Does charging for a financial plan even make sense?

November 20, 2017 by Nathan Lukow

An advisor meeting with a young couple about their financial plan in a coffee shop

about the author:

Nathan Lukow

Account executive

Nathan is an account executive at Advicent, the financial planning technology provider of choice for nearly 100,000 financial professionals.

Charging for financial plans is a business model that a relatively small minority of advisors has been using for years, but the concept has really taken off since the introduction of the DOL fiduciary rule in 2015. One of the first questions I ask when meeting with an advisor is how they are currently monetizing or foresee themselves monetizing the plans they develop, and I get a wide range of responses to this question.

By far the most common answer is that they leverage planning as a “value add” for prospects to win their AUM. Some charge a flat fee for plans or bill by the hour, and others have some more creative strategies such as offering planning as part of their pricier top tier service package.

I think all of these strategies are perfectly valid and each lend itself better to a particular market segment; however, what consistently surprises me are advisors who insist that their clients are not interested in financial plans and even more adamant that charging for plans is impossible.

Proactive advising with holistic financial planning

I think the basic rationale for thinking clients are not interested in or will not pay for a financial plan is the fact that their clients are not proactively asking them for plans, so they assume that they are not interested. This is not at all surprising to me because the majority of consumers may not understand holistic financial planning or have no idea that formal financial plans are available.

It is the advisor’s job, however, to communicate effectively why financial planning is valuable. One of my closest friends is a dentist, and he does not sit around waiting for his patients to ask for specific preventative procedures. He understands that it is his responsibility to articulate the relevance of his recommendations.

Financial planning works in the same way. The most effective way to create demand for plans is to show some tangible value before asking clients or prospects to do a bunch of homework or agree to pay for one.

The NaviPlan Forecaster Assessment fits this niche perfectly. It gives advisors the opportunity to introduce the idea of planning, start the data gathering process, and demonstrate the need for a plan without the time or monetary commitment it would take to complete a more formal, comprehensive plan.

While the Forecaster Assessment (along with light planning in general) is often overlooked, this can really be the sweet spot for advisors currently completing financial plans as a “value add.” Charging for a financial plan is a much easier conversation to have after clients have already mentally bought into the process.

To learn more about how NaviPlan can help you demonstrate value to clients and prospects, click here.