How Planners See The Future Of The Profession

By

Philadelphia

Hundreds of financial planners jammed a 7 a.m. session here to hear what four prominent planners had to say about the future of the profession.

“Were in the wonderful position of helping to create something,” said Sheryl Garrett of the Garrett Planning Network at the Financial Planning Associations Success Forum here. “We can design how we want to get involved with clients lives.”

Garrett said she sees a lot of competition at the high end of the market, but “for us to truly emerge as a profession, we have to provide financial advice to all people who need it.”

She presented the choice this way: “Do we only do comprehensive financial planning or do we take a more comprehensive approach to financial planning?” For her part, Garrett said she does the latter so she can serve “all people in the way they need it.”

Among the trends that Joe Votava Jr. of Nixon Peabody LLP sees emerging in the profession are more technical competence among practitioners, a client-centered fiduciary approach, and the continued integration of traditional disciplines “but also the use of more psychology” in dealing with clients.

Additionally, Votava sees more competition ahead, both for solo practitioners and for larger firms.

According to Dick Wagner, principal of Worth Living, LLC, the notion of the profession is changing dramatically with movements to “wisdom advisors” and to “craftsmen.”

In terms of relating to clients, Wagner said, “Its on our plate to talk about money, but we tend to ignore it.” Planners, he continued, need to look at the negatives and positives regarding money.

“Its all right to talk about dreams,” Wagner said, “but maybe we need to talk about survival,” particularly in view of how shaky some government programs may be in the future.

Merrill Lynch has done much research in the area of financial advice, said Vince Tarduogno, director of financial planning development, and has identified a number of trends that are impacting and will continue to impact the planning profession.

First, he said, is that despite the tough last three years, “the creation of wealth in this country continues, and with increased wealth comes increased complexityclients have more alternatives” and need advice regarding them.

Another trend that will impact planning, Tarduogno said, is that equity-based compensation is increasing, which means that the number of individuals who have much of their wealth tied up in one asset is also on the rise.

Additionally, Tarduogno said, products that were once only for institutional investors are now available for individuals. This, combined with the commoditization of pricing per transaction, is also giving a boost to the movement toward advice, he said.

Merrill also asked clients why they did not do financial planning. Tarduogno said the firm found there were four major reasons: people didnt think they had enough money; people didnt want to be questioned about what they hadnt done; the trust factor; and inertia.

Tarduogno said clients want financial planning and investment planning integrated. “They know the difference,” he said.

“Individuals also want someone who can listen and hear what theyre saying, someone who understands their risk profiles.” People dont just have one risk profile, he said.

Finally, he said, clients want recommendations that are tied to their overall needs. “They dont want a financial plan, but they do want planning, an ongoing process with flexibility built in.”

When the question–”Will we be paid for our advice?”– was raised, Tarduogno said that people “like a la carte pricing,” with components broken out such as fees for assets under management or for advice.

Garrett said that planners “need to de-link how we are paid from assets under management.” She said she was delighted about the trend emerging that “if youre providing investment advice, you get paid for that, and if youre doing comprehensive financial planning, thats what you get paid for.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 7, 2003. Copyright 2003 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.