In 2007, the firm started bundling comprehensive financial planning services with some of its investment advisory programs.

“Instead of planning being a single event where clients are taken through the process and charged a fee, it began incorporating comprehensive planning into the investment advisory relationship,” Reeves explained. 

“Advisors have adopted this in different ways,” he added. “But the idea is that planning is part of the ongoing client conversation. It’s a change of conversation, so instead of focusing on investment returns relative to an index or benchmark, it’s a conversation relative to clients’ goals and objectives.”

As a result of this shift, Reeves said, the company has seen the number of financial planning engagements with clients more than double since 2010: from a little less than 15,000 engagements that year to more than 30,000 in 2015.

During that time, there has been a high degree of correlation between planning activity and advisor productivity. Collectively, Waddell & Reed advisors slightly trailed the industry in 2010 in terms of average productivity, Reeves said, but by last year the projected average revenue per advisor was $266,000.

“I don’t have the industry average, but I expect we will be at or exceeding the industry average,” he said. “That’s attributable to a couple of things. One is the transition to a fee-based approach to working with clients. Most importantly, it’s the adoption of this different business model of working with clients in a comprehensive capacity.”

Another benefit from the increased emphasis on planning is better client relationships. “One of the ways we measure that is by looking at the redemption rates of our investments across our three distribution channels [wholesale, institutional and advisory],” Reeves explained. “When you look at the redemption rate of our investments—the Waddell & Reed Advisors Funds and the Ivy Funds—sold by our advisors relative to those same funds sold by other advisors across the country, there’s a redemption rate of about a third of what we see in the wholesale distribution market. Those assets to us as a firm are three times more valuable because we retain them three times longer.”

The upshot, Reeves said, is that Waddell & Reed advisors who engage in comprehensive planning consistently have greater AUM and revenue with those clients.”

“What’s working at Waddell & Reed is financial planning,” he said.

Reeves noted the firm takes two approaches to its fee structure. One is a separate planning fee plus the advisory fee that handles investment management and ongoing monitoring of a portfolio. For advisors taking a bundled approach, one fee covers all.