Fee-Based Planning And Sales– Two Separate Steps

Industry experts emphasize the importance of separating the planning process from the implementation process. In a previous National Underwriter (Aug 19, 2002), it was reported that a number of companies have made fee-based planning available to their distribution channels. All carriers with whom NU spoke offered their comprehensive financial plans with no strings attached as far as implementation goes.

Typically, according to insiders, the planner who delivers the plan will end up providing the products that meet the needs outlined in the plan. And, while some agents new to the world of fee-based planning may have never had a client go elsewhere for implementation, more experienced planners note that this sometimes happens.

“Its really not too bad to just be a persons planner,” says Mark Olson, a MetLife senior financial planner from Berkley Heights, N.J. “You dont have any of the service issues, when the market goes down they dont call you to complainyoure just like their accountant or their attorney, an objective third party who they pay to get guidance.”

Olson relates an instance where a client implemented elsewhere. “They liked the recommendations, they liked me, and the first year I delivered the plan to them I didnt do any business from it at all.”

Even though no products were sold after Olson delivered the plan, he still considered himself their planner. When Olson followed up to review and update the plan, he was shocked to find out they had implemented his recommendations–only with someone else.

“I went back and did the plan the second year–and at that time they invested 300K with me,” he explains.

“It actually ended up bringing me other business later on down the road,” he continues. “The funny part is, it was very tempting to not call them because they hadnt done anything and I felt I might be wasting my time. But the whole purpose of the financial plan is that it stands on its own,” he says.

“When you hire me as your planner, it entails that you have to implement, otherwise youre wasting your money–it doesnt mean you have to implement with me,” Olson adds.

But some planners will only prepare a financial plan for a client, without providing any products. Larry Moore, a financial advisor with Northeast Planning, Short Hills, N.J., works with his network of accountants to provide their clients with a fee-based plan, only to have the plan implemented elsewhere.

“A lot of people want you to be completely objective,” he explains. “They feel that if youre providing the financial planning services and at the same time getting a commission for placing the product, your objectivity is going out the door.”

Barry Higgins


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 2, 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.