WHITEPAPER Published: Sept. 25, The Value of Comprehensive Financial Planning

Transcription

1 WHITEPAPER Published: Sept. 25, 2012 The Value of Comprehensive Financial

2 Table of Contents Summary... 3 Why financial planning?... 4 Advantages for the client... 4 Get clients on board... 5 Drive success with planning software... 5 The tools to succeed... 7 About Zywave

3 Summary As a financial advisor, planner or other professional in the financial services industry, do you provide comprehensive financial plans for all your clients? If not, you re certainly not alone but you are missing a huge opportunity to bring in more revenue and generate more referrals. Though the process is more time-consuming, the benefits far outweigh any downfall. And the right software can help you work efficiently, meet each client s unique needs and easily satisfy compliance guidelines. Learn more in the following whitepaper. 3

4 Why financial planning? If you re already successful in your business and have been doing things a certain way for years, you re probably wondering why you should invest the time and money into comprehensive financial planning. As mentioned earlier, you re not alone. According to the 2011 Survey of Trends in the Financial Industry, 13% of CFPs don t provide comprehensive plans. The Financial Research Study found that among clients who have purchased a financial services product, 10-30% of them do not receive formal, written financial plans. However, there are significant benefits for advisors who provide comprehensive plans, said Craig Uhlenkott, Zywave product director. And given the number of financial professionals yet to adopt this practice, there is opportunity in the market for those willing to make that transition. Uhlenkott shared the following advantages to comprehensive planning. When you create a comprehensive financial plan, you identify more needs, opening more opportunities for product sales. When clients see the big picture, they understand those needs more and are more likely to fund them, Uhlenkott said. A Zywave survey found that 31% of advisors sell three or more products per comprehensive financial plan they present. Comprehensive financial planning creates lasting, stronger relationships with clients. Once you ve taken the time to understand their needs and goals, and continue to check in periodically, you earn that client s trust and they are likely to stay with you longer, emphasized Uhlenkott. Regardless of your compensation structure, longer client relationships means more revenue for you. The more a client trusts you, the more likely they are to open up about held-away assets and possibly move those assets to you. The plan will uncover potential heldaway assets, Uhlenkott noted, but it s the trust factor that is the difference-maker in the conversation with the client. Plus, Uhlenkott added, when clients trust you with their finances, they re likely to open their network of family and friends to you, hugely There are major benefits for advisors who provide comprehensive plans. And there is opportunity in the market for those willing to make that transition. increasing your potential for referrals. If you re not doing comprehensive plans, your competition likely is. Technology is changing the industry, so it s important to always look to innovate your business or risk losing clients to those advisors to do. Advantages for the client What s in it for your clients? Plenty. They may think they just want to buy a life insurance policy or manage their retirement account with you, but the 2012 Household Financial Survey illuminated deeper need. According to the survey: Consumers with a financial plan feel more confident about their financial decision-making, save more money and feel 4

5 better about their progress in saving toward financial goals. Over half of Americans say investing seems complicated, are worried about losing money if they invest it and/or believe they don t earn enough money to save regularly. Working with a financial professional on a comprehensive plan can help educate people and dispel these myths, said Uhlenkott. Only 63% of people currently save for emergencies, leaving them vulnerable to a job loss or major unexpected expense. Only 48% of people with college-bound children have started to save for college. Nearly 40% of non-retired adults are not saving for retirement at all. These last three statistics are troubling, but they illustrate just how much your clients can benefit from a financial plan, said Uhlenkott. A comprehensive plan would highlight shortcomings like this between a client s goals and their current savings, and ideally drive the client to take action. Get clients on board Just because you understand the benefits both for you and your clients doesn t mean it s always easy to convince a client that a comprehensive plan is the best option. You know the common objections: it s too time-consuming, no one wants to gather all the necessary paperwork, clients don t want to think about death or retirement or disability, etc. It s your job to explain the benefits of financial planning, said Uhlenkott. Once you have the client s buy-in, you have the foundation of a lasting relationship Nearly 40% of nonretired adults are not saving for retirement at all. built on trust. Start by asking some questions about their financial goals, beyond the topic they ve come in to discuss. Share the statistics listed above and ask if they have adequate emergency, college and retirement savings. Emphasize that financial planning puts them in the driver s seat, said Uhlenkott. Clients can see the big picture of their financial situation, and knowing their needs are covered gives them peace of mind for the future. Speaking of peace of mind, don t make this conversation all about numbers. Get to the core of what the client values and wants out of life. When people see the connection of their deeper values to financial goals, that s when reality hits home for many consumers. Drive success with planning software Ready to start building comprehensive plans? It s not as daunting as it sounds, if you have the right software tools. Some advisors are doing financial plans right now without software, using spreadsheets and online calculators, said Uhlenkott. That approach was fine in the past, but you won t be able to stay competitive in the next five years if you don t adopt more technology. Look at what your competitors are doing. If you re producing a handmade Excel report, and your competition is delivering a professional presentation, along with dynamic scenarios and other sophisticated functionality, the reality is you will lose clients. Here are some other benefits of financial planning software that Uhlenkott shared: It helps you take clients from fact finding to deliverable, consistently. It s a repeatable process, so the more you do it, the better you get at it. 5

