The business of financial advice is changing. People want more transparency, there is fee compression, robo advisors are entering the business to provide formulaic advice and clients, as well as financial advisors, are nearing retirement age.
I recently asked a few industry thought leaders and fellow contributing authors of the book Exploring Advice, to discuss these issues and to share advice on how firms and advisors can stay competitive in this environment. We explored how financial professionals should approach their business in this new age, which includes challenges from new technology, new competitors and new transparency expectations from regulators and consumers. We also examined how the business of financial advice might be affected by the pending U.S. Department of Labor (DOL).
What Can Advisors Do?
In this time of change, the best way for a financial advisor to increase revenue and the bottom line is through quality financial planning. There is no single activity that will provide better ROI than financial planning. Some firms say financial planning takes too much time, but financial advisors that work with PIEtech that have done just 12 financial plans have generated an additional 39 percent in revenue per year above what they typically average.
Frank McAleer, CIMA, director of retirement services at Raymond James, emphasized that a quality financial plan also needs to examine longevity issues such as healthcare, housing, caregiving, long-term care and transportation. By providing clients with a financial plan that is goals based and allows for consistent monitoring, financial advisors provide their clients with a highly valued service that enables them to grow their business.
For example, at Raymond James, for every financial plan that the firm does, advisors identify an average of $450,000 of assets that a client has elsewhere, that they can frequently bring under their management. By providing the client with an interactive, collaborative financial plan, Raymond James advisors demonstrate that the firm is doing more than simply helping them manage money, the firm is helping them to manage their life decisions, be it college for children, retirement planning or other short-and long-term financial goals. Today, Raymond James has more than $600 billion in assets under management, much of what has been consolidated from assets formerly held elsewhere due to their financial planning process.