Advisors’ assessments of their high-net-worth clients’ cash holdings can diverge wildly from the reality of those held-away liquid assets, which could spell a massive untapped opportunity, according to new research by Flourish.
The fintech firm’s study, done in partnership with Wealth Management IQ, draws from a survey of 750 advisors primarily from independent RIAs, which was conducted from August 20 to September 5. All in all, the advisors surveyed managed over $1.5 trillion in assets.
The report, Client Cash: Mapping an Unexplored Opportunity, found that while advisors estimate their clients keep 7 percent of their net worth in cash, the figure actually exceeds 30 percent.
Despite recognizing the critical nature of discussing cash management – with 95 percent of advisors acknowledging it as part of their professional duty – just 5 percent said they actively offer solutions or engage in conversations about their clients’ cash reserves.
Interest among clients in earning higher yields on their cash is strong, with an overwhelming 92 percent of advisors reporting their clients’ interest in high-yield savings accounts.
A smaller majority of advisors believe providing cash management services would enhance their competitive edge not only against other advisory firms (71 percent) but also against wirehouses (68 percent) and robo-advisors (62 percent).
“The crucial insight of this survey lies in the significant disparity between the number of advisors recognizing the responsibility to advise on cash and those actually providing solutions or engaging in discussions with clients,” Flourish CEO Max Lane emphasized in a statement.
According to Lane, 70 percent of surveyed advisors are convinced that the chance to earn 4 percent
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