A recent study originating in the United States concerning financial advisers generated some very thought provoking results. The social policy group conducting the study posed two very simple questions to a broad section of financial advisers. The first was “Do you have a financial plan?” Moreover, the second, “Do you have a succession plan?”

My first thought was that, of course, all financial advisers would have a financial plan for themselves. Surely that is part of the definition of being in the business of advising others about their financial futures? However, it seems this scenario is a little like the mechanic who’s car needs maintenance or the carpenter who has not quite finished constructing his house. It appears that less than forty percent of these advisers had acquitted themselves with a formal plan. Unfortunately, this state of disorganization also seems to be the case in Canada.

“Not really, I already know what I am doing.” was not accepted as a legitimate response, nor should it be.

A financial plan is future planning, and all of us need to plan for our futures with acceptable and achievable guidelines and goals. We also need to plan for contingencies. Although already knowing what you are doing might be a marginal response for a financial adviser, it is hardly a format that I would recommend for individuals who are serious about their future well-being and security. Guidelines give us points of reference and allow us to see how we are progressing. If changes of strategy are required, these adjustments can be made long before an irreversible scenario has been generated. That is the nature of planning and the responsibility of the advisor and you.

Business Owners Need Succession Planning

Succession planning is critical for financial advisers and even more important for the wellbeing of their clients. According to the study above, less than one in five planners had a succession plan. This statistic is clearly unacceptable. If anything untoward should happen to that adviser or they opt to retire, there is no one immediately in place to address the client’s needs or concerns. Simply having someone answer the phone or an email does not mean the needs of the individual are being either solved or understood. The lack of availability is very dramatic for many clients, especially elderly persons who are seeking stability.

In many cases, particularly with established advisers, they simply sell the client-base to another adviser when they contemplate retiring. By doing so, it defeats the ability to cultivate an appropriate candidate who has similar investment philosophies and servicing ethics to meet the responsibilities relinquished by the original adviser. It also generally means the highest bidder might well be the new counsel. Again this is unacceptable and hardly addresses the concept that client well-being is the foremost consideration.

If you are uncertain about our belief in financial plans or the status of our succession plan and your long-term well-being, then let’s have a face to face discussion about it.

Which was the most helpful question you asked your financial planner? We love for you to share in the comments below.