Why Every RIA Should Heed the Client Cash Accounts at Buckingham

In the “new paradigm” of wealth management, advisors and clients expect this.

(Chris Ratcliffe/Bloomberg)

(Chris Ratcliffe/Bloomberg)

A growing RIA that manages over $15.5 billion has added a new, streamlined service akin to a checking or savings account, a sign of a “new paradigm” in wealth management, the firm says.

Buckingham Strategic Wealth, a St. Louis-based Focus Financial Partners RIA, said Tuesday that all of its advisors would gain access to Flourish Cash, a new cash account service that leverages partnerships with a group of FDIC-member banks to offer an interest rate of 1.70%. The accounts have no minimum balance or fees, users can make an unlimited number of transfers, and it takes less than five minutes to open one.

Increasingly, RIAs are looking for ways to offer cash management and other services to differentiate from other wealth managers and meet clients’ demands. Almost half of all wealthy clients (49%) want a single financial institution to serve most of their needs, including investment management, financial planning and banking. But only one third of them are engaging a company that way, according to a report by Cerulli Associates.

Offering clients a cash solution that pays a higher interest rate than most checking or savings accounts is not revolutionary and some pay more than Flourish Cash, a brokerage account. Goldman Sachs’ Marcus savings account currently offers an interest rate of 1.70% and MaxMyInterest, or Max, a company that automatically moves cash to high-interest accounts and functions similarly to Flourish, offers a rate as high as 2.01%, according to the company.

Still, while many companies might like to, consolidating different services under one roof is a challenging task. Some go only as far as simple account aggregation and might fail to meet expectations in the future, Scott Smith, director of advice relationships at Cerulli, wrote in a report last fall. The account opening process, and the duty of managing it by the advisor, needs to be fluid and free of friction.

That was Buckingham’s goal and the RIA said it achieved that with Flourish.

Buckingham’s advisors can now invite clients to use Flourish through Salesforce. Clients receive an email co-branded by Buckingham and Flourish and their information is pre-populated. Once an account is opened, the Flourish Cash balances automatically affiliate with the correct household and feed directly into Orion, the reporting software used by Buckingham’s advisors.

Developers from all the companies collaborated on the integration, which streamlined the account opening process and eliminated the need for advisors to manually “map” Flourish accounts to a household in Orion – Buckingham’s system now does that for them.

“Those differences may seem nuanced but are actually a pretty big deal particularly in cases of large, distributed teams like BSW has,” Aaron Grey, an advisor and the Director of Planning Integration at Buckingham, said. The RIA has about 175 advisors in 35 offices and 21 states.

At Buckingham, an active advisor is intentionally put in charge of evaluating and improving the tools advisors use. Grey, who has held that role for more than two years, said more complex integrations, like the one between Buckingham, Flourish and other software providers, represent a “new paradigm” in the industry.

As advisors and clients raise expectations of their platforms they use, the platforms themselves will become more powerful and competitive.

“I think this is the start of the move from products to platform. Part of that is going to be additional products but part of that is the technology component and becoming an open system,” said Kelly Brewster, head of Client Strategies at Flourish.

Brewster began working on Flourish, a wholly-owned subsidiary of $15.8 billion alternative asset manager Stone Ridge, in 2017. The company launched Flourish Cash in January 2019, which is now used by more than 175 wealth management firms that manage more than $450 billion in assets, although a meaningful portion of that money is in retirement accounts. Roughly $250 billion in assets under management are non-retirement assets, Brewster estimated, making the addition of Buckingham’s approximately $15.5 billion relatively more meaningful.

He declined to share the total deposits but said Flourish Cash has experienced 58 consecutive weeks of deposit growth. Households using the service hold more than $250,000 in cash on average, the company said.

The cash management business was just the first Flourish “module” to launch. It plans to launch at least two more in 2020.

In a previous interview with RIA Intel, Brewster said the company was exploring what might be called “Flourish Home” to help investors to unlock equity in real estate they own, and “Flourish Gift,” a tool that investors can use to explore charitable causes and use to donate money.

“The vision for Flourish is really a platform for advisors upon which fit a number of different apps or modules that enable advisors to do all sorts of different things,” he said at the time.