Cannon Financial Institute

Unique Assets: Hidden Half of Your Clients’ Wealth


Let me start this article with a statement you'll likely think cannot possibly be true: most trust professionals routinely ignore half of their affluent clients' assets.  Let me say that again for emphasis: most trust professionals routinely ignore half of their affluent clients' assets

Your clients own assets that do not trade on any stock or bond exchange, that have no CUSIP number, that are not sold to investors by Fidelity, Merrill Lynch or Charles Schwab.  I call them “unique assets” and by the term mean investments that originate not on Wall Street but on Main Street – things like real estate; interests in privately-owned (usually family owned) businesses; mineral oil and gas interests; life insurance; farms and ranches; loans and notes; and collectibles. 

Even though you won’t find unique assets much discussed on CNBC or in the Wall Street Journal, they are anything but an afterthought to their owners.  Below I will share with you data from the Internal Revenue Service that suggests unique assets represent roughly half of the assets of high net worth investors.  50 percent!

If you read Superman comics growing up, you may remember this guy: Mr. Mxyzptlk, a character from a “parallel universe” where things were sort of like ours, but different.  Well, you can think of unique assets as belonging in a parallel universe.  Their owners care about them deeply -- but most advisors seem unaware they exist, let alone take it into consideration when giving financial advice.   Certainly Fidelity never speaks of unique assets, or Merrill Lynch, or Schwab, or TD Ameritrade, or any of the other money management firms that advertise during the Super Bowl.

Yet to their owners, unique assets are hugely important.  Moreover their owners have very predictable needs and they have those needs at predictable times in their lives.  Trust professionals who understand this and who offer solutions (and without much effort, any trust institution can) will enjoy tremendous opportunities to differentiate themselves in the marketplace, attract high net worth prospects, and uncover rich opportunities to provide their core services. 

Now let's take a deeper dive into the world of unique assets.  The bar chart nearby is drawn from analysis the IRS does every year of estate tax returns filed the prior year.  The IRS slices and dices the data in those returns many different ways.  This chart shows the assets owned by the decedents as listed on estate tax returns filed in 2014.  This is a glimpse of the investments of America’s wealthiest investors – in other words, your institution’s best clients and prospects. 

The left-most column shows smaller estates – those worth $5 million or less.  The right-most column represents the assets owned by estates worth $20 million or more.  As you move to the right you’re moving up the wealth spectrum.  Each column shows the three asset classes most frequently mentioned on the estate tax returns.  Liquid assets – stocks, bonds and mutual funds, shown in orange – represents 46% to 52% of the decedents’ investments.  When I first saw this chart, I wasn’t surprised that liquid assets were the single biggest asset class; but I was surprised that liquid assets represent ONLY HALF of the portfolio of millionaires.  I would have thought those kind of investments represented 80%, maybe 90%, of their investments.

What about the other half?  Real estate (shown in grey) and other “unique assets” (shown in blue) constitute roughly half of the affluent’s investment portfolios.

The reason to care about  unique assets is because to your best clients and prospects, they are just as important – just as valuable – as their stocks, bonds and mutual funds.  Yet in my experience, most advisors focus primarily on their clients’ traditional investments and ignore their unique assets.

Advisors who understand how important unique assets are to their owners have a tremendous opportunity to differentiate themselves in the marketplace and attract a lot of affluent prospects.  The reason is because most people believe investment advisors are pretty much the same – a commodity service.  And how can you blame them?  Every time they turn on the TV, there is an ad from Fidelity, or Schwab, or Merrill Lynch, or New York Life, or MassMutual – and every one of them says they are great asset managers.  Laypeople have no way of telling who is telling the truth, so they conclude they’re all the same. 

