DALBAR, the Boston-based financial services rating firm, reports that investors don't much care if they see a written financial or investment plan. Rather, DALBAR says, consumers want their brokers to be well-versed with their particular financial situation and provide them with proper answers.
"The plan is important. But, it's not an end in and of itself; it's a means," says Robert Powell, an editor at DALBAR. "Investors want to be walked through the process and have explained to them the costs and benefits of their investment plan. They need that personal interaction."
DALBAR gleaned its information from a series of focus groups and surveys it coordinated with investors.
While the report indicated that investors were more satisfied when advisers used a written plan to address their needs, it showed that investors were more interested in the "person" behind the plan. "It is very clear that written financial plans that are delivered without an adviser have failed to provide clients with a satisfactory degree of comfort," DALBAR says in its report.
The report found that most investors just assumed their adviser had a written plan; but they did not consider it as important as what the adviser said.
"The written plan is a vital tool for the adviser in the decision making process," the report says. But, "It can never be a substitute for the trust that is required for a client to achieve comfort with his/her finances."
Powell says the plan is viewed as something for investors to have and compare against. "Then the adviser can explain why they did this or did that. That's what the investor wants to hear," he says.
DALBAR's report concludes that "The successful personal financial adviser will prepare a plan that incorporates the emotional and economic needs of the client and uses the plan to manage the client's financial situation."
In other words, don't just print and drop ship a client's investment plan; give 'em a call and refer back to it.