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Half of Financial Planners Don't Have a Financial Plan

By Hal M. Bundrick

NEW YORK (MainStreet) Perhaps financial planners should begin each client meeting with a disclaimer: "Do as I say, not as I do." While 40% of financial advisors say they intend to retire within the next 14 years, nearly half (46%) of them do not have a retirement strategy in place to accomplish that goal, according to a study conducted by the Financial Planning Association Research and Practice Institute.

The lack of retirement planning impacts an even greater number of advisors who need it most. According to the survey, two-thirds (66%) of advisors who are over 65 don't have a retirement plan in place.

Other findings of the research include:

  • Only 25% of advisers say they have a formal succession plan in place.
  • Most (46%) advisors charge a fee based on assets under management and more (49%) plan on doing so in the coming year.
  • One in five advisors (21%) charge commissions on investment products but fewer (18%) plan on doing so within the next twelve months.
  • Only 7% currently charge an hourly fee for financial planning, estate planning, tax planning or consulting, but slightly more (8%) plan on doing so in the coming year.

Nearly half (43%) of advisors define their "ideal" client based on the size of their investable assets, with 28% saying that their minimum falls between $250,000 and $499,000. Nearly one-in-five (19%) of advisors surveyed set their minimum client asset value at $1 million.

Most of the financial consultants who currently refer to themselves as money managers, investment planners or financial planners intend to reposition their businesses within the next five years as "wealth managers."

The study defines wealth managers as advisers who "specialize in comprehensive wealth management and transfer issues including stock-option planning, executive compensation, complex trust and estate planning and charitable giving."

--Written by Hal M. Bundrick for MainStreet

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