Pretty much any investment advisor will help people invest in stocks, bonds and mutual fund, but almost none of them offer unique asset expertise.  As you’ll see in a minute, unique asset owners have very predictable issues at very predictable stages in their lives that keep them up at night.  But how many advisors are out in the marketplace saying they can provide the help those owners need?  The answer is – not many.  Unlike what seems like an infinite number of firms vying to manage liquid assets, few if any are offering to provide unique asset help. 

Let me make an analogy.  I’ve lived in Annapolis Maryland, on the Chesapeake Bay, for close to 40 years; and I’m a history buff.  You may have heard of the explorer John Smith, of Pocahontas fame.  John Smith was one of the first Europeans to explore the Chesapeake Bay.  If you read his diary from that voyage, he talks about sailing up the Bay and seeing fish and wildlife in such abundance, he literally couldn’t believe his eyes.  I believe advisors who become known among their clients and prospects as a source of unique asset solutions will find the field entirely to themselves, just like John Smith found the Chesapeake Bay. 

So what kinds of issues do unique asset owners have, that you might be able to help them with?  And how does it follow that by helping them, you can tee up opportunities to grow traditional assets under management?  Great questions.  Let’s start by spending a few minutes getting to know the most common unique asset types; the issues their owners have, and how you can take advantage of this information. 

This chart is drawn from a survey my firm conducted in 2013 of 47 trust institutions, focused on how they administer their clients' unique assets.   This chart shows how widely held each unique asset type is.  For example virtually 100% of the surveyed banks reported holding real estate-related unique assets, followed by closely-held business interests, minerals oil and gas, etcetera. 

I think it is safe for us to conclude that the distribution of unique assets held by the surveyed institutions is reflective of the frequency with which these assets are held by affluent individuals in the general population.  So for example, likely more than half of your wealthy clients own stock in a privately owned business.

Now let’s talk about the kinds of issues unique asset owners face, and when.  Perhaps the best way to explain is to describe a hypothetical unique asset owner whom I’m going to call “Mr. Unique A. Owner”.  Mr. Owner is a very successful business owner -- 70 years old and still very active.  For this illustration, let’s assume he’s made his fortune developing four or five apartment complexes in his home town.  He not only developed them, he’s still actively involved.  Here are some of the things he does to protect and grow the value of his properties:

  • Pay property taxes and insurance;
  • Conduct annual inspections;
  • Provide leasing services (including collection of rents);
  • Supervise contractors (for example, lawn maintenance, asbestos removal, etc.); handle asset sales;
  • Process distributions;
  • Vote shares for annual meeting and other corporate actions; and
  • Periodic asset valuation.

Is there anything you or I could tell Mr. Owner about how to develop and manage apartment buildings? No – he’s much better at it than we are.  We have nothing to offer at the moment that he would consider valuable. 

But sooner or later, something’s going to happen to Mr. Owner and he’ll no longer be able to do what he’s been doing for decades.  He’s going to die or get Alzheimer’s or want to move to Florida where it’s not so cold in the winter.  The question that worries him as he’s lying in bed at 2am is, who will step into his shoes and do what he’s been doing to protect and grow the value of these properties once he no longer can?

By the way, don’t waste your time suggesting he sell the properties and invest the proceeds in traditional investments -- that’s not going to happen.  Mr. Owner feels emotionally attached to these properties, and so does his family.  They’ve proven to be fantastic investments.  Furthermore he believes Wall Street is a den of thieves that he doesn’t understand and really isn’t interested in entrusting his financial future there.  These properties are not going to be sold for a long time.

Let’s put ourselves in the mind of Mr. Owner as he ponders the question “what is going to happen when I can no longer manage this stuff?”  So he goes down a very short list of people he trusts who might possibly step in for him. 

First possibility on the list is his spouse.  Is that a viable option?  Probably not.  Mrs. Owner is typically not as experienced as he is at property management.  And even if she is, she is just as old and isn’t growing any younger.

