The surest way to kill the blossoming spark between advisor and client is to present an 80-page financial plan.
“Don’t get me wrong. I love the fact that we do financial planning, but I don’t love that that’s the way we engage with our customers,” said Adam Holt, CFP and CEO of Asset Map, a financial software company that focuses not just on what is being communicated to clients but on how it is being communicated.
“This huge booklet that they never refer to again, that we take great pride in making and binding and doing whatever we do with those things, is just not getting read,” Holt said last week at Investments & Wealth Institute’s 2022 New York conference in a session he titled “Presenting Financial Plans Is Over: Long Live Advice Engagement.”
Instead, the plan is sitting in a drawer being ignored because no one has time and attention to waste anymore, he said. “Technical presentation is really dead, in my opinion.”
His new approach to client communication is something he said he learned from his wealthiest clients, who told him “the financial planning is for you, the conclusion is for me. I don’t pay you to take me through 80 pages of reports,” he recounted. Instead, clients want just the explanation of the plan, and they want it simple and fast.
And given where the industry is going, where technology can replace many aspects of the behind-the-scenes work of a planner—the reporting, needs and suitability analysis, risk profiling, transactions, trading and holdings analysis—the distillation of all that information into a single piece of paper that can prompt a conversation is where the successful advisors of the future will invest their time, Holt said.
“What is the most functional, discussable, conversation piece we can give them, that they’re going to want to retain and that has value to us as a business?” he queried. “The highest level of advice engagement—where our clients judge us, where they learn the greatest value of what we deliver—is actually all in relationship. It was in the early engagement with our clients when they were prospects, it was when we gave them some guidance for how to make some change in their life, it was when we present specific aspects of their financial plan. The point is there’s very little technology that helps me be more me.”
This refocus on engagement with a client makes good business sense, as an engaged customer is worth 10 times the value of a typical client if an advisor can keep them long term and serve their needs over time. And not just in their referral value, but in their long-term revenue value, he said.
The two recurring themes discussed most often today in wealth management are 1) lead with advice, and 2) engage the under-engaged.
Unfortunately, other entities around the financial advice industry have figured this out as well.
“You’re seeing a massive push toward credentials and accreditations for advisors or for professionals who want to move into the advice category,” Holt said. “We’re going to see a lot of competition from banks as well as property/casualty insurance, and we’re even going to start seeing it from the CPA community.”
But despite the competition for clients, there is an enormous number of people who institutions or advisory practices claim to have as clients but who are under-engaged—in that the advisors have perhaps done a little work with them, but no holistic planning, or maybe the advisor is managing some of the client’s money but not all of it, he said.