Kitces & Carl Ep 53: Using Financial Plan Proposals To Show Planning Value To Prospective Clients

Kitces & Carl Ep 53: Using Financial Plan Proposals To Show Planning Value To Prospective Clients

The evolution of advisor technology in recent decades has made it easier and easier for financial advisors to build (and manage) systematized model portfolios for a large number of clients. The good news of this shift is that it has greatly facilitated the scalability of advisory firms. The bad news, though, is that it centered the advisory firm’s value proposition around the portfolio, as the firm’s resources were literally focused on “investment management”. And in turn, to help convert the prospects to clients, advisors learned to create beautifully designed marketing brochures, “investment decks”, and engaged proposal generation tools to show why their bespoke portfolios were better than all the other bespoke portfolios out there.

However, as the industry has continued to evolve towards a more holistic and service-based (i.e., intangible) approach to the financial planning process (and away from such a focus on investment management and the attendant performance expectations), advisors often struggle with illustrating the increasingly financial-planning-centric value that they offer (often over the course of decades) to their clients. Which, in turn, raises the question: Is there such a thing as a “financial planning proposal”, or something similar that financial advisors can give to prospective clients in an initial meeting to illustrate how great all this ‘financial planning stuff’ really is?

In our 43rd episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards talk about the importance of meeting prospective clients where they are and asking good initial questions, creating a preliminary financial planning proposal and deliverable (and what that might include), and how to provide an even more substantial piece of supporting material that can help advisors show prospects what value they can expect to receive from the financial planning process.

As a starting point, it’s important to recognize that, in order for a prospect to decide to hire an advisor, the advisor needs to have asked the right questions to uncover and understand the specific pain point that prompted the prospect to book a first meeting. As it’s the clear understanding of this pain point as a motivator that led the client to take action that the advisor must address in a financial planning proposal (and communicate back to the prospect to make them feel they’ve been heard!).

From there, the advisor can create a one-page plan that lays out what the key issues are, which might include a preliminary statement of purpose, a list of initial goals that have been identified, and a 90-day action plan to start down the proverbial financial planning road. The key is to understand that prospective clients care far less about specific solutions than knowing that someone understands their problems (and can help them work towards a solution). Additionally, advisors can supplement that one-page plan with a full sample financial plan, which can really help prospects understand what exactly they will be getting, why the fees are what they are, and what the financial planning process really means (beyond what they may have encountered in prior experiences).

Ultimately, the key point is that the days of glossy brochures full of Morningstar reports and stock photos of compasses and lighthouses may not be as relevant as they were when an advisor’s main value proposition was investment management. But that doesn’t mean that there aren’t valuable deliverables that advisors can use to help demonstrate the sort of value that prospective clients can expect. And at the end of the day, tools that help clients decide to move forward and engage a financial planner not only help them solve the problem that they came in to get solved in the first place but can expand further into a holistic financial planning engagement… and also help advisors grow their businesses in the process, too!

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