Consumer Perceptions of Financial Planning

The Financial Planning Association has twice yearly events for their Major Firm constituents where about 100 financial planning advocates from the large wire houses and broker dealers get together to share ideas and best practices about financial planning. The last such event was in NY about two weeks ago. One of the presentations was on consumer perceptions of financial planning, based on at least four studies either conducted or commissioned by the FPA over the last three years. It's always good to know your market, and if you are selling the merits of a financial plan (as either an end in itself or a means to another revenue opportunity), its helpful to know what the market thinks about your service.

I would not say that the results of the study highlighted anything that was particularly unexpected, but it reinforced a lot of truisms that most of us probably believe, and put a lot of quantitative data behind the assumptions we make about clients perceptions. For those us like Dennis Hopper who stand in the middle of an intersection and say with stern conviction, "You Gotta Have a PLAN!!!", the results of the survey may be a little disappointing. The key takewaway is that across most demographics, the perceived value of a financial plan is fairly low. ($144 was perceived as "inexpensive" and over $400 was perceived as "expensive"). Naturally this improves somewhat in the six-figure income range, but not as much as one would think. The top three takeaways according to the presentation, though, show the opportunity for advisors:

• Consumers have an established idea of what "financial planning" and a "financial plan" are. However, education in the value, purpose and possibly the true definition is needed.
• Consumers are driven to professional planning by retirement planning and base their choice of planner on reputation, fees and service specialty.
• Providing a written, professional plan, tangible actions and reinforcing client confidence increases client satisfaction and positively impacts your bottom line.

Like I said, not exactly earth-shattering, but it's important to keep in mind that the more planners educate clients on the need for planning, the more the clients will appreciate it and develop a more trusted relationship with the advisor. The decisions that are made have a more defensible and justifiable framework, and the perception of the advisor, even if things get off track through tough times, will generally remain higher.

There's about 45 pages of compelling charts and data in the presentation that backs up all these conclusions. Let me know if you are interested. The next Major Firm Symposium will be at the FPA Show this October in Anaheim.

Comments

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as much as one would think. The top three takeaways according to the presentation, though, show the opportunity for advisors:

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