To a great extent, Logue said, the move from an advisory model to financial planning is being driven by necessity — competition and regulatory concerns. “A client can put together a portfolio at very little cost. Meanwhile, regulators are scrutinizing the fiduciary position of an advisor. But beyond the reasons an advisor might have to make this change lies the greater question: Why should they want to make this change? The answer is simple: Clients are seeking help to create what they envision to be an ideal life, rather than solving for singular needs.”
“I think when advisors stop working in their business and start working on their business, all signs point to an ongoing financial planning relationship as the best course of action.." - Chazz Logue
This, Logue said, is why a one-and-done approach so often falls short. “It’s like handing someone a map and having them drive around the country for 20 or 30 years. Things inevitably change. Instead, an active relationship with a trusted planner serves as a sort of GPS that constantly updates the route based on changing roads and conditions, a voice reminding you to take an exit or a turn. That, to me, is what modern planning should strive for.
“Financial planning is a verb. It's not about the documents you give your clients, it's about creating and nurturing a financial planning relationship. The planning process does ultimately lead to recommendations, but clients see value in three ways:
1. Regular, periodic meetings to review progress, seasonal topics and pertinent changes.
2. Proactice meetings when issues like a market correction or a new tax law warrant a discussion to explain what's happening, how it affects them and what (if anything) they should do.
3. Ongoing availability to answer client questions or alert them to any upcoming changes or decisions.
“The point is that a financial planning relationship is hands-on, ongoing, and long-term. An allocation strategy can start someone in the right direction initially, but life changes. Imagine having a checkup with your doctor at 25, and not consulting again until five or 10 years later. That's not ideal; life, people just change too much. Most people see their physician every year for a checkup, and I think it should be the same with planning. Just as a doctor looks at your vitals, a planner should monitor various core topics.”
Financial planning is a verb.
An active relationship with a trusted planner serves as a sort of GPS.
Planners are not paid to have all the answers. They're paid to find the answers.
Traditional asset allocation and portfolio construction services serve an important need, but often fall short in the context of clients’ long-term needs. As Logue puts it, “I've always viewed insurance and other products like chapters in someone's life. Planning is about how these chapters, together, tell the story of someone's financial life. The number one question we get from clients is about tax management strategies. The number two question is about health benefits. Many advisors shy away from these topics because they're not really equipped – or compensated – to address them. But planning puts more of an emphasis on answering what's important to a client. You need to look at the whole story.”
It stands to reason that many advisors may feel ill-equipped to address some of these more complex and specialized topics. “At MassMutual, we have a case consulting unit which is basically a team of CFPs that can help advisors with making recommendations and creating the plans,” said Logue. For those with no access to such a resource, networking with trusted colleagues in specific fields of expertise is recommended. “I often remind newer planners that they're not paid to have all the answers. They're paid to find the answers.”
In the end, said Logue, “Our job is really about the client's goals. Reach out to your clients, ask them what they were looking for in an advisor relationship when they chose you. What were their expectations? What more could you do for them? Then review your service model. Put yourself in your clients’ shoes. What is it like to be one of your clients? What do you want your advisor to do for you? How can you improve your clients’ experience? How can you help them write their best story?”
You can access the full discussion on The Flexible Advisor, wherever you get your podcasts.