Insights | 02.26.20
The ROI of Financial Planning
A recent research study conducted by Kehrer Bielan Research & Consulting and sponsored by Raymond James concluded that advisors who embrace planning outperform other advisors in similar circumstances.
The report, “The ROI of Financial Planning: The Impact on Additional Planning on Individual Advisor Production,” surveyed 33 banks and credit unions. It found that advisors who embrace financial planning have the potential to increase productivity exponentially.
Furthermore, the quantity and quality of the financial plans produced play a key role in productivity as well. Those who did the most plans had the most assets under management, and as a result, the most revenue.
“The first thing is that you want to do right things for your clients. You want them to have a good plan. But secondly, by doing the right thing, we’re hoping to increase your business and share of wallet,” said Frank McAleer, senior vice president of wealth planning at Raymond James.
“The role of the advisor is changing. The “new era advisor” understands the need to offer value beyond investment selection. Holistic financial advice considers and integrates all areas of personal financial management to help our clients live the life they want to live. It is not about selling great products, although that happens. It is about stepping back to understand the big picture before offering an investment recommendation,” said Leigh Van Heule, director of financial planning consulting at Kehrer Bielan.
According to the research, advisors who create or update two to four goal plans a month have average production that is 132% higher than advisors who do only one to two goal plans per month, and over 155% more than advisors who do even less planning. Advisors who adopt planning and create or update more than eight plans per month produce twice as much (208%) as advisors who “dabble” in planning with one or two plans per month.
According to McAleer, “Financial planning allows you to understand a client more completely. You are then able to provide the appropriate resources to them, whether it’s specific investments or longevity resources. It can compel the client to transfer their outside assets to you because you become their center-point advisor.”
The Effect of Plan Quality on Advisor Productivity
The number of goals addressed in a plan provides a measure of how comprehensive the plan is. Only 5% of advisors included five or more goals per plan. Goals can include living expenses, health care and others, such as world travel, home remodeling or funding a grandchild’s college education.
Financial Planning Resources
Goal Planning & Monitoring (GPM) software is available to every advisor as an integrated part of Raymond James’ robust technology platform and is supported by a dedicated group of professionals to help with individual plan questions. GPM enables advisors to quickly identify and enter client goals to assess appropriate asset allocation targets, spending or savings rates, and the probability of achieving those goals.
Goal Planning & Monitoring is powered by MoneyGuidePro®, the leader in goal-based financial planning software.
According to Kimberlee Bouska, CFP®, CRPC, an investment management consultant and financial advisor at Addison Avenue Investment Services, “GPM helps me grow my business in two distinct ways. First, it gives me credibility as a comprehensive financial planner. Second, it helps me to see outside assets that clients may not reveal to me otherwise. Over time, I can convince them of the benefits of consolidating all assets with me, and my AUM grows accordingly.”
Advisors who create or update two to four goal plans a month have average production that is 132% higher than advisors who do only one to two goal plans per month, and over 155% more than advisors who do even less planning.
A screenshot of GPM for a hypothetical client. The image is reproduced from the Goal Planning & Monitoring financial planning software, © MoneyGuide, Inc. Used with permission. All rights reserved.
“GPM is our enterprise provided goals-based planning tool. In addition to constructing an overall holistic plan at once, calculators related to items such as Medicare expenses, social security income and estate planning needs are available and can be utilized toward building a comprehensive plan over time,” said McAleer.
According to Adam Allen, a financial advisor at First Financial Wealth Management in Greenwood, Indiana, “We put GPM on the screen during every client meeting, and it seems to draw them in. By using GPM interactively, I think it demonstrates to our clients how knowledgeable we are about their circumstances and aspirations regarding the future.”
Increasing Client Engagement
Clients can log on to the client portal at Raymond James to review their plans and enter different assumptions to see the overall effect on the plan outcome. The client portal integrates seamlessly with GPM, allowing advisors to give their clients access to their plan, promote several of its innovative features to their clients and encourage client engagement.
“Engaging the client in their plan in client meetings and through the client portal is key to becoming their trusted advisor and implementing your recommendations,” said Van Heule.
