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Are You Offering Financial Planning “Lite”?

The Department of Labor’s fiduciary rule, released in April, highlights what our affluent research has been telling us for the past decade: The affluent want a professional to oversee the multi-dimensional aspects of their family’s financial affairs and have their best interests in mind.

But many advisors are providing a “lite” version of financial planning.

There are numerous forms of planning software that firms provide their advisors. Some advisors use these tools as they were intended (a comprehensive planning tool) and are providing a valued service for their affluent clients. But others use these tools to create documents that resemble financial plans, touching on goals and basic investment outlook, with the main objective of checking the financial planning box. This is what I’m describing as financial planning lite.

Affluent investors want a realistic and comprehensive financial plan that will provide them with a roadmap for meeting their financial goals. This roadmap then becomes their critical path upon which all future financial decisions are made. They are interested in protection strategies, tax minimization and health care guidance.

Look at your top 25 clients: Have you created such a plan for them? Are you providing thorough insurance planning (protection), state and federal income tax planning, and asset protection planning? Have you partnered with a health care specialist? Are you helping each client put their plan into action while monitoring the progress? Are you helping them on track to meet changing goals, circumstances, life stages, products, markets and tax laws? There’s a big difference between creating a financial plan and overseeing the execution of the plan.

Don’t be surprised when the Certified Financial Planner designation becomes a requirement for any professional involved in any type of financial planning, regardless of the software being used. Your affluent clients may ask:

  • What qualifies you as a financial planner?
  • How long have you been offering financial planning advice to clients?
  • How long does it take you to prepare a comprehensive financial plan?
  • What are your educational qualifications? Are you a Certified Financial Planner?
  • What’s your involvement after you create a plan for your clients?
  • How are you paid for your services?
  • Will you or an associate be creating my financial plan?
  • Do you provide a written client engagement agreement?
  • How many clients do you have?
  • Do you have clients who might be willing to speak with me about your services?
  • Do you have references from other professionals?

With comprehensive financial planning at the core, executing the plan and providing the full array of wealth management services transforms clients into advocates.

You’re likely to see more advisors shifting from conducting performance reviews to “progress” reviews towards agreed-upon goals. Regardless of what happens with the DOL and fees, affluent clients will always pay for advice, not advice lite. And true advice stimulates word-of-mouth-influence. 

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