Survey: Do You Make Money By Writing Financial Plans?

Monday, August 20, 2012 11:20
Survey: Do You Make Money By Writing Financial Plans?

Tags: Advisor businesses | CFP Board | financial planning | profession

Financial advisors have long complained about the difficulty of making money on writing financial plans. But is it really problem? Here's a short survey aimed at helping find out.

In June 2011, I write a post saying that the CFP business model needs help and that planners have a difficult time making money on writing financial plans. The story has received more than 23,000 hits and for months was one of the most popular posts trending on A4A. That post argued that the CFP Board should provide continuing education (CE) credit for practice management to help planners address this business issue. 

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Last week, after the CFP Board proposed revising its CE credit requirements to provide up to four hous every two years for practice management topics, I applauded the CFP Board taking a step in the right direction but chided the Board for not going far enough.

Today, A4A blogger Sheryl Rowling posted calling on advisors to charge for preparing financial plans and saying it was unwise to regard plan preparation as a loss leader next to investment management. I'm not sure how realistic that is. 

To facilitiate the discussion, please take this survey and let us know where you come out on this issue.



Create your free online surveys with SurveyMonkey, the world's leading questionnaire tool.



Comments (6)

Andy, not only do I make money by writing financial plans; it's how I make my living. Granted, there are still investment only managers out there (planning only advisors too), but I think many have moved towards being an investment firm that offers planning, or a planning firm that offers investment management. Clients are demanding this. And for either type of advisor there are opportunities to service their client needs and make money by outsourcing the work.
ryanj317 , August 20, 2012
Andy: When I first started in the business, I did not charge for the financial plan and client implementation was very low. I felt like I was wasting my time and energy.

Once I began requiring a financial planning fee and a separate agreement, client implementation skyrocketed making it a win-win for all participants.
msteele512 , August 20, 2012
Some very successful advisors do require every client to get a plan. But that's rare. I'd like to hear from advisors who I speak with all the time that are not as good at getting clients to pay for planning. What obstacles do you face? Why don't you require all -- or at least most -- of your clients to get plans? Why do some CFPs say they rarely do comprehensive planning for clients?
agluck , August 20, 2012
Andy - ask about the elephant in the room!!!! If you charge, what 'financial planning' software do you use?

If you're not using financial planning software, you can't charge for financial planning. HINT - if a large broker firm or 'independent' b/d uses the software, it ain't planning- because of FINRA rules on communications with the public!!!

brentb843 , August 20, 2012
Your assertion that reps at BDs can't do financial planning seems absurd. Please explain.
agluck , August 29, 2012
absurd, but true. a registered rep can provide advice that is only incidental to their role in securities transactions, so planning can only be provided by an IAR (investment advisor rep).

Now, we then have to consider how the b/d protects itself from the individual who is both a reg rep and IAR, that is providing planning as an IAR but 'implementing' under the b/d, because clearly this would be continuous advice and the 'trades' would be based on the planning, not securities transactions.

So, the way around this is to obtain FINRA approval on the 'planning.' Remember, Andy, FINRA is the regulator to brokers, not advisors. FINRA will sign off on the 'planning' under its communications with the public/client rules when the 'planning' has disclosures that it is really just hypothetical illustrations for now, not any indication of future whatsoever.

So, if we define planning as current illustration, then ok. But if we define planning in the manner the client perceives it and desires it, well, then that is a whole 'nother story.

Look at the CFP/FPA fight over the 'planning' definition. Look at the disclosures in MGP. Look at RULE 2210.

However, the easiest thing is to call any broker dealer's compliance department and ask 'do your reps provide planning?'

Why did Merrill Lynch end its Financial Foundation program?

IAR reps yes. Dual registered, highly unlikely.

brentb843 , August 31, 2012

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