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There were many challenges that CFP® professionals needed to adjust to in 2020 to support their clients, especially given that nearly 1 in 5 CFP® professionals reported that clients leaned on them as a financial therapist first and a financial planner second, in an April 2020 survey.
“People were reminded of financial planning and its importance this year,” says Brittney Castro, CFP®, founder and CEO of Financially Wise, Inc. Looking forward, Castro, along with several of her fellow CFP Board Ambassadors, agree there are trends that financial planners should watch to best serve their clients in 2021 and beyond. While these trends may have been emerging in the financial planning profession for quite some time, they were brought to the forefront during the pandemic.
Financial Planners and Clients are no Longer Limited by Geography
Over time, technology has increasingly become an important tool for financial planners, but the pandemic accelerated its use in the profession. Financial planners and their clients had to become comfortable with meeting remotely, rather than in person due to social distancing mandates. Erin Voisin, CFP®, Director of Financial Planning at EP Wealth Advisors, has seen her clients across generations increasingly adapt to connecting remotely throughout the pandemic. As a result, Shashin Shah, CFP®, a Managing Director at SFMG Wealth Advisors, says “advice is now transportable,” as planners and their clients can connect while located hundreds, or thousands, of miles apart.
“Advice is now transportable,” as planners and their clients can connect while located hundreds, or thousands, of miles apart.
The profession-wide adjustment from in-person to remote meetings creates both opportunities and challenges for advisors. With remote capabilities, financial planners have an opportunity to connect with potential clients outside of their immediate area, both Castro and Shah agree. Castro says financial planners should consider how they plan to build and foster their “community of clients” in this new digital era, such as leveraging online marketing and connecting with new clients via referrals.
Financial planning firms can also target new talent in different locations, presenting an opportunity to grow, diversify and strengthen firm staff.
From the client’s perspective, if they are unhappy with the services they are receiving, their ability to find a new financial planner is no longer limited to who is located in their area. Therefore, it has never been more important for financial planners to adapt to any external challenges to consistently provide optimal services to clients.
Clients Expect a Contingency Plan for Themselves - and for You
While many firms may not have been prepared to transition to remote work at the beginning of the pandemic, Shah’s Texas-based firm, having been in the path of a major tornado in 2019, already had a disaster plan in place. Shah and his team were prepared to connect with clients, despite not having physical access to the firm’s office. Their plan proved critical to providing a seamless transition for their clients at the beginning of the pandemic.
If a firm did not have a contingency plan prior to the pandemic, it is important to establish one moving forward to prevent disruptions in service.
If a firm did not have a contingency plan prior to the pandemic, it is important to establish one moving forward to prevent disruptions in service. At this point, Shah “would be surprised” if investors were not asking prospective financial planners about their contingency plans and what service they can expect under different scenarios.
Additionally, Shah saw an increase this year in clients’ interest in establishing contingency plans for themselves. For many, the pandemic brought into perspective just how important having an estate plan is if the worst were to happen.
In her experience, Voisin found that, “as an advisor, this [was] the year you talk[ed] about so many other things,” outside of stock market investments. Financial planners are in a unique position to holistically review an individual’s financial and personal life and offer support to ensure their assets and legacy are protected.
Change Will Continue - Financial Planners Must Be One Step Ahead
In 2021, unforeseen changes will undoubtedly arise during the year. Though no one has a crystal ball to see into the future, there are a few anticipated changes that financial planners can prepare for now.
Among the items on Voisin’s radar are President-elect Joe Biden’s tax agenda, pending Paycheck Protection Program loan forgiveness and required minimum distribution waivers. It is important to Voisin to stay informed and follow updates in real time—by reading news articles, listening to podcasts, and watching webinars—so that she can provide answers as quickly as possible to her clients.
With so much still unknown, Castro emphasizes being as nimble as possible, taking the world “day by day and chang[ing] with what is going on around us.”
Shah is also “certainly keeping an eye on what happens with tax law,” because he knows the significant impact taxes can have on his clients’ lifetime earnings and wealth. To prepare for 2021 and beyond, Shah and his team are studying different areas of financial planning that will be impacted by anticipated tax changes, whether those changes occur in 2021, 2022 or even 2023.
With so much still unknown, Castro emphasizes being as nimble as possible, taking the world “day by day and chang[ing] with what is going on around us.” Regular check-ins between financial planners and their clients are important “always, but now more than ever,” to ensure everything is in alignment, Castro says.
For more on how the challenges of 2020 have reinforced the importance of professional financial advice, and how CFP® professionals are uniquely qualified to help their clients navigate 2021, read our recent Industry Insights article on the enduring value of the CFP® certification.