Adding Health Care Needs and Expenses to the Equation
GPM automatically estimates health care costs of Medicare premiums, copays, coinsurance, and all Medicare options, such as advantage plans. There is also a lot Medicare doesn’t cover, especially catastrophic needs. GPM can show your client how much their assets could be reduced without the protection offered by a long-term care policy, and conversely, how their assets can be preserved by having such coverage.
Making Longevity Planning Part of the Plan
Retirement concerns are not solely about financial matters, but also about quality of life and levels of independence as clients live longer. When such longevity issues are raised, the result is often a client request for more information and guidance on matters such as Medicare providers, health care concierge firms and caregiving experts — all of which adds to further client engagement and the added value an advisor brings to the table. Providing additional resources and integration capabilities supports advisors in creating comprehensive plans.
“Raymond James has several vetted resources that are approved, and we can provide advisors with cobranded materials that they can present to their clients,” said McAleer.
Bouska incorporates longevity planning into her conversations with clients. “By tackling longevity issues, I show them a level of expertise and concern for their well-being they probably won’t get anywhere else. When I dig into other benefits, like HealthPlanOne, PinnacleCare, Broadspire, helpful iPhone apps, etc., they see a depth of resources they didn’t know were available.”
Allen added, “A discussion about longevity planning elevates the conversation and focuses on higher-value topics than investment performance and asset management. It helps elevate the value of my role in my client’s life.”
Despite the benefits, there are still advisors that do little or no financial planning.
The question is “why?” Perhaps they entered the business back when it was transaction based. They may think financial planning is too time consuming, or, they think, “I don’t have the client information to do the plan.”
How Program Directors Can Help Motivate Advisors
Financial planning can not only benefit your financial institution and advisors, but your clients as well. Raymond James can provide all of the resources and support you need to increase the quantity and quality of the financial plans you provide. With today’s regulatory landscape and price decompression over time, bringing more value to your clients is more crucial than ever.
There are hurdles to overcome. Many advisors are caught in a cycle where investing time to learn more about their clients and learning how to use planning software does not seem to have the same payoff as moving on to the next client. Management’s challenge is to find ways to overcome this. Here are some suggestions:
• Coaching advisors and their managers
• Tracking each advisor’s progress, pinpointing where to apply additional training and coaching
• Identifying who to hire and who will respond to coaching and become a holistic advisor
• Creating appropriate incentive compensation
• Leveraging technology to facilitate discovery and planning conversations
• Developing a planning process for the institution
“With a true focus on significantly increasing planning activity, making it core to client interactions, an average advisor can double production,” said Van Heule.
Advisors can do a simple plan in as little as 10 minutes using GPM software.
GPM guides advisors step-by-step to what information is needed — and with existing clients, GPM can pull in whatever information is already in the system. Based on even the limited client information an advisor has, they can build a simple plan, post it to Client Access, and email the client inviting them to review it as a starting point to facilitate a follow-up conversation.
For a more holistic plan, GPM is designed for advisors to walk through the questions with a client in as little as 30 minutes, which is designed to fit into the typical 45-minute to one-hour client meeting.
“Raymond James is an industry leader as far as overall plan creation and utilization. In any given month, we usually have about 50% of our advisors utilizing GPM,” said McAleer.
Raymond James offers a wealth of financial planning training materials and a consulting team that works closely with advisors on all types of planning-related questions, including assistance with goal planning strategies, social security, Medicare, insurance, education, and tax and estate planning. GPM enables advisors to set up a repeatable, but customizable process for helping clients identify their goals, determine how to fund them, and be prepared for retirement.
To receive the full study, click here.
You can learn more about The ROI of Financial Planning in a concurrent session at this year’s BISA Annual Conference, Maximizing ROI and ROA with Financial Planning, with Tim Killgoar (Raymond James), Leigh Van Heule (Kehrer Bielan), Mike Miroballi (The Huntington Investment Company), and Kelly Corah (Addison Avenue Investment Services).
10:15 am – 11:00 a.m, March 5 in Atlantic 1
The projections or other information generated by Goal Planning & Monitoring regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.
The return assumptions in Goal Planning & Monitoring are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used in Goal Planning & Monitoring. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.
Goal Planning & Monitoring results may vary with each use and over time.