Weekly Executive Update: "It Only Takes ---- Hours To Create A Financial Plan"


The financial impact of the pandemic provides financial advisors with one of the strongest arguments ever to reach out to those investors that currently do not have a financial plan in place and convince them that now is the time.  For those investors who do not currently have a plan, 41% claimed in the past that they could do it themselves, while 31% said they “just haven’t gotten around to it”.  Other excuses included cost, not enough assets and lack of interest.  The market fluctuations and the surprising shutdown of the economy may have changed the minds of some of these individuals and now is the time to encourage them to invest the time and effort into creating a financial plan.

Spectrem’s report Defining Financial Planning provides an in-depth analysis of investors’ perception of how much time and effort it took them to work with an advisor in developing a financial plan as well as an in-depth look at what they believe should be included in a financial plan.  While most investors acknowledge that they created the financial plan to assist with their retirement planning, others acknowledge that plans were also created for other life events such as college planning.

Clearly the level of customization impacts the amount of time required by both the investor and the advisor.  Only 36% of investors indicate they have a highly customized plan while 56% indicate their plan is somewhat customized.  Investors understand that many financial advisors are plugging information into a computer program but they are comfortable with the output.  Only 8% of investors define their plan as standardized.

When asked about the format of the information they were asked to gather to submit during the planning process, 50% of investors indicated it was primarily hard copy information while 38% indicated it was primarily electronic information.  Twelve percent of investors were able to use an online aggregation tool as part of the planning process.  As age increased so did the likelihood that the information was provided via hard copy.

When asked how long it took to gather the necessary documentation, 33% of investors with a plan indicated that they spent 2-5 hours gathering the information and 30% spent less than 2 hours.  Twenty percent 6-10 hours while 17% spent more than 10 hours.

Clearly the above relates only to the hours spent by the investor not the number of hours spent by the financial advisor and his or her firm.  Clearly many investors are more organized and tech savvy than others and that also impacts the amount of time spent by the investor.

Encourage investors to take the time to create a financial plan or even update their plans if necessary.  Investors who had a financial plan in place were more confident at the outset of the pandemic and investors that have a financial plan in place and 61% of those with a plan in place are somewhat or significantly more likely to move assets to that firm.  It's a win-win for everyone.