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 “It’s not what you look at that matters, it’s what you see.” — Henry David Thoreau

According to a recent survey by Certified Financial Planner Board of Standards, Inc., 91% of consumers expect that the advice they receive from a financial advisor will take into account their total financial situation.  Yet, many advisors are still myopically focused only on managing their client’s assets.  This renders them unable to serve the 70% of consumers who prefer an adviser who has the ability to look at their whole financial situation, as reporting in the same survey.

Advisors without the proper tools will be unable to prepare a comprehensive financial plan that incorporate not only a client’s investments but also their taxes, insurance, retirement, education planning and budgeting of everyday

Consumers have become used to comprehensive views of their financial lives through free personal finance manager software such as, and Personal Capital.  All of which offer a centralized, holistic view not only of a consumer’s investments, but also their checking account, credit cards, even their PayPal balance.

Not only do they provide a simple display of the data, they also analyze it and provide consumers with recommendations.  Of course, most of these recommendations generate commissions for the websites, but that’s what subsidizes the service and enables it to be delivered free of charge.  And consumers don’t seem to mind. Mint has over 10 million registered users, tracks $80 billion in credit and debit transactions and almost $1 trillion in loans and assets.Toolbox Financial

In case you were reading too fast, that was trillion, with a ‘t’.

While these integrated services are gathering AUM and have become ubiquitous on the Internet, a household-level view of a client’s financial world is still elusive for many advisors.  The majority of advisors are employed by broker-dealers and do not have much choice since the home office controls the firm’s technology solutions.   This prevents the type of data aggregation, performance measurement calculations, and customizable data visualization that advisors could provide their clients to catch up to what is being offered online.

A reasonable first step for home offices would be to provide their advisors with access to a client’s held-away assets, from anywhere they may reside.  The market for aggregation software is crowded and most vendors have built out impressive infrastructures made up of automated connections to over 10,000 financial institutions.

Smart advisors could leverage knowledge of outside assets in any number of ways.  Large cash balances in low-yielding checking accounts can be migrated into money markets, municipal bond funds or Treasuries.  Equity holdings can be replaced with index funds that mimic returns with lower risk.  Some aggregators even provide a window into 401(k) accounts where advice can be provided on asset allocation or mutual fund selection.

All of these options increase the client’s perception of the value of their advisor, which will reduce turnover, increase referrals and improve the chances of consolidating assets currently held at competitors.

A holistic view of a client’s entire financial picture will soon become table stakes in the fee-based advisory market.  What consumers now receive for free online will come to be expected from the advisors they are paying 150 basis points or more.  Rich rewards await those advisors who not only look at their client’s accounts, but who can truly see and manage their wealth at the household-level.

3 Responses

  1. Craig,

    There are significant institutionalized inefficiencies in the retail product distribution model that preclude the brokerage format from supporting advice and fiduciary standing in the best interest of the investing public. Mint, Personal Capital, et al have none of the self imposed barriers to entry in supporting advice which as you imply render conventional brokerage obsolete. The personal initiative of advisors at the encouragement of you and others has resulted in many searching for professional standing presently not supported by brokerage and custody utilities to include roll-ups.

    The industry redefining question you raise is where do brokers and advisors turn to for support of expert fiduciary standing? There are no b/ds or custodians that acknowledge or support the fiduciary standing of its brokers or advisors. There is no large scale institutionalized support for expert fiduciary standing. A new generation of support is required which is built around (a) an expert prudent process (asset/liability study, investment policy, portfolio construction, monitoring and management) which makes advice safe to acknowledge with an audit path to statute to prove it, (b) advanced technology is required that (i) supports continuous comprehensive counsel, (ii) provides transparency, (iii) streamlines cost, (iv) advances modernity in portfolio construction, all required by statute, (c) work flow management tied to a functional division of labor (Advisor, CIO, CAO) which makes advice (I) scalable, (ii) easy to execute and manage, (iii) as a high margin business at the advisor level.

    The reason why large scale institutionalized support for fiduciary standing does not exist is the consumer’s best interest is in conflict with the industry’s best interest. This is self defeating behavior. There is no complexity other than industry’ self interest. The inconvenient truth is that advisors have a far superior value proposition at a lower cost to the consumer and higher margins to the advisor than is possible in a brokerage format. This is largely achieved through a more modern approach to portfolio construction. The reason why the brokerage format will not evolve is that its skill set is in sales and marketing of high cost products, not in portfolio construction for which they are not accountable or responsible. Thus, when investors discover they can get less expensive far superior advice from advisors who are accountable and responsible for their recommendations. In a free market the advisor wins every time because the broker is not allowed to render advice in violation of their b/ds compliance protocol. Pretty simple. Brokers neither acknowledge nor support advice.

    Fiduciary Advisor Advocates (FAA) is one resource emerging to help advisors actually control their value proposition, cost structure, margins and professional standing. FAA is the point of the spear in addressing institutionalized inefficiencies that thwart professional standing. There needs to be other such organizations emerge which are unequivocal in the support of expert fiduciary standing and advisory services as a high margin business at the advisor level.


  2. While is very useful for consumer account aggregation, what do you think about the promotions and upsells delivered by Mint?

    How closely should advisors manage the relationship with clients? Is it enough for advisors to simply tell clients to ignore the promotions?

    Why not investigate alternative aggregation solutions where the advisor can private-label the aggregation dashboard and reinforce their advice and collaboration, not third-party credit card promotions?

    Guide Financial is one solution advisors can consider: