Neil Waxman Explains in the Street.com Why Financial Planning is at the Core of a Client Relationship
Financial Planners See Growing Demand From Younger Prospects
Scott Van Voorhis
Tuesday, November 20, 2018
While technology is changing some parts of the business, demand for a core financial plan appears to be on the rise.
A tech revolution is transforming the way financial advisors do business as planning software gains traction.
But even as things change, the importance of the financial plan has retained its place as the core of the client relationship.
In fact, the financial plan may now be more important than ever before amid rising demand by young professionals and others for financial guidance, financial planners say.
"Our next generation clients seem to have a growing appreciation for financial planning akin to modern wellness (sleep, nutrition, exercise are good for you is now standard!)" writes Paul Fain III, president of ASSETPlanning Corp. in Knoxville, Tenn., and a CFP.
Financial plan comes first
Maybe not all that surprisingly, many financial advisors are passionate about the importance of the financial plan. When dealing with new clients, advisors say one of the first major steps they take is to write one.
Scott Bishop, an executive vice president for financial planning and a partner at STA Wealth Management in Houston, says he will "rarely" manage anyone's portfolio without first doing a financial plan, for which he charges a flat fee.
"How could I determine the overall allocation, tax strategies or needed cash flow without a financial plan - especially if someone is at or close to retirement?" Bishop notes.
Bishop's firm, which manages over $1 billion in assets, has a five-person financial planning department that includes CFPs, certified financial analysts, or CFAs, and JDs.
Neil Waxman, managing director of Capital Advisors in Shaker Heights, Ohio, says "nothing happens until we have addressed a prospective client's qualitative and quantitative goals and objectives."
The first step is laying out what Waxman calls a "roadmap" for the client using a proprietary cash-flow modeling program.
The firm wraps the fee for the financial plan in the fees it charges clients for managing their investments.
"This provides us and the prospective client with the comprehensive, integrated, logical, forward looking perspective, which creates the basis for sound investment, estate, retirement, and tax planning," Waxman notes.
Peggy Gordon, senior vice president and portfolio manager at IBERIABANK, says the process of drafting a financial plan is crucial step in establishing a strong relationship with a client.
The firm takes a goals-based approach to investing, so the process of putting together a plan helps clients formulate and express their goals.
"Planning is a great tool for helping us all get on the same page in terms of understanding our clients' current resources and how we can best maximize those resources to achieve specific short- and long-term goals," Gordon says.
And ASSETPlanning's Fain says his firm has a six-part financial planning process, with an annual review of each client's plan.
"In our financial planning practice, the financial plan IS the relationship," Fain says.
Rising demand for plans
Financial advisers are also seeing an increase in demand for one-off financial plans by young professionals.
These are prospects who may not have enough assets to become investment clients but who need -- and value -- sound financial guidance.
It is a segment of the market that is large and growing and which a growing number of planners are eager to tap.
Jason Lacey, portfolio manager and financial planner at PJS Investment Management in Cedarburg, Wis., notes the financial plan is the "cornerstone of what we do."
Some of the strongest demand for financial plans comes from rising professionals whose careers are taking off and who are beginning to accumulate assets and start families.
"I believe there is a growing demand for financial plans as individuals are looking to develop or improve their financial position and they typically are in need of someone who is competent and trustworthy to guide them," Lacey says.
Richard "Skip" Fleming, founder of Lodestar Financial Planning in Colorado Springs, focuses his practice entirely around creating financial plans for clients, opting not to manage assets.
While most of his clients near retirement and looking for a second opinion on how prepared or not they are for the next phase in their lives, Fleming has also noticed an increase in demand by younger professionals.
These clients are typically just starting out and are "seeking advice to keep them on the right track toward their long-term goals." Some need help over a longer period implementing their plans, for which Fleming charges a flat fee every month or quarter.
"The financial plan is the center of my relationship with my clients," Fleming says. "They come to me for advice not to be sold a product. I charge for my time only."
The views and opinions expressed herein are those of the author and may or may not represent the views of Capital Analysts or Lincoln Investment. Articles are not written or produced by the named representative and the information has not been verified. There is no guarantee as to the completeness or accuracy of the content. Quotes and remarks have been excerpted from conversations with the interviewer and may have been taken out of context. All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome or the achievement of financial or retirement goals. A plan of regular investing does not assure a profit or protect against loss in a declining market. You should discuss any legal, tax or financial matters with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.
S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. Investors cannot invest directly in an index. Past performance is no guarantee of future results. Neither asset allocation nor diversification guarantee a profit or protect against a loss.
You should be aware of and carefully consider the following points before determining whether alternative investments are appropriate for you. Alternative investments include, but are not limited to, investments in hedge funds, fund of hedge funds, CTAs, private equity funds, real estate funds and managed account platforms. Alternative investments are very speculative and are highly risky. Alternative investments are not regulated. They may employ speculative and risky investment strategies. They may have limited liquidity and carry high management fees. They may have little or no operating or performance history. Past performance is no guarantee of future results. There are no guarantees of profit.
A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.
Search the Blog
Subscribe to the Blog
About the Writers
Zachary Abrams
Manager, Wealth Management & Portfolio Analysis
CFP®
Nathan Creviston
Manager, Wealth Management and Portfolio Analysis
CFP®, ChFC®, RICP®
Rob Holub
Chief Investment Strategist
CFA, CFP®
CONTACT US
Please Note: Limitations. Different types of investments involve varying degrees of risk and volatility. Therefore, there can be no assurance that the future performance of any specific investment or investment strategy (including this Strategy), will be profitable, equal any specific performance level(s), be suitable for your portfolio or individual situation, or prove successful. At any specific point in time, or over any specific time-period, any investment or investment strategy can and will suffer losses, at times substantial losses. It should not be assumed that stocks with higher dividend growth will outperform those with lesser or no dividend growth.
It should not be assumed that stocks with higher dividend growth will outperform those with lesser or no dividend growth. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Capital Advisors is engaged, or continues to be engaged, to provide investment advisory services. Capital Advisors is not a certified public accounting firm, and no portion of its services should be construed as accounting advice. Moreover, you should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advisory services from Capital Advisors. A copy of our current written disclosure Brochure and Form CRS discussing our advisory services and fees is available upon request or at www.capitaladvisorsltd.com.
Aggregated Portfolio Data as of 12-19-2023.
S&P 500: a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States
Vanguard U.S. Dividend Growers: measure the performance of U.S. companies that have followed a policy of consistently increasing dividends every year for at least 10 consecutive years. The index excludes the top 25% highest-yielding eligible companies from the index.
Capital Advisors, Ltd., 20600 Chagrin Boulevard 1115 Tower East Shaker Heights, Ohio 44122
Please review Important Disclosure Information set forth in the last section of this web site. Form ADV Form CRS FINRA Broker Check
More information regarding this firm and its investment professionals can be found on Form ADV, Form CRS, and FINRA's BrokerCheck.
Please review Important Disclosure Information set forth in the last section of this web site.