Harold Evensky: Comprehensive Planning by Stages—The 2015 IA 35 for 35

Evensky predicts RIAs in the future will offer ‘modular comprehensive planning,’ and be competing against national firms, breakaway brokers and wirehouses who will do ‘serious planning’

Since being named to the inaugural IA 25, Harold Evensky has been honored six times. (Portrait: Joel Kimmel) Since being named to the inaugural IA 25, Harold Evensky has been honored six times. (Portrait: Joel Kimmel)

When Harold Evensky started in the financial planning business he was doing “yellow pad planning,” literally using a yellow pad of paper and a pen to map out clients’ financial plans, he told Investment Advisor in April. The industry was still young and along with limited options in technology, there were few advisors with planning expertise.

“I taught the investment portion of the CIP program at the University of Miami and in my class was a UPS driver and a French teacher,” he said in a joint interview with his wife and partner (and fellow IA 35 for 35 honoree), Deena Katz. “But that was fairly typical. I was an engineer who came from the construction business. Back in those days, everybody came from somewhere else; nobody started off in planning.”

Evensky, chairman of the wealth management firm Evensky & Katz/Foldes Financial and a professor at Texas Tech University, said that in those days, the focus was on comprehensive financial planning, but “it wasn't a very good business model.”

He explained, “Someone would come in with $2,000 and say, ‘What should I do?’ And we would say, ‘Pay us so many thousand dollars and give us a couple of months, and we'll tell you what to do.’ But we were believers back then that there was only one right way to do it.”

Over time, Evensky said, the focus in the industry has shifted from comprehensive planning to asset and investment management, and he predicts that in the future, advisors will offer “modular comprehensive planning” that focuses on individual portions of a client’s portfolio, building a comprehensive plan as they go.

For example, he said, when a client comes in, “Initially, our focus can be on designing a portfolio, investment policy statements and implementing. But then, the next quarterly meeting might be, ‘OK, let's review your tax planning. Next quarter, let's review your estate planning.’ Over a period of time, we will indeed have done some comprehensive planning.”

Just as the industry has grown from UPS drivers and French teachers to trained experts, technology and planning software have improved to allow advisors to provide a level of quality in their work that “wasn’t possible before,” Evensky said.

“I believe, over the next couple of decades, simply to be competitive, we are going to have to significantly expand our value offering beyond simply portfolio management,” he said.

As they expand their offerings, advisors will likely have to do it in a low return environment, Evensky said, which will affect everything from the impact of fees to how you plan for retirement.

He also anticipates the industry will comprise “billion-dollar RIA firms, instead of where we came from, which is the mom and pop universe,” and that immediate annuities and DIAs will become “extraordinarily important over the next couple of decades.”

Competition will not just be from robo-advisors, either. Evensky said in the next 20 or 30 years, advisors will be competing against national RIAs, breakaway brokers and wirehouses who will be starting to do “serious planning.”

“Competition is going to be dramatically different and more significant in the future,”

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See the full 2015 IA 35 for 35 and the calendar for extended profiles of each honoree.

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