Held-Away Assets

Held-away assets are financial accounts that an advisor does not custody, manage, or draw fees from directly. For most households they are the largest slice of net worth: employer retirement plans such as a 401(k), 403(b), or the federal Thrift Savings Plan, along with health savings accounts, 529 education accounts, employee stock plans, and any brokerage or bank account the client keeps in their own hands. The term matters because how an advisor is paid often determines how much care these accounts actually receive.

The concept only exists because of how the traditional advisory business is built. An advisor charging a percentage of assets under management (AUM) needs your money at their chosen custodian, under their trading authority, to manage it and to bill on it. A 401(k) can't move there while you're still at your employer, so it becomes "held away" — visible on your financial plan, but outside the billing relationship. The predictable result is an incentive problem in both directions: accounts the advisor isn't paid on can be under-advised, and when you leave a job, an advisor paid on managed assets has a standing financial reason to recommend rolling your 401(k) into an IRA they manage, whether or not that's your best option.

Some AUM firms address the gap by billing a fee on held-away balances or by using third-party technology platforms that let them manage workplace accounts without taking the client's login credentials — an arrangement that gets regulatory attention because logging into a client's account can create custody issues under the Investment Advisers Act of 1940. Advice-only planners sidestep the whole problem structurally: since the fee is for advice, not management, there is no distinction between a "managed" dollar and a held-away one. Your 401(k) menu, your HSA investments, and your self-managed brokerage account all get full recommendations, and you carry them out yourself.

In practice, an advisor handles held-away assets in one of three ways: they ignore them (common under pure AUM billing), they advise on them for an additional or flat fee, or — in the advice-only model — advising on them is simply the engagement.

A hypothetical example: Marcus, 45, has $600,000 in his current employer's 401(k) and $150,000 in a taxable brokerage account. A traditional AUM advisor can only manage the $150,000 — at a 1% fee, about $1,500 per year — and has no direct economic reason to spend hours optimizing the $600,000 held-away 401(k), which is four times larger. An advice-only planner charging a flat project fee reviews both accounts as one portfolio: the 401(k)'s fund menu and contribution strategy, the brokerage account's tax placement, and how the two should fit together. Marcus implements the recommendations himself inside each account.

Pros (of getting advice on held-away assets)

• Your largest accounts — usually workplace retirement plans — get real analysis instead of being left out of the plan.
• Coordinating held-away and managed accounts avoids duplicated holdings and poor asset location across account types.
• Reduces the pressure to roll a 401(k) into an IRA just so an advisor can manage and bill on it.

Cons

• You implement changes in held-away accounts yourself; the advisor can't press the buttons for you.
• Some advisors charge extra to cover accounts they can't manage, so ask exactly what the fee includes.
• Arrangements where an advisor uses your login credentials to trade a held-away account raise security and regulatory custody questions worth understanding before you agree.