When I entered the financial services industry in 1985, and more specifically, when I became an employee of Merrill Lynch in 1996 (having earned my CFP designation earlier that year), I placed financial planning at the forefront of the client relationship.

During the few years I spent with Merrill, I wholeheartedly embraced the company’s vision for planning and created approximately 25-35 financial plans. I should also note that these plans were offered at a cost of only $250. As it turned out, that was enough to merit a trip and a multi-night stay at the Arizona Biltmore in Phoenix. In fact, I even shared an elevator with Cal Ripken Jr. on the final night of the trip.

Today, I still fully embrace financial planning, even though it is the most labor-intensive part of my business. Labor intensive, yes, but very beneficial for the client.

It is interesting how you can discuss the benefits of financial planning with two clients and get two different responses. One client will be gung-ho and the other just doesn’t see enough benefit to pay the fee. Of course, the fee is a bit more than the aforementioned $250. In fact, it’s more like $1,500 to $4,000. But how can two people view financial planning so differently? Whenever a client rejects it, I am dumbfounded. Honestly, I can’t imagine why anyone would refuse to have a customized, comprehensive financial plan created.

In my practice, about 50% to 60% of my clients engage me as a planner. I also find these are the best clients in many respects. I define a good client as one who has some wealth or the potential to accumulate it, and who accepts advice. 

Why do clients hold such a different view about the same service? Much of it has to do with their past experience. For example, if they had a plan done in the past, and felt like it was more of a sales tool than an objective and thorough analysis, then they would be justified in their position.

On the other hand, if they’ve never had a plan created, and especially if they have questions which the plan can answer (e.g., will I run out of money in retirement?), then they should be very amenable to a plan. This is why it is so important to do what’s best for the client and not just to try and generate revenue. The revenue will come if we do what’s right. 

Thanks for reading and have a great week!

For another perspective on the value of financial planning to advisors, read Angie Herbers’ recent ThinkAdvisor blog: Thinking of Cutting Back on Financial Planning? Don’t.