Financial Planning – Process, Time, and Profits

How does your practice’s financial planning process compare to other financial advisors? A recent report from FPA Research and Practice Institute™ helps planners understand how advisors engage in the financial planning process. Financial Planning in 2015: Today’s Demands, Tomorrow’s Challenges explores the financial planning process, resources used, fees charged and more. The study uses the CFP® certification to segment the advisors and explore the results of the two groups.

The financial planning process is primarily executed by advisors rather than supporting team members. Advisors play a key role in the entire process from gathering data, developing the plan, and delivering the results. The average time spent to create an initial financial plan by the advisor is seven hours. Six more hours go into developing plans by the advisor’s team. Total time invested to develop an initial plan is thirteen hours.

It’s common practice for advisors to not charge a separate fee for financial planning. Only a third of advisors charge a separate fee for creating initial plans. Even less charge a separate fee for plan updates. Most advisors charging a separate fee for planning use a flat fee rather than an hourly fee model.

Advisors without the CFP® certification commonly charge less than $1,000 to develop an initial financial plan.  Advisors with the CFP® certification most commonly charge between $1,000 and $2,499. A breakdown of the average financial planning fee is shown below.

A large majority of advisors reported clients who receive financial planning are more profitable. With the time required to create plans compared to the average fee charged, it’s clear the profitability is not due to planning fees alone. The study shows a majority of clients who go through the financial planning process end up investing assets with the advisor. Fees based on AUM continue to be the largest revenue source for advisors.

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Silver Financial Planner is an easy, effective solution for busy planners. Silver’s intuitive navigation and clear reports allow you to spend more time with clients and less time creating plans. Instant, side-by-side scenario comparisons allow for rich client interaction.	TOTAL is a powerful and flexible financial planning platform that offers both goal-based planning with Easy Money Power Planner, and cash flow-based planning with Golden Years Cash Flow, allowing advisors to plan for any client situation.