Over Half of Retail Investors Prefer to Consolidate Their Financials to a Single Provider

June 14, 2022 — Boston

Wealth management providers must create an omnichannel experience that services clients’ wide-ranging needs

To optimize their competitive position in the marketplace, wealth management firms need to implement and maintain platforms that seamlessly offer support across a broad spectrum of client-facing options, according to Cerulli’s latest report, U.S. Retail Investor Products and Platforms 2022: Creating an Omnichannel Experience. Wealth managers will be well-positioned to capture greater walletshare by pursuing opportunities for innovation across technology and service levels.

The research finds that 74% of affluent respondents indicate that their current provider could serve all their financial needs and more than half (58%) express an interest in consolidating all investable assets to a single institution. At the same time, just 37% indicate that they use the same provider for cash management and investment services. “There is a sizeable opportunity for financial institutions to gather additional walletshare by becoming a one-stop-shop for all advice needs across the wealth spectrum of retail investors,” comments Scott Smith, director.

At a baseline level, this reveals an overall Consolidation Opportunity Gap (Expressed) of 21% of current clients who have an expressed preference for using a single provider but have yet to act. At least one-third of clients working with advisors in the full-service (37%), independent (35%), and wirehouse (33%) channels fall into this category. It is important for platform providers to recognize that their consolidation market is not only limited to those that have already expressed a preference for a single provider, but also includes those who believe their provider has the capabilities to serve all their financial needs—resulting in a potential total consolidation opportunity of 37% of clients.

Preference and Use of One Financial Institution by Primary Provider, 2021

Preference and Use of One Financial Institution by Primary Provider, 2021
Sources: Phoenix Marketing International, Cerulli Associates | Analysts Note: Consolidation Opportunity Gap - Expressed represents the difference between clients who would prefer to use one institution for all their financial business and those who have consolidated their investments and cash management relationships. Consolidation Opportunity Gap - Potential is the difference between those who believe their provider has the capabilities to serve al their financial needs and those who have already consolidated.

While provider platforms can serve core financial needs with at least some degree of personalization, it can be exceedingly difficult to convey these realities to clients and prospects, according to the research. In most cases, if an investor has even a baseline knowledge of a firm’s existence, they have already formed an opinion of what the firm does and are not particularly interested in finding out more unless they have a need for that product or service. “This emphasizes the benefit of initiating long-term relationships early in investors’ financial lifecycle, thereby creating the opportunity to reinforce firms’ capabilities as clients’ needs evolve,” says Scott Smith, director. “Relationships focused on transactional banking, brokerage, retirement plans, and employee stock ownership programs can all be strong starting points for these relationships.”

Ultimately, constructing and maintaining an omnichannel platform to deliver comprehensive wealth management solutions will require providers to center their strategy on creating a seamless experience that meets client preferences. “From the breadth of each relationship to which communication methods investors are using, each step in the client journey is fundamentally determined by decisions made at the household level—not the boardroom,” says Smith. “While every firm must decide the exact mix of resources, services, and products they feel are best suited to serve their target market, the key factors in maximizing addressable investor markets are universal: prospective clients want easy access to customized advice that puts their best interests first in pursuit of their long-term financial goals,” concludes Smith.

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