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What Advanced Planning Is-And Is Not

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What Advanced Planning Is–And Is Not

With the financial services industry in turmoil, producers are scrambling to find the optimal approach for creating and maintaining a (very) successful practice.

In their effort to do so, some mistakes have been made; some have been trying, ineffectually, to sell their practices and others have been striving to create a multi-disciplinary practice.

Lets pause to define just what a (very) successful practice is. Once we can define success objectively, we will be able to pick out the business models producers can rely on to achieve such success.

We can start with a definition of a (very) successful practice everyone will agree with. That is, a (very) successful practice is one in which personal income is $1 million or more per year, consistently. These producers are members of an exceptionally select “club” of professional advisors–the million dollar club.

The members of this club have incomes that start at $1 million per year. Most of them have incomes substantially greater than this. If we can agree that a good definition of success is personal income in excess of $1 million, we can begin to explore just what it will take for other producers to join this club.

If you start with this objective, there really are very few business models that will get producers there.

One that will is advanced planning.

Lets lay out exactly what advanced planning is and what it is not.

One problem with defining advanced planning is that most producers think they are doing it. Ask any group of producers whether or not they are advanced planners, and 80% or more will say they are. In addition, most insurance companies and many attorneys, accountants, private bankers and stock brokerage firms all claim to be active in the field of advanced planning.

When we delve a little deeper, however, few of these producers and institutions agree on a workable definition of advanced planning. As it is currently used, advanced planning often gets confused with everything from selling a few big cases to comprehensive wealth management.

The best way of achieving clarity on the definition of advanced planning is to define advanced planning as the approach used by producers with (very) successful practices and high personal incomes.

Lets look at what it is these producers do.

Defining “Real” Advanced Planning

As implemented by the most successful producers, advanced planning is composed of four interrelated sets of services:

–Wealth enhancement.

–Wealth transfer.

–Asset protection.

–Charitable gifting.

What is not included in this definition of advanced planning is an array of products such as investment management and credit. A “requirement” of this kind of advanced planning is that its practitioners are consistently enhancing the intellectual capital of the field.

Another way for us to get our hands around this definition of “real” advanced planning is to compare it to general (or “pseudo”) advanced planning as it is understood in the field (see Exhibit 1).

“Real” advanced planning refers to the practice activities, methodologies and mind-set of the members of the million-dollar producer club. This is contrasted with “pseudo” advanced planning which, while potentially very profitable, is not in the same league.

In both kinds of advanced planning, the focus is on upscale clients. Without upscale clients, there would not be any need for advanced planning according to any definition. These well-to-do and successful clients are the ones that can benefit from the state-of-the-art thinking advanced planners bring to the table. They can also afford the services and products of a high-quality advanced planner. This is where the similarity between “real” and “pseudo” advanced planning ends.

“Real” advanced planners are client-centered. They utilize processes that directly and indirectly ensure they have a thorough understanding of the upscale client. One example of this is the Whole Client Model TM. By employing this model, the advanced planner is able to obtain comprehensive insights into the needs, wants, preferences and the agenda of the upscale client.

In contrast, the “pseudo” advanced planners are generally product-centered. Their fact-finding focuses on financial information and only occasionally will expand into related areas such as philanthropy.

Related to the previous distinction, “real” advanced planners are consultative whereas the “pseudo” advanced planners tend to concentrate on the “idea de jour.” Extensive research among high-net-worth families clearly demonstrates a strong preference for working with consultative advisors. This preference gets progressively stronger as the level of wealth increases.

“Real” advanced planners obtain their well-to-do clientele by being the “go to” experts for other advisors. This consultative approach can be seen in the Virtuous Cycle which is employed in a number of versions by members of the million-dollar club (see Exhibit 2).

This approach is in stark contrast to how the majority of “pseudo” advanced planners are presently sourcing and working cases. It is very common for them to market the “latest and greatest” strategy, tactic or even product in a road show fashion among potential referral sources.

While this approach can translate into cases (many of them quite profitable), it is not sustainable. Not only is it dependent on a stream of new strategies to market, but it is threatened by referral sources getting into the game themselves and by competition from other producers promoting the same answer.

Lastly, “real” advanced planning (as compared to other business models) is amazingly profitable–and “amazing” is not overstating it.

Moreover, advanced planning will continue to remain highly profitable irrespective of any changes in commission structure or the competitive environment. Why? Because advanced planning is about cutting-edge expertise delivered in a classic consultative manner.

With the compensation for advanced planners being composed of both advisory fees and life insurance commissions, the ability to offset a decrease in one with the other is ever present and quite viable.

Although “real” advanced planning clearly leads to (very) successful practices, few advisors are currently positioned to become truly consultative.


Advanced planners–those producers who have adopted a consultative approach to working with upscale clients–are (very) successful, earning $1 million or more annually.

As advisors struggle to identify a viable business model for their practices going forward, we have found it useful to distinguish between “real” and “pseudo” advanced planning. Advisors who are using “real” advanced planning models are building sustainable businesses.

In the future, advisors who fail to incorporate a consultative approach are likely to be increasingly marginalized. Of course, some of them will be successful. However, the probability of being (very) successful is increased when the consultative model is employed.

is principal of Prince & Associates, a research and consulting firm in Shelton, Conn. He can be reached via e-mail at [email protected]

Reproduced from National Underwriter Life & Health/Financial Services Edition, April 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.