The collective shift toward comprehensive financial planning has been talked about for years. Those who predicted it would occur in the 1990s jumped the gun, but, fast-forward a decade; it now seems that financial planning is finally a household practice at most brokerages, mutual fund and full-service dealers, banks and insurers.
Investment Executive’s 2008 Report Cards show that half of all advisors’ clients have a financial plan in place, a strong indicator that many advisors are adopting a holistic client-service mindset.
“The fact that I do a financial plan without earning a cheque right away doesn’t mean I’m not getting rewarded down the line,” says Bill Bell, president of Bell Financial Inc. in Aurora, Ont., which is affiliated with Waterloo, Ont.-based Manulife Securities International Inc. Bell, who champions comprehensive financial planning, wishes more advisors — regardless of which arm of the industry they’re in — would take a longer-term approach to client service.
Bell cites two reasons why more advisors aren’t creating comprehensive financial plans: “One, the money always comes from somewhere else; and, two, because of the old-school training.”
Other advisors in our surveys can add other reasons. “Financial planning is very time-consuming,” says a Great-West Life Assurance Co. advisor in Alberta, “especially if clients don’t pay for it.”
An advisor in Saskatchewan with Markham, Ont.-based Professional Investment Services (Canada) Inc. likens written plans to diets because “no one follows them.”
“The idea of financial planning is marketing gobbledegook,” adds an advisor with Toronto-based brokerage Raymond James Ltd. in British Columbia.
But Bell maintains that comprehensive financial planning yields huge returns over time in terms of commissions, referrals and long-lasting relationships. “We need to ask our clients whether they plan on buying a cottage or travelling the world or staying in their jobs,” he says. “My clients are so happy that I’m engaged in their lives; it’s the best way to keep them, long term.”
Bell believes firms need to step up to the plate, to advocate financial planning and make it a mandatory aspect of rookie training: “We should have young advisors, those who aren’t already entrenched in a certain way of doing business, trained in a way that’s better for our clients.”
Indeed, the firms surveyed in this year’s Report Cards say they are stepping up their support — either financial or philosophical — for financial planning. Advisors surveyed at the mutual fund or full-service dealers remain the most committed to comprehensive financial planning, with 57.2% of their clients having a financial plan in place.
“In our training,” says Kevin Regan, executive vice president of financial services for Winnipeg-basedInvestors Group Inc., “we emphasize that our advisors not just be product focused but client-needs focused.”
Manulife shares a similar, client-centric mentality. “Our ideal advi-sor is someone who takes a planning approach to meeting their client’s needs,” says Manulife Securities president and CEO Rick Annaert.
And he is not just paying lip service to the topic, as Bell attests: “Manulife has never said, ‘You know, Bill, you’re spending too much time on planning and not enough time selling insurance’.”
Insurance advisors have the second-largest percentage of clients with a financial plan in place, with 48.7%. “Financial planning wasn’t my practice before, but it is now,” says an advisor in Ontario with London, Ont.-based Freedom 55 Financial, who estimates that half of his clients have financial plans.
“We take a holistic approach to financial planning,” says Mike Cunneen, senior vice president of the firm’s wealth and estate planning group.
A significant number of advisors with investment dealers are also taking a planning approach and asking their clients questions about their plans and dreams. Says Hamish Angus, head of Toronto-based ScotiaMcLeod Inc.: ““As one advisor said to me, ‘You can’t dream for a client, unless you understand what their dreams are’.”
This sentiment is shared by many of the brokerages, with executives touting the importance of comprehensive financial planning. Montreal-based National Bank Financial Ltd. has made “major investments” in financial planning, says Gordon Gibson, senior vice president and managing director.
“NBF has great tools,” agrees a NBF advisor in Quebec.
Advisors with Toronto-based RBC Dominion Securities Inc. also praise their firm’s support for comprehensive financial planning, which includes a team of 50 centralized planners and assistance at the branch level. David Agnew, DS’s national director, says an increasing number of advisors are taking advantage of these services: “They realize it is very, very key.”
@page_break@On average, 47.4% of brokers’ clients have financial plans in place, compared with 44.8% of account managers’ clients. However, at least two of the Big Six banks say they’re substantially beefing up their support for financial planning.
Toronto-based Royal Bank of Canada, which uses NaviPlan software, plans to roll out a Web-based planning platform this autumn. And Toronto-based Bank of Montrealis also set to launch a new NaviPlan platform this autumn, which will be used by all of the institution’s subsidiaries and divisions. IE
Shift takes hold of financial services industry
Half of all advisors’ clients now have a financial plan in place
- By: Maureen Halushak
- September 4, 2008 October 28, 2019
- 09:10