Not only can financial planning help advisors increase their business, but there are a number of different business models to choose from, according to a new report released by the Aite Group.

Not only can financial planning help advisors increase their business, but there a number of different business models to choose from, according to a new report  released yesterday by the Aite Group, The Practice of Financial Planning: An Advisor Segmentation.

“Advisers who embrace financial planning effectively can generate more revenue,” Sophie Schmitt, senior analyst for Aite, told Family Wealth Report. “Planning allows advisors to develop deeper relationships that help them attract more client assets and a deeper share of wallet.”

Perhaps just as important, Schmitt added, is that there at least three successful models advisors are using, according to a survey of nearly 400 advisors Aite conducted in the fourth quarter of 2009.

“There isn’t just one way to do it,” she said. “The survey shows there are several.”

In the “planning-driven” model, holistic planning is the primary offering which leads to recommendations spanning different product types, according to the report. The advisor in this model “convinces the prospect of planning benefits and acts more as a generalist than as a specialist.”

In the “planning-supported model,” both planning and investment management services are offered, which leads primarily to recommended investment solutions as well as other solution types. The advisor in this model is “more comfortable with being a product specialist than a generalist.”

Planning is the key offering in the “planning-selective model,” but “only for clients who are willing to pay for the service.” The process leads to “more planning flexibility as reflected in the hourly pricing model.” Advisors perform multiple levels of planning and are usually part of a team-based process “in which planning and implementation are likely to be separated.”

Selecting the best fit for advisors

Firms should evaluate the best fit for advisors when choosing a model, the report recommends.

For example, if advisors are able to engage clients by speaking about planning in their first conversation, “firms may want to focus more on adopting a planning-driven approach.”

Conversely, firms with advisors “more well-versed in investment products than other products” should consider the planning-supported model as “a better fit,” the report said.

The study also urged  firms to support “planning-challenged advisors” who are moving from a transaction-focused business to an advisory one with resources such as easy to understand presentations; integrated business applications that enable advisors “to work more efficiently and increase the time they can spend on planning” and planning skill development activities and coaching.

No matter what firms choose to do to bolster financial planning, they can’t ignore it, Schmitt said.

“Clients are recognizing they need financial planning, and they increasingly want it,” she said. “For advisors it’s a way to differentiate themselves and a real way to add value.”