Sign up to receive exclusive monthly wealthtech insights and interviews from our Chief Growth Officer, Jack Sharry. SIGN UP NOW

Why advisors should adopt an asset location strategy

August 19, 2020 Steve Zuschin By Steve Zuschin

We live in a “more” culture. Money. Happiness. Health. We’re programmed to always want more.

That’s what asset location provides. More.

Higher after-tax returns for clients. More revenue for the advisor and the firm. It’s a win-win.

Adopting an asset location strategy and adding the ability to quantify those benefits for clients adds tremendous value to an advisory practice. Not only will you generate more revenue per client, but your clients will have a clear understanding of the value you bring to the table. Value that goes far beyond the performance of investments.

“It’s the right thing to do.”

I recently had an advisor tell me they were unsure where the line is for their fiduciary duty and trying to help clients avoid unnecessary taxes.

Throughout most of 2020, people have been dealing with uncertainty in many areas of life. At the heart of that has been financial insecurity and confusion. Advisors that can easily communicate their value will come out on top as we look back on this era of socially distanced financial services.

It’s more than just about being good for your practice. It’s the right thing to do. 

Do you think you manage all your clients’ accounts? Think again.

Studies have shown that the average investor has accumulated between 6-7 accounts and has worked with 3 advisors. By the time they reach retirement.  The likeness that any one advisor is calling all the shots is unlikely.

If you don’t manage all the accounts within a household, you have constraints on your results. Held-away accounts are holding your clients back. This strategy gives you a leg to stand on when you ask for these held-away accounts.

Do your clients have a mixture of qualified and non-qualified accounts?

If your clients have multiple accounts with both qualified and non-qualified money, then they are the perfect candidates for an asset location strategy.

Implementing the strategy doesn’t have to be complicated. And it can improve client confidence tenfold.With tools like LifeYield, you can use a simple one-page summary to explain the household approach (one asset allocation for the entire household), then explain the long-term benefit of asset location optimization to each client. If there is an improvement to be made, this summary includes the Taxficient Score®, which is accompanied by the expected dollar benefit as the result of the shift.

By illustrating the enhanced value of a client’s portfolio over 10-, 15- and 20- years, you can validate that the client’s investments are heading in the right direction. The advisors that are embracing this approach have found that an asset location strategy results in better retention, increased referrals, and more revenue.

Steve is the EVP of Advisor Success at LifeYield. He's responsible for leading our Direct-to-Advisor channel and always keeps up on the latest advisor technology. Steve writes about how advisors can grow their business by building stronger relationships with clients and adopting new technology.