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Financial Planning > Tax Planning

What Tools Are Carriers Offering Agents Who Move To Fee-Based Planning?

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Fee-based planners agree that transitioning their practice from commission-only to one that also charges fees takes some getting used to. Mental hurdles, establishing new relationships, and billing out existing clients are all barriers that many have overcome, as reported previously (see NU, Sept. 2, 2002).

What tools or support models are carriers providing to these newly crowned fee-based planners to help in their transition and to assist them in running their business?

Probably the most tangible tool with which any carrier supplies its planners is the software that develops the actual financial plan for the client.

While planners are focused on gathering data from their prospects, these complex software systems organize, evaluate, and make recommendations based both on the current financial position of the clients, as well as what their goals and objectives are.

Most carriers have selected multiple planning systems, which vary based on the profile of both the client and the advisor. According to insiders, training and developing fee-based planners on more than one system can be a difficult task.

Both Prudential Financial Newark, N.J., and New England Financial, Boston, Mass., are currently using multiple financial planning systems for their fee-based planning distribution channels.

“The approach of building the financial plan is different in each one,” says Tom Crawford, president of Prudentials Retail Distribution.

“I think if you break it down, some systems are built strictly for affluent individuals,” Crawford says.

Prudential has a number of different planning systems its field is currently using, but is in the process of narrowing that down to just one. Crawford anticipates the release of a single new Web-based system early next year–one that will meet the needs of all the markets that Prudentials planners serve.

At New England Financial, there are three different systems currently in place, and a fourth–the same one that is being used by Mass Mutual– that will be piloted in the next couple of months.

“Weve got the whole gamut of products [systems],” says Bette Skandalis, vice president of financial planning for New England Financial. “Weve got a system for analytic producers, expressive producers, high-end clients, and middle-market clients.”

In order for any system to be successful, she adds, it is important to meet the needs of the producer as well as provide the client with a comprehensive financial plan. Skandalis explains that one system NEF uses provides both agents and clients with a very detailed plan–for those more analytic individuals–while another system offers a very basic solution “for a producer who doesnt want to get into a lot of detailed scenarios.”

Mass Mutual has recently announced that it is focusing its efforts on one type of Internet-based wealth management system, according to Mike Zebrowski, director individual insurance group, Springfield, Mass. “This system uses the Internet to do account aggregation.”

Zebrowski explains that in addition to building a comprehensive financial plan, the new system will look up account balances for clients, and provide them with one consolidated statement that lists all bank accounts, annuities, investment holdings, and other assets owned–even if they are all with different institutions.

“It allows the producer to build a comprehensive plan using all the updated values,” Zebrowski explains. “It also allows us to consolidate all those figures for the client as well.”

Another benefit of Mass Mutuals system Zebrowski cites is a feature he refers to as a virtual safe deposit box. This electronically stores any document a client wishes. Zebrowski notes that this feature is commonly used for living wills, trust documents, tax returns, and sometimes even photographs of family members.

“Rather than have a safe deposit box, a lot of people would rather have a soft copy, or electronic copy, so theyre scanning that type of information in,” he says.

Mass Mutual piloted this program last December and is in the process of rolling it out to the rest of its fee-based distribution channel. There are currently about 50 Mass Mutual planners working with the system, says Zebrowski, but he expects that number to rise to 250 by the end of this year.

“This is not something were offering to everyone in the organization,” he continues. “Its only for planners who have the background, top producers in the organization who hold the RIA title. Its a high-end tool.”

But probably more significant than all the technological tools these carriers offer is the continuous mentoring and coaching that takes place as agents make the transition to a fee-based practice.

“Anyone can provide a financial calculator,” admits Skandalis. “Within minutes you can find all these tools on financial Web sites, but what you cant find is someone who can interpret the calculations, help organize your financial documents, and put you in touch with other financial professionals,” she says.

Insiders agree that the training and support provided to new fee-based financial planners is paramount in their success.

In addition to providing their agents with the latest fee-based planning systems, MONY is requiring its agents who are transitioning to a fee-based practice to undergo a series of bi-monthly personal coaching sessions, according to Jeff Harrison, assistant vice president for MONY Life, New York.

“During the pilot program, we set up coaching sessions every two weeks,” he explains.

MONY Life is in the process of wrapping up a pilot program that began in March, but Harrison is going to make the coaching sessions a requirement as the transition expands to more planners throughout MONYs distribution channel. “As we move forward well make this a requirement for the first three months an agent enters the program, then well make it optional,” he says.

During these sessions, Harrison and other members of his team work with producers to talk through the issues of how to present the concept of financial planning to their current or prospective clients.

In addition to one-on-one coaching sessions with advisors, Harrisons team also conducts monthly teleconferences to help planners switch from a sales process to a more advisory process.

“We work with them on the planning process, and the presentation process of the plan,” he says.

Prudential Financial, a company that began making the transition to fee-based planning five years ago, has made a complete overhaul of how it attracts producers to the organization. A tool that all financial planners new to Prudential utilize is a formalized, structured two-year schooling program.

“We used to hire people and pay them for 14-15 weeks until they learned the business,” explains Crawford. “Today we pay them a two-year salary to come in and actually learn the products, sales skills, relationship building, and introduce them to the tools that we are going to be using for fee-based financial planning.”

Upon completion of the school, neophyte planners are placed in an agency where they can gain experience and learn from veteran planners. Crawford adds that this is where new planners will develop and be promoted to the next level, that of an advanced financial planner.

“I dont think an individual after two years of schooling will have the capability of building an advanced comprehensive plan regardless of the tools,” says Crawford. “I think it just comes from pure knowledge and experience.”

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 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.


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