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.
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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.