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Aite Survey on Financial Planning: Some Advisors Need a Boost

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A report from Aite Group found that the majority of the advisors surveyed classified themselves as planning-focused, 35%, a segmentation strategy that could become more important as lawmakers move to enact a fiduciary standard.

Some 17% say they are planning-driven. Remaining advisors classify themselves as planning-selective, 10%, planning-challenged, 22%, and investment-focused, 16%.

Broker/dealers have an important reason to help these last three groups of advisors: 76% of planning-driven advisors recognize it as an effective client acquisition tool, which means advisors who don’t are losing potential business.

In addition, planning-challenged advisors gather fewer assets than other groups, though their revenue-per-clients levels are not below their peers.

“Planning-challenged advisors may find it challenging to move from a transaction-focused business model to an advisory one,” says Sophie Schmitt, senior analyst with Aite Group and author of this report, in a press release.

“They have amassed large books consisting of clients who are more likely to have engaged in one-off transactions with their advisor than in ongoing financial planning discussions,” explains Schmitt. “Firms must help these advisors select a more successful model and should support them with intuitive planning tools and ongoing skill development.”

If Congress moves ahead with financial reforms that ask the SEC to examine a fiduciary standard for financial advisors, financial planning could take on much more importance, advisors say.

When asked if a fiduciary standard will lead to the greater promotion of financial planning, the majority of planning-driven advisors, 56%, said “yes.” Most advisors classified as planning-challenged, 40%, said “don’t know,” though 38% said “yes.”

The Aite survey of nearly 400 advisors was conducted in the last quarter of 2009 and included wirehouse, insurance, independent, and other brokers, as well as RIAs.


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