A new breed of wealth client has emerged over the past decade. These clients want to collaborate with wealth management firms when planning for their financial future.
A report by CEB TowerGroup says firms that are willing to expend the time and effort to move away from an investment management approach focused on past performance toward a financial-planning-centered one that meets current clients’ broader needs will be rewarded.
The white paper, “Shifting to the Center: Financial Planning is the Hub of Wealth Management,” is based on a yearly detailed adoption and investment analysis of key technologies in the wealth management space, including the needs and preferences among end users and executives.
According to the report, which was commissioned by SunGard, 68% of high-net-worth clients do not have a formal financial plan to reach their long-term goals.
This does not mean they are not interested, as financial planning is the most selected service chosen by clients of wealth management firms.
Clearly, wealth management firms have a big opportunity to meet untapped client needs.
“Goal-based investing raises the bar for the financial planning process,” Scott Parry, an executive vice president at SunGard, said in a statement.
“Besides driving the client’s savings goals and their target asset allocation, the financial plan now becomes the benchmark upon which future account performance is measured. That makes the financial planning process a key component of every conversation an advisor has with his or her client.”