What about the kids?  Mr. Owner has four kids.  Two are in medical school.  One lives out of state.  The fourth still lives at home, but (let’s say it politely) he has “issues”.  None are appropriate choices to provide the skills Mr. Owner has been providing.  While there are exceptions to the rule, generally speaking the kids are not qualified to, or interested in taking over when Mr. Owner steps down.

Who else could do it?  What about his trusted advisors?  He’s been using the same attorney for 30 years and trusts her completely.  But while his attorney is great at the law, how much does she know about property management?  Not so much.  And the same goes for his CPA, and for his financial advisor. 

That constitutes the entire list of people on Mr. Owner’s list of possible replacements.  Unless you intervene, he’s probably not going to do anything; and then after he’s gone, the family will have to use Craigslist to find somebody, and keep their fingers crossed they won’t be ripped off.

What if instead you were to say to Mr. Owner, “You are doing great managing your unique assets, and I’m sure you are going to keep at it for many years.  But when the day ever comes where you can’t (or don’t want to) do it any more, know that my trust institution works with service providers who can provide those services too.  Isn’t it good to know that if you (or more likely, your family) ever needed them, that we can step in and do what’s necessary to preserve and grow the value of these assets?”  Would Mr. Owner be happy to know you offer this solution?  Would his spouse and kids appreciate it?  Absolutely. 

You can use this future benefit to attract the owner’s more traditional assets today.  I suggest you require those who plan to use your unique asset services in the future, to open up an account today with (say) a minimum of $1 million in liquid assets.

I cannot emphasize enough how many Mr. Owners there are out there, and how frustrated they are with the status quo.  They can't turn on their TVs or fire up their Internet browsers without being bombarded by ads from money managers; but not one of those advertisers wants anything to do with unique assets, just the liquid stocks, bonds and mutual funds.  Think how excited these people would be to know that not only is your firm skilled with traditional investments, it also is skilled with unique assets.  What a way to differentiate yourself from the competition!

Before I go any further, let me address something I know is on your mind.  Right about now you are probably thinking: "Brad, are you nuts?  Our organization offers traditional trust services, not unique asset services.  We don’t manage office buildings, or perform business valuations, or help landowners negotiate leases with oil companies.  Even if we agree that unique asset owners would find those services valuable, how can I say we offer such solutions?  And even if I did offer those services, how would that lead towards the result I want, namely to attract more traditional liquid assets?" 

These are two great questions.  Let me answer them now.  As to the first - how can you offer unique asset services when you don't do them yourself?  Simple: build a Rolodex of niche service providers who can provide the administrative services your clients need for their specific unique asset.  For example if they own a strip shopping center, they may need a property management firm.  If they own a mineral interest, they may need a “landman” skilled at negotiating leases with drilling companies.  If they own timber, they may need the services of a forester.  I will tell you that there are dozens of niche service providers operating in this space but they are hard to find -- they are typically small outfits that market using only “word of mouth”. 

You can do vendor research and due diligence yourself; or else just call Unique Asset Partners (  UAP maintains a directory of service providers we recommend.  So whenever you have a client needing a specific service, we can give you the names of some firms you should interview.

And to the second question, how does all this effort increase traditional assets under management?  I think you already have some ideas, but let me suggest three:

1.  Distinguish Yourself from Competitors.  Earlier I expressed my opinion that for most people, investment managers seem pretty much the same.  You and I both know there are huge differences but unless you are in the business, it is really hard to tell who’s good and who’s not.  To the lay person they all sound pretty much the same.  And they all want to do the same thing: tell you how to invest your money – that is, your liquid assets.

None of these financial advisors ever even mention unique assets, let alone suggest how owners can solve the issues that keep them awake at night.  So if you decide to market yourself as a unique asset solution provider and get known as such in the marketplace, the first benefit you will enjoy is a clear point of differentiation from all the other financial advisors out there.  In a few minutes I will suggest three steps you should consider to establish your brand in the marketplace.

