Practice Management

Financial planning could help advisers retain client assets through a bear market

New Cerulli report says financial planning builds relationships more likely to survive a major downturn

Oct 11, 2018 @ 3:48 pm

By Ryan W. Neal

If the current market dip turns into an extended downturn, financial planning could help advisers hold onto clients and assets.

According to a new Cerulli Associates report, financial planning taps into deeply emotional and difficult financial decisions involving children, spouses, careers and caring for aging parents. Advisers who can skillfully navigate these conversations can build deeper relationships than an adviser focused entirely on collecting assets and beating the market.

This connection is not as easily dislodged in a market downturn, according to Cerulli research analyst Marina Shtyrkov. Even through significant volatility and corrections, knowing a plan is in place helps clients feel more secure.

"It all boils down to trust," Ms. Shtyrkov said. "The financial planning process is more likely to breed a stronger client relationship. From that comes trust and loyalty and a sense of security."

It's also beneficial for advisers on days like Wednesday of this week. When a worried client calls and is fearful about their portfolio, a financial plan provides a roadmap the adviser can refer them back to, Ms. Shtyrkov said.

(More: eMoney introduces mass-market planning tool for advisers)

This can be especially helpful for fee-based advisers working with aging clients. Cerulli's research found more than half of advisers' clients are between the ages of 50 and 69,and 48% are older than 60.

Forty percent of advisers' outflows consist of regular income withdrawals from retired clients, meaning a steady drain on assets under management. A prolonged bear market could put even more pressure on the ability to collect fees.

It appears this is weighing on advisers' minds. Cerulli found 52% of advisers are focused on downside protection over the next 12 months. Financial planning allows advisers to review clients' risk exposure across financial assets, real estate and insurance, Ms. Shtyrkov reported.

Yves-Marc Courtines, principal at Boundless Advice, agreed, adding that providing planning for a separate fee helps provide value not tied to market performance, such as minimizing taxes, estate needs or helping maximize a client's business income.

"Your annual fee is therefore more protected in times where assets decrease," Mr. Courtines said. "If anything, in a downturn, a [client] who relies on your for actionable advice is even more likely to need hand-holding and answers to difficult questions as the economy gets harder for them."

(More: FPA splits with CFP Board over state regulation of financial planners)

Even with retired clients, there is opportunity to deploy financial planning as a way to connect with younger generations, Ms. Shtyrkov said.

"Intergenerational planning is a great opportunity for advisers to strengthen that relationship with the entire family, the entire household," she said.

This can help strengthen relationships with current clients as well as infuse the firm with fresh assets and younger clients.

So whether the current market is a brief correction or a sign of bigger things to come, financial planning could be the key to protecting assets now and building assets in the future.


What do you think?

View comments

Recommended next


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print