Written by: Peter Stanton | Advisor Credit Exchange
Advisors who are not in cash management today risk losing clients to those who are already expanding their offerings in this direction.
In the age of fintech, advisors have options available that can make it simple to provide clients with access to cash management solutions such as funds transfer, check writing, bill pay, digital services, cash deposits, cash alternatives and more. Why might clients be interested in a checking account option from advisors? For starters, we are talking about their cash. This has always been a driver in the day-to-day financial decisions of clients, and it stands to get more attention during the current climate of rising interest rates.
Here are three additional reasons why advisors should consider offering cash management solutions to their clients.
Enhancing Client Relationships: By offering cash management solutions as part of a financial planning ecosystem, advisors can provide a more comprehensive and holistic approach to their clients' financial well-being. Cash management services can help clients optimize their cash holdings and maximize returns. This can improve client satisfaction and strengthen the advisor-client relationship. It can also enable advisors to add additional value to their clients' financial plans.
By actively helping clients manage their cash effectively, advisors can deepen their impact and provide personalized strategies that align with clients' specific goals and objectives. This heightened level of service strengthens the advisor-client relationship and positions the advisor as a trusted partner in their clients' financial journey.
Competitive Advantage: As fintech companies, and increasingly traditional wealth managers, continue to innovate and offer cash management tools directly to consumers, advisors focused solely on investments face increasing competition. By incorporating cash management solutions into service offerings, advisors can differentiate themselves and provide a more comprehensive suite of services.
This can attract new clients and retain existing ones, ensuring a competitive edge in the evolving financial landscape. By staying ahead of the competition and offering robust cash management options, advisors can secure their position as trusted financial partners and remain competitive in the dynamic marketplace.
The Next Generation: It’s no secret that the “Great Wealth Transfer” is ongoing. From 2018 through 2042, Cerulli Associates projects that nearly 45 million U.S. households will transfer $70 trillion in wealth to heirs and charity. Roughly $61 trillion of the transfer will be passed on to heirs—mainly the households’ children.
These children don’t get excited to hear an advisor is really good at fixed income. Instead, they are more likely to ask an advisor: “What can you do with my money today?” They have grown up on cell phone apps offering instant services and won’t likely waste time on an advisor who sends them down the street to do their banking.
Bottom Line: Don’t Become a Dinosaur
By offering these comprehensive solutions, advisors can simplify their clients' financial lives and strengthen their relationships – and also be in a better position to build new relationships with their clients’ children. This is the type of innovation enabling today’s forward-thinking advisors to meet clients' evolving needs. Down the road, advisors not offering cash management options may indeed go the way of the dinosaurs.
Peter Stanton is CEO of Advisor Credit Exchange, which is a technology-empowered network that brings together lenders and wealth managers, enabling investment firms and advisors to deliver financing solutions to build their clients' net worth and meet their financial goals.
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