Wealthy Clients Revisiting Need For A Formal Plan, Advisors Say
Many investors who reaped huge returns in the 90s were anxious to ride that trend as long as possible. So, they concentrated their wealth in a few well-performing sectors, held on to their equities too long and in todays volatile market are left watching those returns fall to a fraction of their former heights.
Those hesitant to take any action at all with the remains of their portfolio have been termed the “fiscally frozen” by The Phoenix Companies Inc., Hartford.
According to a recent Phoenix survey, 87% of advisors claim to currently offer a formal written plan that can be tailored to each clients needs.
However, overall, advisors havent consistently communicated the importance of formal planning with their clients, Phoenix says.
According to the survey, 35% of the high net worth without a formal written plan report not having one because they dont believe they need one; another 38% arent sure if they would benefit from a plan.
But, a wealthy person who does not have a plan will not stay wealthy long, warns Harold Evensky, chairman of the financial planning firm Evensky, Brown & Katz, Coral Gables, Fla.
The market has proven wrong investors who thought they knew what they needed, he says.
“We have saved clients money because they had a plan and stuck to it,” Evensky says. “If they have a fortune and can afford to lose it, they dont need a plan; if not, they need a plan. They need to understand it and implement it.”
James Cotto, managing director of investments, Cotto & Padovani Financial Strategies Group of Wachovia Securities, says he has never had difficulty communicating to his clients the value of a formal plan.