53% of investors believe that having a written financial plan is important, up from 41% of retail investors as of year-end 2014. Financial advisory practices that incorporate comprehensive wealth management and planning services see longer-lasting client relationships, bolster upmarket growth, and manage wealthier clients, according to new research from Cerulli Associates and Osaic, Inc. (“Osaic”), Financial Planning: Fueling Client and Business Growth.

This increased demand in planning is driven by various factors, including greater market volatility, the continued decline of employer pensions as a funding mechanism for retirement, and a growing array of complex investment vehicles. “Financial planning and advice services are now a vital consideration for investors when choosing an advisor with whom to work, nearly surpassing investment performance as a factor,” says Andrew Blake, associate director. According to the research, 55% of investors consider an advisor’s understanding of their financial goals, needs, and risk tolerance as well as their entire financial picture (49%) when choosing a financial advisor as compared to the performance of their investments relative to the overall market (46%).

At the same time, advisors specializing in comprehensive wealth management have significantly larger average client sizes and assets under management (AUM) per practice than those providing financial planning on an issue or case basis. Private wealth manager advisors, defined as practices that offer comprehensive wealth management, manage $822 million, on average, versus $210 million for case-based planners, service a greater proportion of high-net-worth (HNW) clients (37% versus 7%), and manage an average client portfolio of $1.8 million versus $562,000.

“With client demand for financial planning increasing and the majority of retail investors considering a financial advisor's planning-related services as an extremely important factor when selecting an advisor, the service offering provides an opportunity for advisors to differentiate their practice beyond investment performance,” comments Blake. “Just less than one-third (31%) of financial advisor practices provide a wide range of core financial advice services as an integral part of their value proposition, creating ample opportunity for advisors to gain a competitive advantage.”

Taking the steps necessary to transition from an investment-management-oriented service model toward a financial planning and advice-oriented service model will not come without challenges for many practices. However, Cerulli's research indicates that the benefits may be worth the effort as investor demand for this service grows.

“Relationships are at the core of our business, and advisors whose practices incorporate comprehensive wealth solutions into their service model often results in deeper and longer-term connections as they work with clients holistically on their larger financial picture instead of individual needs,” says Joe Gaeckle, Head of the National Planning Institute at Osaic. “Osaic is committed to continuous education and we empower our advisors to build upon their expertise through programs like Wealth Advisor Academy to further grow their practices.”

Cerulli believes that many advisors should evaluate how their wealth management service offering is satisfying the growing demand and consider gradually adding more services to move further along the service emphasis spectrum. “Advisors who don't currently provide financial planning and advice services don't need to make the transition all at once. Small steps can be taken toward incorporating financial advice and planning into a practice's service model and familiarizing clients with the value proposition of services,” concludes Blake.