Capturing Client Assets

The Most Important Metric You Probably Don’t Track

According to the Kehrer Bielan 2017-2018 Bank Broker Dealer Report, the typical advisor in a bank broker dealer increased production by 6.1% last year to $471,818. While that closely-watched metric was evidence of a strong year, it was inflated somewhat by the outsized increase in the value of assets that generate recurring income. However, another, often overlooked, metric pointed to an even healthier gain. The typical advisor affiliated with a bank-owned broker dealer acquired $10.2 million in new assets last year, up 10% from $9.2 million the previous year.


Perhaps more importantly, 29% of those assets were in fee-based accounts, which will generate revenue for the next several years.

This metric is becoming an increasingly important indicator of which advisors, and firms, are winning the quest to become dominant primary advisors to their clients. While the fee and pricing competition works itself out, the firms that capture and retain client assets are positioning themselves for the future. Net new assets might be the most important metric for us industry watchers to track these days.

Unfortunately, the bank BDs, and their clearing brokers, aren’t yet ready to track metrics like this. Their systems were built to track the lodestar of revenue, not to track how much a client added to an account, or how much a new client invested, let alone how much leaked out of accounts, or transferred to another firm.

As the share of assets in fee-based accounts increases – it reached 15.4% last year -- the changes in market valuation of those assets confounds our ability to understand the extent to which an advisor or firm is adding or losing client assets. The bank insurance and investment community would be well-served by technology advances that would improve tracking of these important metrics.

The 2017-2018 Kehrer Bielan Bank Broker Dealer Survey covered 29 of the 32 largest bank-owned broker dealers, which collectively employ 7,861 financial advisors. This year’s survey was sponsored by Midwood Financial. 

As a wholesaling and training organization, Midwood has responded to the industry’s movement toward a fiduciary model by employing only Series 7 licensed associates. Midwood’s success is derived from the ability to continuously match financial institution partners with the solutions they want and the resources they need. Midwood takes pride in being a satisfaction leader, consistently earning high marks on:

 

For more information, please contact Alan Blank at: ablank@midwood.com

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