2.  Meet the 1%.  What trust professional has too many millionaire clients?  What trust professional would not like more such clients?  Then you should be interested in any approach that creates opportunities for meaningful conversations with these prime prospects.  Again, since mainly millionaires own unique assets, positioning yourself as a unique asset solution provider will attract them and create plenty of chances to have conversations with them.  Because none of their existing advisors have ever discussed the topic (let alone offer solutions), they likely will be only too happy to share their needs with you, and seriously consider whatever solutions you may suggest.

A corollary to this point is that millionaires tend to be friends with other millionaires.  Once you start helping clients solve their unique asset issues, it won’t be long until they start talking about you to their friends at the country club.  Expect your phone to start ringing with prospects of exceptional quality. 

3.  Identify unaddressed issues you can solve.  Invariably owners have never had their unique assets properly valued (or at least haven’t had them valued recently).  My background is in business valuation and it is my experience that owners tend to mis-value their unique assets by orders of magnitude.  It may be worth $X but the owner thinks it is worth 3X, or 1/3X.  Knowing the asset’s real value is necessary in order to decide whether it (or its owner) is sufficiently insured; whether they have an estate tax issue; whether their portfolios of liquid investments may need to be rebalanced; and other similar questions. 

To recap: if you want to (i) distinguish yourself from the competition, (ii) meet the 1%, and (iii) identify issues you can solve; then position yourself as a unique asset problem solver.  Here are three steps I suggest you follow to position yourself:

1.  Educate yourself about unique assets, the issues they create, and what services are required to solve those issues.  A good place to start is an article I wrote in the June 2015 issue of Trusts & Estates magazine entitled “Unique Asset Administration”.  (Send an email to and I’d be happy to send you a free copy.)  A popular resource used in the trust industry is a 200 page guide I wrote in 2014 entitled the Unique Asset Road Map.   The Road Map and related consulting services are described at our website also.

2.  Identify service providers who can provide solutions to unique asset problems.  Assuming your clients’ unique assets are located in your community, in many cases the service provider will need to be local (for example, a local property management firm is usually the best choice to manage a local apartment building).  Certain other unique asset types can be handled by out-of-town service providers.  Again, Unique Asset Partners maintains a stable of approved vendors so we can be a good resource for you.

Related to this, you may want to consider a fee arrangement in which the trust institution passes along any vendor charges to the client, and charges a separate supervisory fee pegged to the asset’s market value.  (In other words, identical to a mutual fund manager charging a fee to manage the mutual fund, and you charge an asset management fee on top of that.)

3.  Finally, let “centers of influence” know you have unique asset expertise.   CPAs, estate attorneys and trust officers whose clientele include high net worth individuals will be particularly interested in hearing about what you can do to help their clients address their unique asset issues.  Take them to lunch and let them know what you can do.

In conclusion:

1.  The world of unique assets is every bit as large, every bit as valuable, as the world of stocks, bonds, mutual funds and other traditional assets.  Yet trust professionals don’t even discuss unique assets, let alone help their clients who own them solve their problems.  This creates a golden opportunity for you to differentiate yourself from your competition.

2.  Unique asset owners have predictable needs at predictable times in their lives.  Let them know you have the solutions they require, and they will beat a path to your door.  There’s no more effective way for you to generate a steady stream of millionaire referrals than to get the word out that you are a unique asset solution provider.

To learn more on this topic, register for our Unique and Hard to Value Asset Management course or learn more about our other offerings at

Copyright ©2015 Brad Davidson - All Rights Reserved

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Brad Davidson is Managing Partner of Unique Asset Partners, a “one-stop shop” providing everything professional trustees and owners need to successfully manage real estate, privately-owned businesses, mineral interests, life insurance and other unique and hard-to-value assets; and is a principal with Spardata, a valuation firm focused on pricing unique assets.  He may be reached at

For more information (including a fascinating research study on unique asset-related growth opportunities), please feel free to contact me.  (; 240-553-1100)

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