US Wealth Advisors See Financial Planning Tools As Business Winners - Study

Tom Burroughes

10 April 2018

The majority of US wealth advisors think financial planning processes are an important way to stand apart from their rivals, suggesting that wide and deep resources will determine who are the winners, research says.

For many firms, the balance between scale and depth determines the extent to which they can support financial planning initiatives, Cerulli Associates said in a recent report.

The report comes as the US wealth industry moves towards more fee-based advice, even though the recently introduced Department of Labor Fiduciary Rule that requires advisors to act in the best interests of clients has hit legal hurdles.

Broker-dealers with scale can hire advanced planning teams of financial planning specialists that deliver personalized support for nuanced cases, the report said. It gave the case of were teams employ CPAs who specialize in tax efficiencies, attorneys with estate planning backgrounds, and CFP® professionals who can help clients with complex planning issues, such as concentrated stock options and business planning.

“These highly-skilled positions are more difficult for smaller firms to invest in and sustain,” it said.

"Adoption of comprehensive financial planning is on the rise in response to client demand, shifting regulation, and competition from digital, low-cost providers," Marina Shtyrkov, a research analyst at Cerulli, said.

"Cerulli data shows that more than 60 per cent of advisors agree that client demand for financial planning is increasing and that their financial planning process differentiates their practice from other advisors,” Shtyrkov said.

"Avid adopters of comprehensive planning will need support from home offices and other partners to scale these offerings as they grow their practices," Shtyrkov said.

"Firms must be prepared to fund substantive resources in order to provide the necessary ongoing support, lending a competitive edge to those that have the scale to invest in building and maintaining this support,” she added.