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Why Are So Many Advisers Resistant to Written Financial Plans?


A new survey by Fidelity Investments of 500 financial advisers and 500 retirees and pre-retirees found that only 18% of pre-retirees who work with advisers have retirement plans. Of those investors, only slightly more than half have detailed written plans. A separate survey of 1,800 advisers by Cerulli Associates, a Boston based consultancy, found that last year only 33% of financial advisers said they provided clients with comprehensive financial planning, including a written financial plan. That’s down from 40% in 2009. And a June poll of 1,011 adults conducted by KRC Research for the Certified Financial Planner Board of Standards found that just 42% of those surveyed had a written document outlining their financial plans and 11% had little more than notes and ideas.

Why the resistance against getting it down on paper? Some advisers argue that as soon as they write a plan down, it needs to be reworked to adapt to economic shifts, according to the Fidelity survey. These plans can be substantially impacted by market conditions and job changes, to name a few factors, says Patrick Sullivan, chief executive officer of ScenarioNow, a financial software company. Then there are individual life changes: births, deaths and health conditions, he adds. “It gets outdated about 15 minutes after you write it down,” says Sullivan. Other financial advisers just don’t have the resources to provide detailed written plans, a process that could involve collecting financial statements from clients, examining their debts and crunching the numbers for their projected savings, says Ryan Shanks, chief executive officer of Finetooth Consulting, which provides research based consulting to financial advisers. And few advisers are eager to constantly repeat the process, adds Sullivan. ““I think a lot of advisers though don’t want to be held that accountable,” says Shanks.

But the benefits of providing a documented plan are plenty. Clients who received written plans were more likely to be satisfied with their advisers and stick to their plans, according to Fidelity, which found 80% of retirees intended to follow at least some of their plan. Comprehensive financial planning, which includes a written plan, also increases assets under management, strengthens customer relationships and makes it easier to establish investors’ expectations, Cerulli found. Investors who could see their plans also felt more upbeat about their financial futures, says Dan Drummond, a spokesman for the Certified Financial Planner Board of Standards, which found that 58% if Americans said they would feel more confident about their finances if they had a plan in place and 86% expressing they felt they should have a plan. “You’re giving something very concrete for investors to reference,” says Shanks. “Now I can look at this and say here is my road map.”

Not surprisingly, how much you get from your adviser depends on how much you have in the first place: wealthier clients with a few million dollars of investible assets are more likely to get detailed written financial plans, says Scott Smith, associate director for Cerulli. Most, less wealthy  investors receive projection models that focus on one goal – sometimes without documentation– instead of a long term comprehensive plan, says Smith.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.