Asset Diversification, Allocation, Location, and AGGREGATION


Originally published over at My Journey to Millions, Evan’s letting me re-print the material on my own site.  The benefit for me?  More time to spend on wedding planning, but keeping the site fresh.  Tonight was a rip-roaring good time at the local alcohol wholesaler.  The benefit for Evan?  More time being a new father, and getting link backs.  It’s a win-win for all!  Enjoy the post. :)

A while back, the local supermarket ran a promotion with Cuisinart. Collecting “points” with each purchase, customers traded their stickers in for various products. At the time, I was bouncing between two stores, but switched to focus all my grocery efforts on this promotion. The store got a regular customer and I got a sweet 8-cup coffee maker and not-so-sweet waffle maker (either its broken or I’m just that bad at making waffles).

If asked for your own example of customer loyalty, what would you give? Free months of phone service, flight upgrades to first-class, special hotel accommodations?

Most would probably think along the lines of a consumer, yet investments are an often overlooked area. Many of the same benefits for becoming a loyal customer in the consumer arena apply to the world of finance. Just as the grocery store was hungry for my purchases, so are financial institutions hungry for your investments.

More of a long-term plan, “Asset Aggregation” doesn’t get the same amount of discussion as say, Asset Diversification or Asset Allocation. Plus, it’s probably not the first thing to come to mind unless you’ve got a few extra zeroes in your account.

Let me clarify. There’s really two camps: private wealth management and discount brokerage

preferred clients. Private wealth management refers to the full-service operations within organizations like: UBS, Deutsche Bank, & Morgan Stanley, who cater to families/individuals with assets of $20 million or greater. Premium client status offered by discount brokerages fall within bands ranging from $100,000 to $1+ million in assets.

For the purpose of this article, we’re going to look specifically at the discount brokerage services. Nevertheless, there are still 3 primary benefits to asset aggregation as I see it: savings, privileges, and throwing your weight around.


Would you believe Vanguard’s already rock-bottom fees could get even lower? For an easy example, the expense ratio is HALF as much for the 500 Index Admiral shares (0.09%) than the 500 Index Investor shares (0.18%).

Looking at Vanguard’s service breakdown, you’ll notice the words “free” a lot more moving farther right on the chart. For a personal investor, a financial plan will run you $1,000. If in one of the top-two tiers, that service is free to you.

Of course, they’re trading fees aren’t the cheapest – you can still see how they drastically reduce through asset aggregation ($25 vs. $8 per trade).


Sometimes it may not be about the money directly, but indirectly. T. Rowe Price offers free memberships to Morningstar and Wall Street Journal. Those can be hefty subscriptions on the open market!

More interestingly, you’re granted special access to funds currently closed or stocks not yet on the market. Fidelity offers its select clients the ability to purchase initial public offerings (IPOs) that it, or any of its affiliates, underwrites.

Many of the organizations offer dedicated representatives. Having your own “bat phone” to call your broker directly could be useful, but I think it’s a somewhat inflated privilege. I would think firms aim to provide exemplary service at all service levels.

Throwing Your Weight Around

It’s always important to remember that you own your own money. Sounds silly right? About how often do people gripe about fees they pay and end up sticking with the institution?

One of the best stories of weight being thrown around was a friend from high school. After a car accident and during the phone call with the insurance company, the rates were going to skyrocket due to the accident, my friend’s gender, and relative age. The family had been with the insurer for many years and had all of their insurance with the group. The dad, a lawyer nonetheless, bluntly explained that he would promptly be leaving (along with all of his business) if his son’s rates increased.

While every account closed means less business, companies will shed a few extra tears if a big fish leaves their pond and will try to do whatever they can to retain them. This is where the empowering feeling of wealth comes in – you can finally appreciate that these companies need you, not the other way around.

In closing, asset aggregation can still be a consideration even if the assets aren’t there yet. When researching new institutions, look beyond the specific product you’re after and see what other services are offered. Will they afford you opportunities to grow within the company, or like the hermit crab, will you have to leave the old shell to find a bigger, better one?

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4 Responses
  1. Hi, One important consideration when dealing with an advisor of any variety is “how is she/he getting paid?” If the advisor makes money on commissions, they have an incentive to encourage you to trade, if they take a percentage of your assets when managing your money, the advisor has motivation to grow your wealth. That said, put your investing dollars in a diversified mix of low cost index funds and you likely will beat the returns of most “advisors” recommendations.

    1. Fin Engr

      @ Barb:

      Compensation seems like the #1 rule to consider before going with any advisor. I’m surprised people still go with commission-based ones. I’m sure these are topics you’re covering in your class? Hope it’s going well!

    1. Fin Engr

      @ Financial Samurai:

      Yes, definitely. Simply threading water right now. Don’t get the teachers reference, but guessing there’s a story behind it.

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