A recent Cerulli Associates study revealed that financial planning services are vital for client relationships and business growth. Drawing from more than 20 interviews with successful advisory teams and a survey of more than 2,000 financial advisors, the findings show that advisors who evolve from investment management toward comprehensive planning grow faster and with more stability.
Here are six key takeaways:
1. Rising demand for written financial plans
The importance of written financial plans has grown significantly over the past decade. According to the study, 53% of investors now agree that having a written financial plan is important, up from just 41% in 2014.
Factors driving this trend include heightened market volatility with two major corrections in the past 15 years, the ongoing decline of employer pensions as a retirement funding source, and the expanding variety of complex investment options. Furthermore, the growing accessibility of financial planning and advisory services has heightened investor awareness, with their value increasingly recognized in the market.
When choosing an advisor, investors prioritize professionals who understand their goals (55%) and look at their entire financial picture (49%) over investment performance (46%), giving planning-focused advisors a competitive edge.
Pro tip: As a consequence of these changes, in terms of new client acquisition, advisors whose service offerings are more oriented toward comprehensive wealth management have a competitive advantage over those who are not.
2. The many benefits of providing comprehensive services
The benefits of providing these services are far-reaching:
- Stronger client relationships: Deeper engagement leads to increased AUM, with 56% of new clients coming from referrals from current clients.
- Increased client retention: Strong relationships create ‘stickier’ client connections.
- Higher client wallet share: Planning uncovers opportunities to consolidate held-away assets.
- Professional referrals: Collaboration with CPAs and attorneys generates opportunities (practices attribute 15% of new clients to such centers of influence).
- Competitive differentiation: Planning services help advisors stand out in a crowded marketplace focused on investment performance.
- Flexibility to move upmarket: High-net-worth (HNW) investors require comprehensive financial planning, including income tax planning, estate planning and risk management.
Pro tip: Consider implementing specialty services that align with your specific client’s needs. These services could be tax planning, executive compensation planning, risk management, estate planning, retirement planning, and more. Tax planning especially drives a ton of value and revolves around something every client is interested in—saving money.
3. Four main types of advisors
The range of services that advisor practices offer should align with the needs of the client segments that advisors serve and the knowledge and expertise within the practice.
The study categorizes advisors into four distinct practice archetypes based on their service emphasis:
- 7% of all industry advisors are “Investment Planners” (basic portfolio construction solely focused on asset management)
- 57% of all industry advisors are “Case-Based Planners” (investment-focused with some planning)
- 26% of all industry advisors are “Comprehensive Financial Planners” (Develop complete financial plans with nearly all clients based on an extensive analysis of their goals, assets and liabilities)
- 10% of all industry advisors are “Private Wealth Managers” (specialized in comprehensive services wealth management with all clients)
Interestingly, while 88% of advisors believe they provide comprehensive planning, only 31% truly deliver a wide range of core financial advice services as their value proposition. Given investors’ growing preference for planning services and the demonstrated practice benefits, advisors should assess how well their current offerings meet market demand.
Pro tip: Successful practices operate across the entirety of the spectrum of service emphasis. However, advisors who emphasize holistic financial advice, including tax planning, are better positioned to meet growing demand.
4. What services are most popular?
To evolve their value proposition along the pathway toward providing comprehensive advice to nearly all clients, advisors can gradually add more services. The study identifies the most frequently offered financial planning services across all advisor types:
- Retirement income planning (95% of advisors)
- Retirement accumulation planning (88%)
- Insurance planning (69%)
- Education funding (68%)
- Cash management or budgeting (60%)
Less commonly offered services include estate planning (55%), charitable planning (48%), tax planning (46%), and business planning (33%).
Pro tip: Although crucial for them, tax planning and estate planning aren’t just for HNW clients. Even young professional couples with children benefit from tax planning and basic estate-planning guidance, making advisors valuable across all wealth tiers.
5. Staffing for planning success
The study shows a clear correlation between specialized staff and comprehensive service capability. Advisors identify time constraints and subject matter expertise as the greatest challenges in adding specialized services.
- 52% of Private Wealth Manager practices employ specialized staff
- Only 13% of Investment Planner practices do the same
Hiring paraplanners and investment specialists removes workload from advisors, allowing them to focus on client relationships. Growing practices report success by increasing efficiency through teaming and outsourcing investment management.
Pro tip: Scaling your practice requires offering more services, growing and operating in a team structure, and hiring people with varied subject matter expertise.
6. The pathway to offering more
For advisors looking to enhance their planning capabilities, the study offers practical guidance:
- Start gradually: Begin with tracking client net worth and savings rates to familiarize clients with planning’s value.
- Leverage available resources: Contact your home office for planning tools and support.
- Ongoing monitoring: Regular plan reviews uncover new opportunities.
- Pursue planning certifications: Credentials like the CFP® enhance expertise and credibility.
- Partner with external experts: Build networks with CPAs, attorneys, and insurance professionals, which can significantly increase the depth of expertise provided to clients and opens the door for a steady flow of referrals.
- Consider team structures: Teams enable upmarket movement and service expansion.
- Add specialized staff: Paraplanners and specialists increase efficiency.
Pro tip: Begin with your firm’s unique value proposition: your strengths, passions, client needs, and team capabilities. Then implement comprehensive, high-quality services that align with these factors. Consider developing specialized tax planning expertise like we’ve built at Carson Wealth’s Franklin Lakes office, where this capability has significantly enhanced client retention and attracted HNW prospects.
As the industry shifts from “sales and service” to “advice and service,” those embracing comprehensive planning will achieve greater growth and client satisfaction. Start with simple steps like net worth statements and savings tracking to introduce planning’s value, while established practices can enhance their approach through better technology and best practices.