Wealth Management Through the Eye of Financial Planning

Who would you hire?

If you were an investor, what type of advisor would you seek out? It’s probably a given that you’d want to work with someone who aimed to help you address your investment goals. 

 But would you want an advisor whose sole focus was building an investment portfolio that fits with your risk tolerance and preferences? Would you prefer someone who knew all of your goals and challenges, and used your investment portfolio as merely one tool among many to address your needs? Who built a comprehensive plan that would follow you through life?

More and more of today’s investors are searching for the latter type of advisor. Someone who can take an all-encompassing approach to managing their finances—the effect of taxes, how life events can impact retirement goals, and what’s needed to leave the legacy they envision. 

They’re looking for a true partner—also known as a wealth manager. 

What type of advisor are you? Most advisors say they fall somewhere in the middle. 

By incorporating more wealth management, you can differentiate your practice, give clients what they want and need, and set yourself up to handle today’s changing demographics. 

At the bedrock of advisor Marc Freedman’s practice is a philosophy that a planning-based process is the only way to have a long-term relationship with a client. 

Marc, CFP, president and CEO of Freedman Financial in Peabody, MA, uses his repeatable, yet customized planning process to create lifelong plans for clients and work through each wealth management topic or issue. Here, he shares how he brings this process alive in his practice.

The importance of wealth management

In a recent LPL Financial advisor survey, participants told us they see the importance of wealth management and want to incorporate more in their practice. But many also said they weren’t sure where to start. 

Marc believes it begins with building a financial plan that covers all of the wealth management topics. 

“If I’m not doing planning, I’m doing my client a disservice,” says Marc. “I need to know where everything is and what everything is worth so I can build a plan that addresses all of their wealth management needs. It all starts with a comprehensive net worth statement.” 

Working through a planning process allows you to know everything a client owns, where it is, what it’s worth, and where it’s going. Once you have that information, you can work through each of these issues to ensure clients have the funds they need to pursue each and every goal, from funding a grandchild’s education to traveling the world in retirement to leaving a legacy for both their family and a favored charity. 

Marc starts this process by requiring every single client to fill out a detailed fact finder and provide all of their financial documents, including pay stubs, tax returns, bank statements, insurance documents, estate documents, benefits booklets—everything. 

 “The number one mistake you can make is to build a plan based on what clients tell you, not on what they show you,” he says. “When I explain that I can’t give clients an accurate plan until I have all of the information, they don’t say no. I’ve never had a client say no.”

The art of scaling management and planning

Many advisors list a lack of scalability as a significant reason not to incorporate more wealth management and planning. Still, Marc has built a process and a strategy that allows him to provide all of his clients with a comprehensive approach. 

He currently works with 458 households, and for every single one, he maintains a financial plan that covers the full scope of wealth management issues. The plan is monitored and updated at every client meeting as well. He’s able to do this by focusing on the long term and keeping investment management straightforward.

“Advisors should be careful to avoid overcomplicating the investment part of the relationship,” says Marc. “In my opinion, clients don’t need monthly or quarterly trades or reviews of their investment account. If they’re truly in a long-term relationship, the focus should be on the long-term objective, rather than daily market fluctuations. Making regular trades and sharing stories about investment performance is a strategy that I don’t believe should be employed by a wealth manager.”

Marc believes that consistently sending out account performance and having regular portfolio reviews causes them to take on a short-term mindset. 

“Clients hire us so they continue to live their lives without having to worry about their finances.” 

You might be thinking that he must have a large staff to accomplish all of this. Surprisingly, no. Marc provides comprehensive planning to his full roster of clients with a staff of just five—three Certified Financial Planners (two who meet with clients, one who does the prep work), an operations manager, and a front-office client impression manager. He credits his repeatable process and efficient team to making it all happen.

Does wealth management mean high net worth?

A common misconception of wealth management is that it’s only for high-net-worth clients. While high-net-worth clients may require a deeper dive into topics like tax issues or estate planning, all clients benefit from a comprehensive approach. The key is to find the right service model for your client segment or segments.

If your current clientele isn’t high net worth, incorporating more wealth management is still a way to grow your business and retain clients longer. It can also give you the process needed to compete for high-net-worth clients if that’s your goal. 

While he does have high-net-worth individuals in his book, Marc has chosen to focus on baby boomers with average investments of around $800,000 and a total net worth around $2 million. He believes in providing wealth management and planning to all of his clients, but they have to pay for it. 

“We charge a fee of $2,500 to do a financial plan, with half payable up front and the balance due upon the presentation of a plan. But we’ll often wave the second half of the fee if they bring assets over to our management,” he says.

Marc will charge the full planning fee to clients—especially clients’ children—who don’t have assets to be managed yet but need advice to get them started down the right path.

