Defend Your Client Assets from Competitors with High Yield Cash
August 17, 2022
Have you ever heard someone say, “There’s many a slip between cup and lip?” Even if you haven’t, you’ll likely recognize the truth behind it. This old maxim highlights how life has a way of stealing expected outcomes, which is certainly true in the financial services arena where competition for client assets has never been fiercer.
By way of example, let’s say you have a long-time client who experiences a liquidity event—the sale of a business, inheritance, etc.—and they want you to invest the bulk of their windfall for them. Congratulations!
Before you get those assets transferred and the new account funded, however, a mega-competitor gets between you and your client, and those client assets end up in a brokerage or private bank associated with that mega-competitor. What happened?
How Do Competitors Target Your Clients?
Bankers are on alert for large pools of cash. Between realizing the gains from a liquidity event and investing them, those assets typically need to be “parked” for a short period of time prior to account establishment and investment. It’s not uncommon for a client or even an advisor to park them with a large national bank.
Most large national banks are affiliated with a brokerage firm and offer a wide variety of services that are often in direct competition with the independent advisors and RIAs with whom a client wants to invest.
When bankers recognize a large inflow or balance in a client’s checking or savings account, their account management efforts immediately begin processes to retain those assets for their institutions.
Given that, simply depositing funds in a pre-existing account or opening a transition account with another institution will very likely expose those assets to unnecessary competition.
What is High Yield Cash?
In recognition of this pitfall, AssetMark Trust developed the AssetMark Trust’s High Yield Cash (HYC) program to give advisors and their clients a smooth transition when parking assets for the short term.
High Yield Cash is an FDIC-insured enhanced solution for large cash balances, with FDIC insurance extended to up to $2.5 million and higher deposit rates offered at $100,000, $250,000, $1 million, and $10 million.
Why Do Advisors Prefer High Yield Cash Programs?
Competing against other independent advisors and RIAs is difficult enough; competing with the biggest financial services firms in the country is a challenge best avoided. So, how can an advisor minimize the potential of a competitor coming between them and their client (technically referred to as intermediation)?
By leveraging the HYC program, advisors are able to:
protect assets and clients from being targeted by marketing and sales tactics of other financial institutions;
own a simple transition process requiring only one transfer to fund clients’ investment accounts;
expend less time and effort while maintaining a seamless process; and
access the white glove service that comes with all AssetMark Trust services.
Designing a transition plan for portfolios that is simple and seamless helps support your firm’s customer success efforts and, ultimately, client retention.
How Do Clients Benefit from High Yield Cash?
While advisors find High Yield Cash simple and efficient, HYC appeals to clients for financial and practical reasons as well:
HYC offers competitive short-term rates to ensure clients earn interest on every dollar deposited; these rates have recently been raised in reflection of Fed actions.
AssetMark, Inc. ("AssetMark") is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses. The information on this website is for informational purposes only and is intended as an overview of the services offered to financial advisors, not a solicitation for investment. Information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change.
Advisors seeking more information about AssetMark’s services should contact us; individual investors should consult with their financial advisor.
AssetMark is an investment adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of AssetMark Financial Holdings, Inc. (NYSE: AMK) of which Huatai Securities Co., Ltd. is a controlling shareholder. Visit our ownership page for more information.