Cost-efficient Goal-based Planning for all of your clients

24 September 2020

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This session looked at goal-based planning and how it can be delivered across the client spectrum in a cost-efficient manner, explored some of the challenges and allowed participants to share ideas around best practice.

Expert:         Iwan Schafthuizen, Managing Director Business Development, Ortec Finance
Facilitator:   Paul Miles, Founder, Silverback Consultancy 

The session aimed to answer the following questions:

  • Why is it important for wealth managers to offer clients a high-quality, client-centric financial planning service?
  • What does the future of financial planning look like?
  • How do you become THE wealth coach for your clients?
  • What does goal-based planning bring to the wealth manager, adviser and, most importantly, the client?
  • Is this approach affordable and feasible for a wealth manager?

Key takeaways:

  • Goal-based planning brings together traditional wealth planning and cash flow modelling.
  • Modelling software ensures a client’s portfolio is built according to goals and aspirations, visualises the impact of any adjustments and monitors to ensure it remains on track.
  • A client-centric approach is applicable to all segments, from institutional banks and large pension funds through to a more entry level, direct-to-consumer retail offering.
  • Better client engagement through goal-based planning can lead to a 15% uplift in client assets (Source cited: Morningstar).

What is goal-based planning?

  • Can be used for a single goal, single account plan through to multi-plan, multi-pot solutions bringing together wealth and cash flow planning systems using mathematical projections, while linking to the client’s underlying risk profile and investment strategies.

Who is it suitable for?

Institutional clients                                Pension funds                           Family offices

Private banks                                        IFAs                                         Wealth managers

Retail clients/D2C platforms                 Digital advisers                         Insurance companies

Participates at all points in the client journey:

Goal setting > risk profiling > portfolio comparison > investment advice > monitoring

Key benefits (using OPAL software)

Client                                     Adviser                                               Wealth manager

Trust (of advice & investments) Greater share of wallet             Higher AUM

Better engagement                    Higher productivity                   Better suitability reporting

Transparency                           Higher conversion rate             Basis for digital platform

Key questions raised:

  • To what extent can it integrate with other systems?
  • Is it predominantly a retirement solution that people are looking for?
  • How are you integrating ESG when the concept is so ill-defined?
  • What competitor trends are you seeing?
  • Are you able to operate cross-border in different tax jurisdictions?
  • Goals mean different things to different clients – how do you define ‘what is a goal?’

Challenges raised:

  • Manual data entry can account for as much as 80% of the time taken in the advice process.
  • Articulating client dreams and translating them into the financial plan is difficult for many advisers.
  • Many advisers want to become a ‘wealth coach’ but engaging clients throughout the process is difficult – especially with ‘detached’ or younger clients, e.g. pension scheme members.
  • Goals might be top-level such as ‘planning for retirement’ or sophisticated and bespoke at a more granular level – client segmentation means different solutions are often required.
  • Often client banks might comprise internationals or ex-pats and need to ensure cross-border compliance.
  • Compliance requirements increasingly insist on consistency and transparency of audit trail.

Solutions/key benefits:

  • Automation is crucial: linking with existing CRM and pre-population means advisers can jump straight into advice process with quicker reporting procedures in a compliant fashion.
  • Focusing on personal goals rather than arbitrary benchmarks aids client engagement – even with a younger client base.
  • Can lead to holistic planning and increasingly asset transfers from external providers as you strengthen your position as ‘trusted coach’.
  • Able to isolate ESG element and compare with non-ESG solutions – if intended as a USP, you can illustrate genuine value, rather than just another marketing message.
  • The software can be tailored to be as basic (retail, younger, D2C) or as sophisticated (UHNW, family office) as is required, working to create a ‘best of breed’ solution drawing on different underlying strategies and demonstrating the risk/return trade-off of various solutions now and in the future (and monitoring over time to ensure they remain appropriate).
  • Able to operate across different tax jurisdictions to ensure tax optimisation in accumulation and drawdown phases of financial plan.
  • Using the modelling software ensures a fully transparent, consistent and scalable reporting system.