Consolidating Adviser Relationships

I found a study in the most recent edition of planadviser magazine which suggests that families will start consolidating their investment accounts with one adviser in the next few years. The primary explanations they give are: 1- to improve retirement income planning (converting assets into a stream of income) and 2 – asset decumulation (giving your money away). The study divides up the population between three segments and explains why each has a unique set of retirement planning requirements.*


•The first segment, which consumes the large majority of people, consists of households with less than $200,000 invested. This demographic will focus on protecting assets and will need an adviser to help release the equity in their home and investigate a variety of ways to produce income.
•The second segment has $200,000 – $2,000,000 invested. These people will not focus so much on protection of assets, rather finding ways to maximize the income which can be derived from these assets.
•The final segment, consisting of people with over $2 million in assets, are looking for full retirement programs which help them disperse assets to preserve a certain lifestyle and legacy. This segment will have the broadest need for financial planning and wealth management services.
So, I gave this a bit of thought and came up with the following: there aren’t too many good reasons for keeping assets divided between advisers. In fact, I think most people fall into this situation either by accident or through sheer laziness. Have you ever tried to do a 401k rollover? It’s a bit of a pain between the withdrawal paperwork, new account application, risk tolerance questionnaires, etc. Some people leave their money with a former employer’s retirement plan simply because it avoids the headache of transferring funds. What they may not be realizing is that, upon approaching retirement, the desire to consolidate accounts will come creeping back so that the account holder can better view and understand their complete financial picture.
That desire might come at the point when they discover that one investment account has averaged a 15% annual return while another has returned 5%. The client might start thinking about all the possible factors which affect performance. Why did one account return so much more than the others? The funny part is that the performance disparities probably have nothing to do with the investment manager’s ability to outperform the markets. It’s more likely the result of good asset allocation, low expenses, or some combination of the two. Regardless, the solution is often to engage the adviser or investment company which has provided for the greatest total return and consolidate your accounts with them.
The study ends with a little note which is quite comforting to me. It suggests that smaller, more independent firms should end up at an advantage in the adviser consolidation process because independent firms tend to utilize the widest variety of investment products and companies while adding value in the form of financial planning services. Hey, that sounds surprisingly like my own firm! The study does follow a very logical path. I hope they follow up with fund flow data in the next several years.
Russell Bailyn

Wealth Management
Premier Financial Advisors
14 E. 60 St. #402
New York, NY 10022
(212)752-4343 *31
*Study: “Winning the Battle for Retirement Assets: Wealth Management or Product Pitch Polemics?” by Matt Schott, research director at TowerGroup, a financial services research and advisory firm.
Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: NASD & SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.

2 thoughts on “Consolidating Adviser Relationships”

  1. Hi Russell,
    All the three segments, which you have mentioned, need or will need an adviser who can give good suggestion and make a perfect retirement plan.

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