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What Investors Want Within a Financial Plan

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What Investors Want Within a Financial Plan

Written by: Catherine McBreen | Spectrem Group

It does not take a particular type of financial advisor to provide a financial plan to investors.

What differentiates the advisors and the financial plan they offer is the specific services and advice that is offered in the plan.

Spectrem’s new study, Defining Financial Planning, determines just what investors want to have included within a financial plan. The study is a sister study to last year’s Defining Wealth Management, which demonstrated just how undefined the term “wealth management’’ is.

No matter what constitutes a financial plan in the eyes of investors or advisors, 74 percent of wealthy investors claim to have a financial plan, according to the study. Add to that the 14 percent of investors who plan to have a financial plan created either within the next year (6 percent) or sometime in the future (8 percent).

This reveals that a majority of investors either have or want to have a financial plan. It is seen, perhaps, as the first line of organization in the design of a guideline for future financial, investment and portfolio decisions.

A very revealing point of the research is that investors clearly believe they can get a functioning and responsive financial plan from just about any type of financial advisor. They usually get their financial plan from the advisor they work with on a regular basis, but they likely do not select their advisor based on the financial plan details that were offered.

Twenty-two percent of investors got their financial plan from an independent financial planner. The name of the advisor type would seem to attract investors who feel an actual plan of action is required to serve the needs of their portfolio and household finances.

Seventeen percent received their financial plan from a full service broker. Again, the name of the advisor type would suggest that a financial plan could be provided from that advisor.

Twenty-seven percent of investors who claim to have a financial plan created their plan themselves. Comparing a financial plan created by an investor without advisor assistance to a plan created by a professional would indicate a difference between what investors want in a financial plan versus what is often offered by advisors.

Of those investors who designed their own financial plan, only 19 percent used online tools to create their plan. Eighty-one percent just developed their own set of rules, which again begs for a comparison between their plan and one that would be created by a professional.

Among the other advisor types, 9 percent of investors got a financial plan from an investment manager and 7 percent got it from an independent investor advisor. The title “investment manager’’ does not immediately lend to the idea that a financial plan would be available.

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