Financial planning is not just portfolio management

February 05, 2018 by Shawn Preisler

An advisor and her client work through a financial plan.

About the author

Shawn Preisler

Regional sales director

Shawn has more than 15 years of experience in the financial services industry and has held leadership positions in both the broker dealer and RIA space. Shawn leverages his vast industry experience to help investment firms implement financial planning technology solutions which allow their clients achieve financial success.

In the financial services industry, it is commonplace for a word or phrase to mean different things to different people. These terms can also be thought to mean something that it is actually is not; one of those terms is “financial planning.”

With 15 years of experience in the industry, I have had many conversations regarding financial planning. In many cases, there is a misconception that financial planning is synonymous with portfolio management. 

While it is vital to ensure that a portfolio is properly allocated and managed appropriately, that part of the overall equation is secondary — or even tertiary — in the financial planning process.

Understanding your clients and their goals

With any type of plan, there is no way to properly plot a course to achieve the desired outcome without understanding and defining what you are planning for; financial planning is no different. The first step in crafting a truly powerful financial plan is to sit down with your clients and understand their goals.

In most cases, these goals will likely include retirement planning, but the plan could become more complex if they have other goals like paying for educational expenses, buying a new home, detailed tax planning, or estate planning.

Regardless of the goals your clients may have, if you begin with a true understanding of the goals, then you can begin planning the necessary steps your client will need to follow in order to achieve their objectives. Once the goals are identified and the plan is in place, the investment management portion of the relationship will take care of itself because the time horizon and risk tolerance will be determined by the plan that you have helped them put in place.

Fortifying client relationships with holistic planning

As you work through the conversation about goals, it will help for you to use a powerful cash flow financial planning software that will allow you to easily build different scenarios. This will empower your clients to see how their investments tie into their plan and how your recommendations will move them closer to achieving their goals.

Using technology to illustrate the value you bring to the relationship will help remove the doubt that often arises from clients not being able to visualize how your expert advice will support the financial goals of your clients. Building an emotional connection between client goals and your recommendations by using the dynamic reporting capabilities will build trust in the relationship, leading to faster sales and stronger relationships.

If you are looking for a way to differentiate your service from all the other firms and advisors in the market, take a different approach to your client relationships. Identify goals, build a plan to achieve those goals, and then make the portfolio management duties part of the overall plan — not the centerpiece of your client relationships.

To learn more about how Advicent technology can help fortify your client relationships, click here.