Home Investments Asset Aggregation May Be Just as Important as Asset Diversification or Allocation

Asset Aggregation May Be Just as Important as Asset Diversification or Allocation

by My Journey to Millions

Pot of Gold

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.

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).

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.

What is Asset Aggregation?

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 when it comes to Asset Aggregation: private wealth management and discount brokerage.

  • 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.
  • Discount Brokerage Services

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.

Benefits of Aggregating Your Assets with One Broker


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 levels.

Throwing Your Weight Around

It’s always important to remember that you own your own money. Sounds silly right? Yet how often do people gripe about fees then 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. They didn’t.

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

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?

This is a Guest Post from FinEngr of Engineer your Finances

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Darren 04/15/2010 - 12:51 pm

I never actually heard of asset aggregation until now. I guess if I hit “premium client status,” it would be with the discount brokerage camp.

I was aware that Vanguard’s admiral shares are cheaper than it’s investor shares, but I’m not quite at the point of having enough assets to reach that status yet.

Good reminder about being able to throw your weight around if you’re a big fish. Companies want YOUR business, not the other way around!

FinEngr 04/15/2010 - 7:11 pm


The pebble starts the avalanche – someday you’ll be there and have to worry about it! Just like with savings, you have to see how that $100/month contribution will grow over time.

It’s harder with the Admiral shares b/c you need that $100k within the fund whereas becoming a premium member only requires you to have $100k total within Vanguard.

Even if your not a big fish, that’s no reason for someone to forget who works for who. Nature has developed techniques for animals to appear bigger than they are, and we have our own – negotiating.

Evan 04/15/2010 - 7:20 pm

While you might not have the assets to be in the top of the top – I know at some places debt counts (which is kind of weird).

For instances my mortgage is with HSBC and I get all sorts of offers from them lol

FinEngr 04/15/2010 - 7:23 pm

Well, not entirely weird. Whether you’re paying mortgage interest or fund expenses, it’s all business for them.

Evan 04/15/2010 - 7:26 pm

Granted, but aren’t I, as a debtor, a different type of client than a guy with 100k in investments? Although I guess they are making more off of me lol

Financial Samurai 04/16/2010 - 12:31 am

Ah, the joys of having more money to gain more money! It’s the way life works.

Best, Sam

FinEngr 04/16/2010 - 9:12 am

Having more money opens up more opportunities in all regards – what type of activities you put your children in, what kind of vacations you take, what type of investments are available to you.

It’s good to see more client promotion on the discount brokerage side. It closes the gap between exclusive hedge funds / pwm benefits.

Financial Cents 04/18/2010 - 8:29 am

I definitely see value in asset aggregation! Privileges, savings, the ability to throw your weight around are all good…but what about simplicity for you, the investor or owner of investments, policies or other financial holdings? Regardless if you take advantage of private wealth management or are a DIY investor (via the brokerage route), this is certainly a huge positive, the ability to centralize assets. Good post and thanks to your guest!

FinEngr 04/18/2010 - 9:28 am

Financial Cents:

Indeed, centralized investments is yet another example. There’s a range of benefits: from changing your account when you move to reducing the amount of year-end information you receive during tax season.

FinEngr 05/06/2010 - 10:18 am

An update from Vanguard:


Now even more incentive to keep on asset aggregating!


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