Advisors who approach client relationships with a long-term planning focus reported higher revenues, according to research of financial professionals from the Partnership for Retirement Education and Planning.
The survey was conducted among members of National Association of Insurance and Financial Advisors, the Society of Financial Services Professionals, and the Million Dollar Round Table, an international, nonprofit association of more than 39,000 financial service professionals.
The advisors who identified themselves as planning experts reported that their typical client had twice the total assets as advisors who were more focused on individual product sales. These planning experts were not significantly different than non-planners in years of experience, size of firm, job function, or type of products they offer. But, planning experts who approach client relationships with a longer-term planning focus had three times the assets under management and reported 40 percent higher annual revenue than the non-planners.
The financial downturn has particularly led Baby Boomers to seek out more financial planning, the research found. In fact, 77 percent of the surveyed financial professionals indicated the current economic downturn has had a significantly greater impact on their Boomer generation clients than any other generation. Close to the same number, 73 percent, said the downturn made their Boomer clients more focused on financial planning (also more than any other generation).
According to the survey results, Boomers have neglected planning because they dont fully understand the value (a reason cited by 78 percent of respondents), and they are embarrassed that they havent accumulated more assets (mentioned by 70 percent).
It is noted that advisors are usually the ones who instigate the planning: Nearly half (49 percent) of surveyed financial advisers said at least 75 percent of the impetus for a successful financial plan comes from them rather than the client. If there is a silver lining in this dark cloud, perhaps this is a wake-up call for Boomers to get busy managing their financial well-being, says Philip Harriman, past president of the Million Dollar Round Table.
By the way, the Partnership for Retirement Education and Planning is a coalition of 11 non-profit organizations representing more than 200,000 financial advisors working to provide retirement education to Boomers and younger generations. Among the 600 surveyed advisors, approximately one-third of survey respondents operated under a combination of fees and commission, while nearly two-thirds were commission only. Only 4 percent of respondents ran a fee-only business model.
