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How to Fix the Flaws in Financial Planning
By Dan Richards
July 30, 2013

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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Dan Richards

Would a doctor be pleased if 20% of her patients acted on her prescriptions and advice? Would you be happy if your car got you to your destination one-in-five times?

And yet 80% of financial planning recommendations don’t lead to action, according to a Forbes column. Our industry needs a fundamental reappraisal of how to create plans that translate into action and positive outcomes.

Your chance for lunch with Dan

Dan Richards

This fall, Dan Richards will be hosting advisor roundtable lunches to discuss key challenges, share ideas and answer questions.

There is no cost to attend these lunches. Lunches are currently scheduled in Boston, New York, Chicago, Dallas and Houston – with other cities being added.

If you’re interested in more information on these lunches, please email jonelle@clientinsights.ca

Dan Richards
ClientInsights-President
6 Adelaide Street E, Suite 400
Toronto ON M5C 1T6
(416) 900-0968

The problem

The difficulty begins with the fact that today’s financial planning process is too onerous –for clients and advisors. Leading U.S. financial planner Michael Kitces has written that half of financial plans require over 10 hours of preparation time after completion of the discovery process, out of proportion to the complexity of most clients’ needs. As a result, only one in four financial plans are delivered to clients within 14 days.

And here’s what the author of that Forbes column wrote about the client experience:

If you collected a sample of financial plans prepared by planners from across the country, you may very well conclude the objective of financial planning is to take subject matter that has already confounded the advice-seeking client and make it even more baffling.  As page counts, pie charts, graphs and projections mount, clients’ hopes of bringing clarity to their personal finances are dashed.

This is one reason that financial planning polarizes advisors like few other topics. Some view planning as an integral part of the value they deliver; others take the view that developing plans entails a big investment of effort that provides little benefit.

If you’re in the second category, there’s a solution at hand: Change your approach to financial planning, from what you call it to the process you take clients through and what you do with the end result.

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