A number of recent reports show that advisors who deliver comprehensive financial plans receive up to seven times more netflows per household group.
To compete with robo advisors, changing business models, and other market challengers, advisors need to deliver the services clients value most. Over the past five years the demand for both financial advice and financial plans have skyrocketed. Yet only about half of advisors provide any type of formal financial planning. This despite the fact that financial planning services increase both client loyalty and wallet share.
Why it matters: Higher netflows per household group generates higher revenue per client. The result is a more profitable practice.
- You Need Less Clients To Generate The Same Revenue: Increasing netflows per client means more revenue generated per relationship. This means it takes less staff and resources to generate more revenue.
- Efficient Practices Are More Valuable: Higher value relationships, coupled with proper staffing ratios increases the profitability of a practice. This positively impacts practice value (and ultimately monetization of value).
- Clients Will Pay For Comprehensive Plans: The increase in demand for comprehensive financial planning is coupled with a willingness and expectation to pay for the service. This is especially true among younger generations who see a written financial plan as a worthwhile investment in itself.
- It Opens The Door For Legacy Conversations and Beneficiary Introductions: Financial plans provide a natural segway for legacy and estate planning conversations. This creates opportunities to secure introductions with heirs and increases the likelihood assets with remain with the practice even after clients pass away.
- It Creates Opportunities To Uncover Held Away Assets: The data gathering process naturally covers the gamut of a client’s financial needs and assets. Through this process advisors can identify assets held with other advisors, idle accounts, or inefficient products and suggest better instruments for clients to invest.
Getting It Right: The secret to realizing the benefits of offering financial planning is to have a consistent, repeatable, and efficient process. This is achieved by:
- Defining the steps from start to finish along with a timeline.
- Establishing clear roles and responsibilities for team members.
- Utilizing technology (CRM, task management, etc) to manage the process.
- Maintaining a cadence of accountability to ensure everyone follows the process and meets quality standards.