6 It s a good way to build a business, giving advisors the ability to get junior reps up and running more quickly. Plus, everyone in the business is using a consistent system. Software is a huge time-saver, compared to working on paper or spreadsheets. The tool does so much of the work for you, said Uhlenkott, which creates efficiencies in this often time-consuming Good software presents client needs and savings shortcomings in an easy-to-understand, visually obvious way that effectively drives clients to take action to address those needs. process. In addition, software simplifies the process for those who are newer at it. You shouldn t be scared of technology, said Uhlenkott. Software makes planning easy. Earlier we discussed how a comprehensive financial plan can help identify needs and encourage clients to buy more products. Good software presents those needs and savings shortcomings in an easy-to-understand, visually obvious way that effectively drives clients to take action to address those needs. Compliance is obviously a huge issue for the financial planning industry and it s vital that every decision is backed up by facts. With financial planning software, it s easy to go back for an audit purpose and see why you made a particular recommendation, so you can justify your financial advice. Unlike when you use a yellow pad and online calculator, having all your data stored automatically for years in a software system really puts an advisor at ease in terms of compliance, said Uhlenkott. If needed, you can always check your previous data without having to dig through old files or worry if you saved everything. For those advisors looking to move to a fee-only compensation model, having quality financial planning software puts you in a much better position to justify the value you provide each client. There are a variety of software tools available in today s market how do you know what to purchase? There are several considerations, and many will vary depending on your personal business and preferences, said Uhlenkott. Generally though, you ll want your software to have the following capabilities: Simple to understand, professional report output for clients. Your report or presentation is a reflection of you as an advisor, so it s important that it is professional and easy for the client to read. Further, the clearer it presents the data, the more likely your client is to understand their needs and take action against their shortfalls. An interactive presentation component for clients. This is especially important for clients who are skeptical about agreeing to a financial plan in the first place. If you can quickly input a few key data points and walk them through a dynamic presentation to instantly highlight shortcomings and needs, you re more likely to gain that business. Robust scenario capabilities. This is one component that sets good software apart from the pen and paper method. Inputting a client s current data is only the first step you want to help clients reach their goals. With 6

7 a dynamic scenario tool, you can test out a variety of scenarios to help clients reach their goals (retiring later, saving more, spending less, various combinations, etc.), so you and your client can choose the best option together. The tools to succeed If you re looking for a financial planning software solution to take your business to the next level and bypass your competition, consider Profiles or NaviPlan. marketing communications, business intelligence and analytics, agency automation, and needs-assessment and financial planning tools. More than 350,000 financial and insurance professionals, including 90 of the Top 100 U.S. insurance firms and dozens of the world s largest financial institutions, use Zywave s proven solutions to help them differentiate from the competition, enhance client services, improve efficiencies and achieve organic growth. To learn more, visit Profiles is a flexible financial planning software application perfect for advisors looking to sell more products and increase assets under management. NaviPlan is a sophisticated, indepth financial planning software tool capable of handling any client scenario from basic needs assessment to ultra-high net worth planning. Contact a Zywave representation today to learn more at 877-MY- ZYWAVE or marketing@zywave.com. About Zywave Zywave is the leading provider of software-as-a-service (SaaS) technology solutions for the insurance and financial services industries. The company s products include Web-enabled 2012 Zywave, Inc. All rights reserved. The information contained herein, including its attachments, contains proprietary and confidential information. Any distribution of these materials to third parties is strictly prohibited. 7