Business Matters

Monday March 25th 2019

Productivity and efficiency are key drivers of profitability. To make your management task easier, we will regularly post “best practice” articles relating to business management. We would welcome your comments on the articles. Please also share the articles with your friends and colleagues.

The latest Business Matters articles are listed below.

How do I choose the right financial planning model for my business?

Looking back, the only financial planning tools available to assist us with analysis were our trusted HP 10 and Microsoft Excel. Over the last few years, the industry has gone through significant transformation and companies are increasingly using financial planning analysis tools both globally and locally. Automated advice tools have become part of the standard process in most financial planning businesses.

There are numerous financial planning tools and guides out there which can help you and your clients to navigate their way. However, what should you consider when assessing a financial planning tool?

There are some obvious factors driving the change, such as more stringent compliance requirements, consolidated reporting, automated analysis, consistency across your practice and technological enhancements.

The two main drivers creating change in our environment are:

Client expectations have changed. There is a burning need to actively manage these expectations and to continue demonstrating the value of financial planning. Clients want to be a part of the financial planning process. They want to understand their financial plan and require clear information to help them make informed decisions. Although our clients want to engage with us, there is often a disconnection between what we think they value and what they actually want.

Digital technologies are changing the way we work. Robo-advice has shifted from being an innovation led by small Fintech start-ups to being adopted by leading financial institutions globally. However, the focus is shifting to enabling practices to be more effective. This is important to offset the higher cost associated with increased regulatory compliance and increased client expectations. In theory, technology reduces overheads and increases the number of touch points with clients. However, we have seen many instances where new technology did not translate into these anticipated benefits.

When assessing financial planning models and which is best for your practice, the above-mentioned factors need to be taken into account. It is no longer useful to evaluate a financial planning model solely on its analysis or ability to generate reports. You need to assess its ability to digitally enable your ideal client engagement process.

The following aspects are important when deciding on a financial planning model:

  1. Showing clients their ability to meet their goals
  2. Demonstrating the impact of clients’ financial behaviour or decisions
  3. Assessing the impact of different options available to the client
  4. Explaining complex financial planning aspects in a simple way
  5. Automating the 80% so that you can focus on the 20% that adds real value
  6. Managing clients’ expectations by showing all possible outcomes
  7. Making sure your clients are educated, informed and empowered to make better financial decisions

It is very important that your financial planning model creates an engaging digital client experience. Choosing suitable financial planning tools can add value to your clients without costing you a lot of time or money. Once you have decided on a model, make the commitment to master its capabilities to take full advantage of the benefits to enhance your business.