Visualizing the Impact of Planning on Advisor Production at BISA 2020

Banks and credit unions are looking to financial planning to differentiate their advisors in an increasingly commoditized market for financial advice, develop deeper relationships with clients, and document that the advice they provide is in the client’s best interest. Are they succeeding?

The midterm report card is disheartening. The typical branch-based advisor works on less than two plans a month, while having over 400 client households in their book.

The usual path to improving performance is to assess activity, compare that activity to the performance of your peers (benchmarking), determine what the best performing peers do differently (identify best practices), and introduce those practices in your firm. For financial planning, the problem is that the information available to benchmark activity has been firm-level data, i.e., the average number of plans created or updated per advisor. But that average might be the result of quite different activity between two firms, e.g., a firm where almost all advisors work on one or two plans a month, versus a firm where a few advisors do most of the planning while most advisors do hardly any. There just hasn’t been any way to compare the planning activity of each of your advisors to advisors in other firms.

Kehrer Bielan addressed this shortcoming last year with The ROI of Financial Planning, which analyzed the planning and production of a thousand individual advisors. We found that an important barrier to advisor adoption of planning is that the incremental gains from doing almost no planning to doing a little planning are very small. The real gains from planning come once an advisor has fully embraced planning.

We can visualize how incremental planning activity influences advisor production by plotting advisor-by-advisor GDC against the number of goal plans they create or update monthly. First let’s look at advisors who work on between 1 goal plan every other month and 4 plans a month, or 6 to 48 plans per year. That is 81% of the advisors in the study.

When we fit a trend line to the scatter plot, we see that it is fairly flat, indicating that for most advisors, adding an additional goal plan has only a small impact on production.

Now let’s look at a similar scatter plot for advisors who work on at least 5 plans a month, or 60 per year. The trend line is much steeper, and increases somewhat exponentially with incremental goal plans, indicating that working on additional plans increases GDC disproportionately. Once an advisor incorporates planning into the way the advisor does business, the ROI on planning accelerates.

These findings help us to focus coaching resources and incentives on getting advisors over the hump from one plan a month to five. To help firms benchmark their advisors’ journey of the road to becoming holistic advisors, Kehrer Bielan is introducing PlanningInsights: The Peer Perspective™.