hamer of Intersecting Wealth emphasize the importance of transparency and collaboration among multiple advisors to ensure optimal outcomes for clients.
The Complex Landscape of Held-Away Assets
While estimates suggest a significant opportunity in held-away assets, the reality is not always straightforward. Assets held in retirement accounts like 401(k)s present unique challenges due to regulatory constraints and employer agreements. Despite the growing trend towards holistic wealth management services, some high net worth individuals still prefer to work with multiple providers to access a wider range of investment options and services.
As wealth management firms expand their offerings and capabilities to attract and retain clients, the competition for held-away assets intensifies. Clients, on the other hand, continue to balance the benefits of consolidation with the advantages of diversification and flexibility in managing their wealth.
Conclusion
In conclusion, the pursuit of held-away assets represents a compelling opportunity for wealth managers to deepen client relationships, drive revenue growth, and enhance overall client outcomes. By understanding the motivations and considerations of both clients and firms in managing held-away assets, wealth managers can navigate this complex landscape with agility and expertise.
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