3 Questions with Sheryl Rowling on Holistic Financial Planning

By Sheryl Rowling, CEO, Total Rebalance Expert on Tuesday, September 8th, 2015

In today’s blog, we interviewed Sheryl Rowling, CPA/PFS chief executive of Total Rebalance Expert and principal at Rowling & Associates, 3 questions on the topic of Holistic Financial Planning.
From your perspective, what are some of the challenges that advisors are facing today with providing holistic financial planning?
 Communicating value is a huge issue. Helping clients reach their goals by integrating financial planning with investment management makes a significant difference in clients' lives. Yet, clients are bombarded by (seemingly) less expensive options. Since financial planning is intangible, it can be difficult to create an understanding of value. When you think about it, in this regard, advisors are their own worst enemies. They bill on assets under management and report on investment performance. Some firms are moving to a retainer billing model while others are billing on net worth. These methods, including AUM billing, are not perfect so advisors are still struggling. How can you communicate value? How do you structure billing? And how should you report? These are questions without solid answers now.
Another issue with providing holistic planning is profitability and strain on resources. These problems are interrelated. Financial planning, even with financial planning software, is labor intensive. It is also a service that tends to have unpredictable times of high demand. Managing the ability to be responsive to clients while maintaining ongoing tasks can be difficult. Since most advisors don't charge separately for financial planning (except for possibly initial financial plans), the combination of the unpaid value-added service with the need for qualified employees to handle the workload can often strain the business.
What are some of the ways that advisors can overcome these challenges?
I don't know of a magic solution to communicating the value of holistic financial planning. Education is certainly imperative. Explaining the various aspects of financial planning should be an ongoing process in client communications. This should include one-on-one meetings, webinars, newsletters, live presentations and blogs. Education can go a long way toward helping clients realize the value they are receiving. Additionally, advisors need to find ways to report on financial planning deliverables. For example, it might be helpful to report on progress toward goals in quarterly reports.  At my firm, we also send an annual letter detailing all of the value-added services we have provided during the year. (We track these services through our CRM.)
To address profitability and resources, the solution is three-fold.
  • First, make sure you charge for initial financial plans. It has a value and any potential client not willing to pay for professional advice is not a client you want. In other words, charging for initial financial plans screens out bad clients and provides additional revenue for the firm.
  • Second, be sure your fees reflect the cost of value-added services. This means that your fees might very well be higher than average. If asked why my fees are higher than a competitor's, I say that we are worth more (and explain).
  • And third, streamline the financial planning process as much as possible. Use software, create workflows and standardize your process. This will help control the strain on resources.
What do you see as the biggest trends and opportunities for advisors with respect to holistic financial planning?
 Financial planning is what differentiates us from robo-advisors, brokers and "asset gatherers." Adding in our fiduciary requirements and the ability to coordinate tax-efficient investment strategy makes us the ideal "trusted advisor." Without providing holistic financial planning, we will be unable to effectively compete with low-cost solutions.
Early on in my career, I was told that you can compete based on three different areas: quality of work, customer service and low cost. It is impossible to run a business based on all three; two is the maximum. Competing based on cost is a no-win proposition; there will always be someone willing to charge less. So, the best way to compete is based on quality and service. In the long run, that is how advisors will continue to thrive.
Sheryl Rowling, CPA/PFS is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She is also a columnist for both Investment News and Advisors4Advisors. 

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