Of course, going into such depth will require multiple discussions
with each client, the use of sophisticated planning software,
training, and the deployment of other resources. Is it worth the
extra effort and expense? FPs might question why they shouldn’t
just stick to the basics.
Our research has repeatedly shown that FPs who offer holistic
planning and formal written retirement plans to their clients
are rewarded with product purchases, greater assets under
management, and higher client confidence and satisfaction. The
benefits are evident across clients with different wealth profiles.
For example, SRI research finds asset consolidation is significantly
more likely to occur when FPs create comprehensive plans for
affluent and high-net-worth clients (see Figure).
Comprehensive planning can also improve confidence levels
among mass affluent clients with less than $500,000 in investable
assets. For example, the proportion of mass affluent retirees who
are confident that they will be able to live their desired lifestyle is
significantly higher when they have completed a comprehensive
plan (71 percent) than when they have not (47 percent).
FPs who provide in-depth planning and plans to clients will
enjoy an advantage over other FPs, because most pre-retiree
investors do not have plans in place today.
The bottom line: holistic planning
has become “table stakes” and will
be central to FPs’ value proposition.
Percentage of retirees who consolidate 90 percent or more of assets with their financial professionals
55 %
53 %
41 %
21 %
Don’t have a plan
Have a plan
Mass affluent
Investable assets <$500,000
Don’t have a plan
Have a plan
Affluent / HNW
Investable assets $500,000 or more
Source: The Differences They Make:
An Advisor, an Annuity, and a Formal
Plan in a Retiree’s Life, Secure
Retirement Institute, 2018. Based on
2,025 retirees with annual household
income of at least $35,000.
Retirement risk perception Non-financial planning
FPs routinely ask clients about investment risk tolerance and
use their responses to build suitable investment portfolios.
An important but less common aspect of holistic retirement
planning is assessing a client’s perception about the biggest risks
they will face in retirement. SRI research reveals that most
pre-retiree investors are more worried about incurring
catastrophic health care expenses than they are about market
volatility or leaving a legacy to heirs. While outside of the comfort zone for many FPs, it is vital to
understand a client’s overall well-being, including his or her
family and friend networks, activities, and health (both physical
and mental). True holistic planning will integrate these and other
aspects of their clients’ lives with their financial objectives; it will
ensure that financial decisions ultimately harmonize with, and
serve to improve, clients’ welfare.
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