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Why Planning-Led Advisors Are Better Positioned in a Pandemic

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When the stock market plummeted as a result of COVID-19 and the economic uncertainty it created, financial advisors saw an uptick in the number of investment-focused clients looking for advice. After all, the Dow suffering the most severe drop since 1987 was reason enough to drive investors into a state of panic.

However, it wasn’t until a few weeks after this initial shock that investors began to shift their focus to a financial planning perspective. Throughout the pandemic, the increase in demand for financial planning has been significant.

What is the value of a comprehensive, planning-led approach, and how are financial advisors accomplishing this?

Amidst the current pandemic, as Americans struggle with mass furloughs and layoffs, the volatile stock market and the overwhelming sentiment of uncertainty, it is no surprise that planning around finances can be a stressful experience. In fact, a recent eMoney survey found that the majority of people in the U.S. purposely avoid talking about their personal finances.

However, talking about their financial situations and their plans can help.

According to the eMoney COVID-19 Pulse Survey, 64% of advisors say they have seen an increased need to connect with clients about their financial plans. Many prospective clients who initially set out for targeted financial advice have begun to realize the value of having a comprehensive financial plan, one that can endure unexpected obstacles, like a pandemic. As a result, 93% of advisors feel the current environment has had a positive impact on client relationships.

There is also research that confirms the value of financial planning. According to the Fidelity 2016 eAdvisor Study, clients with a financial plan are seven times happier than those without, which suggests the added benefit planning can provide especially during times of uncertainty. In fact, in the eMoney COVID-19 Pulse Survey, 85% of advisors felt clients with a financial plan felt more prepared, while 81% felt clients with a plan felt less discomfort and anxiety.

When obstacles, like a global pandemic, become a part of a client’s financial journey, collaborating with planning-led advisors allows them to navigate challenges more comfortably and effectively, continuing to move them toward their ultimate goals.

Fintech’s Role

The use of technology in financial planning is not unique to the pandemic, however, its value has become all the more obvious as a result. Over the past decade, in particular, the rise of fintech has revolutionized the wealth management industry in various ways, all of which are especially potent during these unprecedented times. In fact, many clients have started to choose advisors based on how effectively they are integrating these technologies to provide a more collaborative and customized planning experience.

Planning-led advisors are able to leverage fintech applications and software to get a 360-degree view of their clients’ assets and advise them with a comprehensive set of knowledge of their finances (not just their investment goals). To help evaluate a client’s probability of financial success, advisors can use a sophisticated, cash-flow based simulation engine with built-in tax projections and Monte Carlo simulations.

These offerings help clients and advisors work together to plan for the unexpected. Advisors also are able to create different scenarios by adjusting factors both inside and outside of a client’s control. Factors inside a client’s control include retirement age, retirement spending, public or private college funding. Scenarios outside a client’s control include a pandemic, but also things like premature death of a spouse, change in Social Security assumptions or an increase in taxes.

Also, digital tools connect client accounts to create one centralized resource for 24/7 access to all their financial information from any device. Advisors have access to digital marketing solutions as well to create new client relationships, stay connected and strengthen existing relationships, and differentiate their value proposition to prospective clients in need of help.

Perhaps the most crucial in these unprecedented times, digital solutions enable advisors to meet virtually in a private and safe environment. According to the eMoney COVID-19 Pulse Survey, 69% of advisors have seen an increase in virtual client presentations. The same things that take place during an in-person meeting can now happen completely remotely, a trend that will certainly stick around post-pandemic.

There are many lessons to be learned from the global pandemic that can be applied to planning for the future, especially those focused on incorporating the right digital tools into the financial planning experience. As we imagine life post-COVID-19, advisors will keep these learnings top of mind, as they will play a crucial role in enhancing their services to support clients as they plan for the unexpected. —Matt Schulte, CFP, Head of Financial Planning, eMoney Advisor