Achieving a Holistic View of Client Assets Through Unified Managed Householding Is a Key Focus for Advisors in 2023
February 3, 2023 — Boston
As financial advisors seek to differentiate, aggregating on a household level is one way to provide a better client experience
As fee-based financial advice combined with financial planning becomes the industry standard for wealth managers, financial advisors must find new ways to differentiate their practice. According to the latest Cerulli Edge—U.S. Advisor Edition, aggregating client relationships on the household level is one way to achieve this objective, improving the client experience by creating more efficient tax outcomes and greater opportunities for portfolio customization.
The potential benefits of householding and the stronger outcomes it can create are apparent to wealth managers. According to Cerulli, 22% of wealth managers said consolidating to a unified managed household (UMH) is a significant priority, with half reporting it as a moderate priority for their firm moving forward. This comes as wealth managers continue to shift toward fee-based assets and away from transactional brokerage relationships and consolidate accounts from multiple sources.
The UMH is steps beyond the account-level aggregation of the unified managed account (UMA) and considers not just the client’s financial picture, but also that of their entire household. The UMH takes all assets, accounts, and holdings from a household and coordinates them to ensure the best possible financial return across the household. “Householding gives financial advisors an additional opportunity for customization best suiting the needs of their clients while adding the tax savings clients desperately crave,” says Matt Belnap, associate director. “Advisors who can implement a household level view have a better chance of standing out from their peers and retaining client assets,” he adds.
The crux of the UMH is asset location, algorithmically determining the best place to allocate client assets. “This builds upon something many advisors already do in an ad hoc manner; for example, placing income-producing securities in qualified accounts to minimize taxes,” says Belnap. “By systematizing this process, and by combining that with other strategies such as tax-loss harvesting and intelligent rebalancing, householding through a UMH can create better outcomes for clients,” he concludes.
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