Working with outside experts

Marc believes it’s the advisor’s job, as the wealth manager, to uncover the gaps clients have in their financial lives and make recommendations to close those gaps. But that doesn’t mean the advisor is responsible for implementing those recommendations. In some cases, other experts are needed to execute, such as attorneys, accountants, or even insurance agents, if the advisor isn’t insurance licensed. 

“I find many clients already have relationships with attorneys and accountants, but I will refer to some I trust if they don’t,” he says. 

He also ensures that clients aren’t walking into meetings blind and have some idea about what they’ll need from the attorney or account. 

“I prep clients for meetings ahead of time and guide them with questions to ask,” says Marc, “and I’ll often join them in the meeting.” 

He’s worked with his mass affluent client base long enough to have a pretty good sense of what solutions might make sense for them. 

If this is an area holding you back from fully implementing a planning- and wealth management-based approach, it doesn’t have to. While it might make sense to familiarize yourself with common estate and tax planning challenges that could impact your client base, there’s no need to become an expert—that’s what other professionals are for.

Working with outside experts

Marc believes it’s the advisor’s job, as the wealth manager, to uncover the gaps clients have in their financial lives and make recommendations to close those gaps. But that doesn’t mean the advisor is responsible for implementing those recommendations. In some cases, other experts are needed to execute, such as attorneys, accountants, or even insurance agents, if the advisor isn’t insurance licensed. 

“I find many clients already have relationships with attorneys and accountants, but I will refer to some I trust if they don’t,” he says. 

He also ensures that clients aren’t walking into meetings blind and have some idea about what they’ll need from the attorney or account. 

“I prep clients for meetings ahead of time and guide them with questions to ask,” says Marc, “and I’ll often join them in the meeting.” 

He’s worked with his mass affluent client base long enough to have a pretty good sense of what solutions might make sense for them. 

If this is an area holding you back from fully implementing a planning- and wealth management-based approach, it doesn’t have to. While it might make sense to familiarize yourself with common estate and tax planning challenges that could impact your client base, there’s no need to become an expert—that’s what other professionals are for.

The benefits of a wealth planning approach

Marc owes his continued success and growth to his planning- and wealth management-based approach and building a local business and visiting with clients in person. In fact, 90% of his clients live or have roots within 15 miles of his office. 

“We have a 99% retention rate,” he says, “and we continue to grow. Clients come to us because they’re looking for someone who’s willing to go deep on all of the issues and who knows everything about their finance—not just a piece of them. When clients come to work with us, they know it’s time to get serious about their future.”

When those clients do come to Marc, they notice the difference. 

“I get the same comment every time we do a plan for a client—‘no one covers the number of topics you do or has the level of comprehensiveness as you.’ They tell me they’ve worked with others who say they do wealth management and financial planning, but it’s not on the same level. As more clients are entering retirement and preparing for the distribution phase of their life, they want to have one person who knows where everything is, what it’s all worth, and where it’s all headed—and that’s what we provide.” 

And because his plans are so comprehensive, Marc can help clients with the gamut of issues. 

“Clients will ask me for advice on buying a car or a house, whether or not they can afford a boat or an exotic vacation, or how they should handle a child or grandchild’s financial issue,” he says. 

This type of service and advice goes a long way to building relationships that last—and brings in referrals. 

Marc’s value proposition and reputation mean his office gets around a dozen calls a month from new, interested prospects. 

“We generally only end up setting appointments with 25% of those, simply because the rest wouldn’t necessarily qualify to be our clients yet,” he says. “But even if we turn them away, if they’re really looking for advice on budgeting, starting a 401(k), or other simple issues, we’ll generally give them our thoughts for free in hopes they’ll think positively about us for when they’re ready to invest or if they have a friend who might make sense for our practice.”

As a result, Marc’s business is thriving and growing. He’d love to find more advisors who share in his firm’s culture of planning, noting, “We’ve got more business than we can handle!”

Incorporating more wealth management in your business

If you’re like many of your peers, you likely already have some of the steps in place needed to provide more comprehensive wealth management and planning. You may even be working through many wealth management issues with your clients today. 

So taking it a step further and making it a key part of your practice—and value proposition—might not be that far of a reach. 

If you want to incorporate more wealth management and enjoy some of the benefits Marc and team have experienced, a good first step is to create or refine a planning process that will allow you to uncover all of a client’s assets, liabilities, and concerns—not just a piece of them. 

Once you have all of the information, you can begin working through each of their goals and the wealth management issues that may impact them throughout their lifetimes, and build a plan to solve them. 

As a result, you’ll likely deepen your relationships with existing clients, bring in more referrals, and grow your assets under management. You’ll have a way to differentiate your practice for the future, starting today.

This material is intended for Financial Professionals. The views and opinions expressed by the LPL financial professional may not be representative of the views of other financial professionals and are not indicative of future performance or success. Neither LPL Financial nor the LPL financial professional can be held responsible for any direct or incidental loss incurred by applying any of the information offered.