The majority of financial advisers still aren't doing financial planning, despite efforts by wirehouses and other brokerage firms to have brokers focus on clients' holistic financial well-being, UBS' client strategy officer Paula Polito said.
Only about a third of advisers at UBS Wealth Management Americas have set up a financial plan for clients, despite the fact that 64% of advisers surveyed said that they thought they were providing doing holistic planning, she said in a speech at the Securities Industry and Financial Market's Associations' private-client conference in New York on Thursday.
“Some advisers believe that they are delivering holistic wealth management when in fact they're not,” Ms. Polito said. “Collectively, advisers across all firms need to do much better.”
In recent years, brokerage firm executives have been encouraging advisers to change the conversation by having more discussions with clients about banking and lending offerings, trusts, estate planning and philanthropy.
It was a theme that was the underpinning of speeches at the SIFMA conference.
“The holistic approach is going to be the hallmark of the financial adviser of the future,” said Greg Fleming, president of Morgan Stanley Wealth Management.
Having conversations about setting up trusts for the next generation, credit cards and financial security are necessary to stay relevant, said Bob Mulholland, the head of investment solutions at UBS Wealth Management.
But the cultural shift has been slow in coming, despite a movement in recent years and recent technology investments such as Bank of America's MerrillOne platform, which was rolled out last year.
Some advisers who already had built successful practices around picking stocks and boosting returns see no reason to change, Ms. Polito said.
“They have built successful practices and are very content with the way things are,” she said. “But often we find that they could be offering a higher level of service.”
Many advisers may think that they are doing holistic planning because they have conversations with clients about retirement or other important life topics, but Ms. Polito said that they still haven't actually written up a goals-based financial plan for clients.
Just 25% of clients are getting advice on insurance and asset protection products, adding that long-term-care insurance is the top concern among clients surveyed by the firm, she said.
“There is so, so, so much opportunity,” Ms. Polito said.
Mr. Fleming said that moving toward financial planning will involve advisers taking a closer look at the liabilities side of a client's balance sheet.
He estimated that Morgan Stanley would have cash deposits of as much as $135 billion by the middle of next year, which would help advisers provide more lending to clients through mortgage loans and securities-backed lending.
“The best thing we can do with those deposits is turn around and lend them back to the clients,” Mr. Fleming said.