The College study is based on data from 283 CFP practitioners. A comprehensive questionnaire must be filled in by respondents, which undoubtedly makes it difficult to get a larger group to respond. Though the small sample size opens the survey data to being skewed toward one group of planners (fee-only, brokerage affiliated) or another, answers the 283 respondents certainly provides insight into broad trends. 
 
Of course, the official College interpretation of the trends in the industry is rosy. The callout box in the press release highlights the following quote in the College’s analysis:
 
“On the heels of one of the worst recessions in U.S. history, salaries for personal financial advisors are not at historical levels, certainly, but what data continues to show is tremendous job satisfaction, the unparalleled importance of the human component in advisors’ careers, and the value advisors place on education.”
 
Buried in the survey data is a statistic that does not bode well for the financial planning profession: 50% if the CFP practitioners don’t prepare comprehensive financial plans or don’t charge for them.
 
What is supposed to be the major work product offered to consumers by CFPs, their raison d'ĂȘtre—comprehensive financial plans—is not offered by 13% of CFPs surveyed and another 37% provide comprehensive plans for free. Typical Fees Charged For Comprehensive Financial Plans(In a story in the April 2011 issue of Financial Advisor, I report on related crosscurrents rocking the financial advisory business.) 
 
Moreover, among CFPs that charge for creating comprehensive financial plans, only a third charge more than $1,000; the fees CFPs are charging bare little relationship to the amount of work that goes into creating a comprehensive plan. 
 
My point is that the financial planning “profession” has a serious problem. The main product of a financial planning business—comprehensive planning—is not the way planners make money. Single-focus plans show the same pattern, according to the survey data.
 
Writing financial plans is not the way planners with 10 to 14 years in the business make their mean gross earnings annually of $239,405. They’re making money on asset management, not planning.
 
After writing about financial planning for 28 years, it recently dawned on me that people who have the money to pay for a financial plan are often so wealthy they don’t need a plan, and the people who do need a financial plan often can’t afford one.
 
These practical business issues need to be addressed by financial planners if they are serious about wanting to become a profession.
 

 

 

This Website Is For Financial Professionals Only

Why Join Advisors4Advisors from Advisors4Advisors