3 financial planning myths debunked

September 6, 2017 by Brian Sasaki

Two financial advisors discuss their financial planning strategies.

About the author:

Brian Sasaki

Account executive

Brian started his career working for a large insurance and investment company located in Milwaukee, WI, where he was one of the top financial representative interns in the country.

There are those who may be hesitant to reach out to seek the aid of a financial advisor. This is not necessarily a reflection of the advisor, but rather a byproduct of commonplace misconceptions about financial planning. Let us tackle some of the most common myths about financial planning.

Planning takes too long

When talking with advisors, I hear a fair amount of pushback from those who do not want to add planning to their practices. Mainly, this is because of the amount of time advisors think it takes to build a plan. However, the days of extremely complicated and detailed financial plans are coming to an end. Do not get me wrong; there are situations that call for a very detailed plan, but we do not have to get into the weeds of planning every time.

NaviPlan® is an incredibly flexible — yet robust — financial planning software. It offers three levels of planning, from simple 10-minute assessments to the most comprehensive tax and estate plans. In addition to the three different levels, you can also decide which modules to turn on and off, thus eliminating any unnecessary data entry. By offering scalability and flexibility, NaviPlan makes planning easy and efficient. To see how easy it is to use the software, watch this short video demonstrating how to create a 5-minute retirement plan in NaviPlan.

There is no ROI on planning

As an add-on to the first myth, there are many that also believe there is no ROI for the time they spend doing and creating financial plans. Advicent has over 100,000 advisors using our software to create financial plans, and through various surveys we have been able to compile ROI results from our planning customers.

A survey conducted by Advicent indicated that 80 percent of respondents said they sell more products because of financial planning. When using plans to position insurances and annuities, you can really connect with clients and show them how events like an early death or disability will affect a family’s goal like retirement or sending kids through college. Planning allows you to go far beyond a simple math equation of needs versus abilities.

Additionally, 45 percent of respondents said they get more referrals from each plan that they create. The best way to receive a referral is to exceed client expectation, and financial plans are not always what your clients are expecting because a lot of times they have never received one before.

Lastly, 91 percent said they experienced an increase in AUM because of planning software. This can be attributed to a number of different reasons regarding planning. One of the most popular is by using planning software, you can illustrate how making a slight investment change, (smaller fees, or slightly higher growth rates) can take them from covering 90 percent of their retirement projection to 100 percent projected coverage.

Only a CFP can do planning

I will say that advisors with CFP designations have a significant understanding of financial planning concepts and rules. However, this is in line with the first myth that planning takes too long. Now that we are able to scale planning back to do simpler plans – and software that helps with recommendations on things like taxes – you do not have to be a CFP to do planning.

Many of our enterprise customers roll different planning levels out to advisors; this is becoming more and more popular with firms rolling out planning for the Department of Labor fiduciary rule. They let the majority of their advisors generate simpler plans and train a core planning department of CFPs to help with difficult and comprehensive plans.

To learn how Advicent technology can increase ROI at you firm, click here.