Chief Investment Officer
Commercial Loan Automation
BirdsEye Viewtrends in financial planning
Financial Planning is an elusive discipline. Everyone agrees its' the best way to build deep customer relationships and anchor a great value proposition, yet the general perception is, no one is willing to pay for it. Financial planners have been prospering for years, but their primary revenue source is investment advice, so people say. How to unlock the Financial Planning query remains a mystery. Below are some thoughts on paths to success with financial planning, some of which were gleaned from our last Wealth Management Forum.
Before you dive into the article, note the words Bill Beitler has shared with me regarding the 2007 Outlook: "The terrible thing we're doing to ourselves with the "special MMA" hit home in particular. I've been ranting in ALCO all year about the ineptitude of our brethren, how they've virtually abandoned normal pricing practices for core checking and savings products (no one in our market has moved these more than a few basis points as rates have marched north), thereby waking up a lot of "sleeping dogs", making all but the priciest of CDs obsolete, and driving everyone's cost of funds through the roof. Behavior like this would almost make you think the industry would do something silly, like give internet banking and bill-pay away for free to everyone (oops, that's right, we did do that?!?!). but hey, why generate any non-interest income; that would just take your eye off the ball as you work at compressing margin!" Bill doesn't mince words, does he? He concludes, "It's a good thing that true, aggressive service-oriented selling can still help a little guy like me drive business deposits up, preserving precious margin. And, of course, we earn our "BMW not Ford" loan rates wand fees with simple, old-fashioned service. Answer your phone, promise and deliver, say please and thank you, etc. etc. etc."
Have a delicious and fabulous holiday season , and consider making the world's best latkes recipe from my friend Amos Shucman; they are non denominationally delicious! Plus, Dick's coveted glazed carrots recipe is also posted for your dining pleasure.
Trends in Financial Planning
The topic of financial planning is a painful one among Wealth Management executives. It's one of those businesses that sound perfect until you actually look at it. Planning should be a perfect relationship consolidator, THE opportunity to become a truly trusted advisor while getting a birds' eye view (no pun intended) of the client's entire financial holdings. Quite a few firms, many of them small, make lots of money in that business. So how come we can't find clients who are willing to pay anything for a good financial plan?
This question keeps arising in our Wealth Management Forum, as it did again last week. It brought the issue to focus once again, and some conclusions did occur to me following our discussion.
In order to be successful in financial planning, I believe the following questions need to be asked and answered:
I believe that financial planning hasn't been as successful as it could be in many banks because it is considered a stand-alone product, an enhancement of an existing product line, rather than a cultural evolution. Like so many other products, most notably credit-life insurance, it's a belief issue. If your executives do not believe that financial planning creates tangible value for customers and for shareholders, it will continue to be marginalized regardless to periodic resurgence efforts. If the culture change starts at the top and goes to the roots, it will take hold.
Further, I notice that many banks aren't crystal clear about the role of financial planning in their product line, or how it is going to be produced and delivered. This ambiguity and lack of goaling contributes to the product's inconsistent performance, as some Wealth Management professionals embrace the service and use it successfully while others ignore it.
Where financial planning does work, the following elements typically are present: