Michael Kitces, the director of research at Pinnacle Advisory Group, and publisher of The Kitces Report and the blog Nerd’s Eye View, through his website Kitces.com, has got an alphabet soup of professional designations behind his name. He’s got two master’s degrees in financial fields, a CFP and a host of other certifications many of us have never heard of (RHU, REBC, CASL?). Kitces writes and speaks about comprehensive financial planning, and his Columbia, Md.- and Naples, Fla.-based firm provides such services to clients.
“Actually going through the full steps of taking someone through a financial plan” builds trust, leads to happier client outcomes and can be “a more enriching way to understand your clients and what’s motivating them,” Kitces argues. And yet the Maryland-based thought leader and AdvisorOne contributor does not recommend that approach for all advisors.
“If you don’t want to learn all the [technical details] you need to learn to do it, then just don’t do it,” Kitces said in an interview with AdvisorOne. “There are lots of business advantages for those who don’t want to be comprehensive planners. It can actually be harder to get referrals.”
He illustrates this by positing two advisors – a comprehensive planner and a life insurance specialist. For the former, everyone is a potential client. But saying ‘Talk to my guy – he does everything’ is less motivating than a new parent in need of life insurance hearing ‘My advisor specializes in providing life insurance for new parents.’
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“Doing everything for everyone means nobody refers you to anyone,” Kitces says.
Another potential hazard of comprehensive planning is undermining alliances with other professionals. “We’ve seen accounting firms that take on comprehensive financial planning, and don’t get referrals anymore,” Kitces says. “We’ve seen life insurance firms that do incredibly well by doing life insurance and nothing else.”