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Once upon a time, virtually all financial planners were actually life insurance agents or mutual fund and investment brokers, who were compensated by selling products and perhaps gave a little financial advice on the side. Over the past several decades, financial planning has been pushing towards becoming a recognized profession, and its practitioners recognized professionals. At the same time, the business itself has become more complex, challenging, and time-intensive, a natural by-product of shifting from the sale of products to the delivery of advice. The net result of all these trends are a greater pressure than ever for financial planners to maintain high productivity levels.

In response, financial planners have sought out ways to make themselves and their firms more efficient - such as requiring clients to come meet at the advisor's office, or to dictate that clients must gather all their data up front and bring it already-fully-assembled to the planner - to manage the costs in terms of both their time and staff, in order to run a successful financial planning business. The reality, however, is that such strategies don't actually eliminate the work to make the planner more efficient - it simply delegates the work to the clients, and makes it their problem instead!

While such an approach may be necessary for some business models, it's less than ideal for many - especially firms that pride themselves on the quality of service they provide their high net worth clients! So what's the alternative? Instead of just delegating work to clients, reimagine how to turn these challenge points into true value-adds for the client, or better yet use some of the emerging technology in today's digital age to eliminate the problem entirely!

Outsourcing Travel To Clients

As financial planners have become increasingly professional, and increasingly time-constrained, traveling to client meetings becomes difficult to manage. As a result, a more and more common refrain of planners has been: "I'm a professional. I shouldn't have to go to the homes and offices of my clients. My clients should have to come to see me, just as they do their doctors and lawyers!"

Without a doubt, the benefit of this approach is a great deal of time savings by no longer needing to travel from one client meeting to the next. But the reality is that the need for travel hasn't been eliminated, it's just been transferred from the planner to the client. Or viewed another way, you've effectively outsourced the "work" of travel to your clients.

Why does this matter? Because you haven't really eliminated the work, you've just transferred it. You've made it your client's problem. Yes, the good news is that you won't have to sit in traffic, getting increasingly frustrated, on the verge of a bout of road rage by the time you get to your meeting. The bad news: instead, you'll just put your client in that negative state of mind instead, making them sit in traffic, get increasingly frustrated, and arrive at your office on the verge of a bout of road range! And then ask them to sit in your office and try to be focused on what you're saying while you ask them to make crucial financial life decisions! Assuming, of course, that you can get them to take the meeting with you in the first place; how many client meetings are delayed, cancelled, or rescheduled because the client simply didn't want to do the "work" of driving to your office in the first place?

Outsourcing Data Gathering To Clients

In a similar manner, in financial planning we also have a tendency to outsource the data gathering process to clients, in an effort to make ourselves more efficient. Just as with the process of outsourcing travel, we have our justifications, like "if the client doesn't want to put in the time to gather data together and give it to me, the client couldn't have been that serious about financial planning anyway" - even though the reality is that for some clients, helping them to progress through the stages of change to take their financial challenges more seriously is part of the key value proposition for being a good financial planner in the first place!

And unfortunately, just as with outsourcing travel to clients, outsourcing data gathering leads to similar dysfunctions in the planning relationship. Again, the reality is that the work isn't eliminated when we tell clients they have to gather all their data details up front and give them to us. We just make it the client's problem instead! And what happens as a result? Clients delay their financial planning meetings and getting through the process because they don't feel they have the time to do the "homework" we've given them up front, for which we often blame the client as though it's their fault!

Good Efficiency Or Bad Service?

The reason why all of this matters is that the steps we've taken for granted as being good for our efficiency amounts to negative hassles, burdens, or outright poor service from the client's perspective. On the one hand, we improve the value and the efficiency of the relationship for ourselves by delegating the work to the client. And the other hand, we reduce the value and the efficiency of the relationship for our clients by giving them more work to do, for what is probably the same fee we charged them in the past! And that's before recognizing the irony that many planning firms profess that their greatest value is helping their clients delegate work and responsibility - founded on a relationship that dumps more work and responsibility back onto the client in the first place!?

Of course, the reality is that for at least some business models, this consequence isn't entirely avoidable. If the firm works with more middle-market clients and requires a certain volume of clients just to survive, it simply may not be feasible to visit clients at their location of choice. Alternatively, if the firm charges on an hourly basis, clients may even prefer to do more of the data gathering work themselves, to try to make the time "on the clock" with the planner more efficient and save themselves some financial cost.

Nonetheless, the fact of the matter is that if firms are going to effectively outsource these workloads to clients, it's crucial to at least recognize the implicit trade-off, not only in terms of how it makes things easier for the planner, but also about how it may make the process harder, or outright undesirable, from the client's perspective!

The Alternative To Client Outsourcing

So what can you do to improve the situation if you don't want to put these outsourcing burdens on your clients?

The first option is to turn the process from a cost into a benefit, from the client's perspective. For instance, if data gathering must either be a time-intensive process for the client, or a "cost" to the planner, then make it a benefit for both by turning the data gathering meeting into a "get organized" meeting that has a tangible client deliverable at the end! This kind of re-imagined data meeting could even be something the planner charges for separately, making it valuable to the planner (by generating revenue) and valuable for the client (by providing a useful, immediate, tangible result)!

The second option is to leverage technology to eliminate the problem entirely. For instance, with the rise of broadband internet, the challenge of travel doesn't have to be a problem for the planner nor a problem for the client; in the digital age, we can make it a video meeting and eliminate the travel "work" for everyone! Similarly, with the rise of account aggregation for both advisors, and even consumer tools like, the reality is that the entire data gathering meeting itself may soon be a relic of the past; while this isn't true for all clients yet, helping them get set up online can again be a value-add for the client, and a permanent elimination of future data gathering updates for the client... not to mention creating the potential for a far more proactive financial planning monitoring process in the future!

The bottom line to all of this: at the least, you should consider what work is being delegated to your clients in the name of your personal productivity and efficiency, especially if your ideal clients are themselves delegators. But ideally, the real goal should not just be a decision about what work to retain and what work to delegate back to clients, but instead how to transform your planning process to eliminate the work entirely, or at least make it a positive value-add to your financial planning experience!

  • Chris Grande

    this is an excellent point to analyze. If we can use a safe data gathering webtool, there would be little need for clients to aggregate fin docs for every meeting!

    thanks for giving me a back office improvement item to work on!


Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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*Future of Financial Planning in the Digital Age *Cutting Edge Tax Planning Developments & Opportunities @ FPA Mid-Tennessee

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