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Wealth Clients Want Financial Planning, Most Not Getting It: Report

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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.” 

Indeed, 97% of clients who rated their planning experience as excellent were highly unlikely to switch to a new firm in the next 12 months, the report said.

Advisors understand this. According to the study, 78% of advisors considered financial planning technology important, yet only 50% said theirs was effective.

Not only do advisors need more effective financial planning tools, the report said, but they also require support in presenting, posting and accessing the planning output.

“Different clients require different planning capabilities, and firms that meet these varied needs across multiple channels not only increase client loyalty, but also open up opportunities to introduce additional product and service offerings,” CEB TowerGroup research director Darrin Courtney said in the statement.

Forty-six percent of surveyed executives said they planned to increase their spending on financial planning technology, according to the report.

The paper posits several things financial firms should do in order to capitalize on the importance of planning:

  • Provide appropriate guidance, and in doing so they will discover that most clients aren’t getting the help and advice they require.
  • Examine the investment other institutions are making in planning technology, and see how ROI is driving investment into platforms that support this need.
  • Enhance advisor efficiency tools. “Since only 14% of HNW clients do not own a smartphone or a tablet, wealth firms should focus on selecting financial planning systems that can easily integrate with digital channels,” the paper said.
  • Learn how other firms have shifted their financial planning model and determine how planning best aligns with your firm’s culture.
  • Research financial planning providers, third party rankings and client opinions to better understand the solutions available.

Check out A Financial Plan’s Two Most Important Assumptions on ThinkAdvisor.


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