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Study: Financial planning practices look toward an innovative future

Written on Oct 29, 2021

A new global study captures Certified Financial Planners’ views on trends likely to affect financial advice delivery in the next five years.

The study by the Financial Planning Standards Board Ltd. (FPSB) surveyed 4,250 CFP professionals in 23 territories.

Results:

Technology expected to enhance the practice of financial planning. CFP professionals viewed financial technology (42%) as the factor likely to have the greatest impact on how financial planners work with clients over the next five years, with almost 70% favorably viewing technology as something that would allow them to spend more time doing financial planning with clients. Two thirds (66%) of CFP professionals increased their efforts to shift to a more virtual practice during the Covid-19 pandemic, and a majority expect at least 40% of their client meetings to continue to be virtual in the near future.

Financial planning relationships shift towards collaboration, financial planners embrace "softer" skills. During the Covid-19 pandemic, almost one third (32%) of CFP professionals reported being more involved with their clients in managing emotions. When asked about the value financial planners will provide to clients in the future, over half the CFP professionals surveyed reported that collaborating to set and achieve financial goals (29%) and providing objective advice to facilitate decision-making (27%) will be the greatest value they can provide to clients. In support of this shift towards more collaborative client relationships, CFP professionals reported financial planners needed to learn more about behavioral finance (55%) and coaching (43%) to be successful in the future, along with more traditional topics such as financial issues related to aging (68%), estate planning (62%) and investment management (57%).

Public demand for financial planning will increase, driven by retirement needs. Overwhelmingly (82%), CFP professionals expect increased demand for financial planning services over the next five years. CFP professionals see demand growing due to more people preparing for retirement (61%) and younger generations seeking financial planning (35%), increased levels of consumer awareness of the value of financial planning (56%) and the need for professional advice caused by global economic uncertainty (41%). Not surprisingly given the importance placed on retirement, CFP professionals listed retirement security (69%), investment planning (64%), managing inheritance / wealth transfer to the next generation (61%) and finances associated with aging and long-term care (47%) as the top items they expected financial planning clients would want them to address in the future.

Raising awareness of the value of financial planning and (re)building trust will be key to engaging the public. Although increased public awareness is expected to be one of the drivers of demand for financial planning, CFP professionals indicate there is significant work that needs to be done to promote the value of financial planning and the value of working with a financial planner. Respondents cite a lack of awareness of the value of financial planning (79%) as the top reason people do not seek out financial planning services, followed by a lack of trust in financial advisors (46%).

Continuing education key to success. Respondents listed continuing education / professional development (65%) as the action that would have the most significant impact on their success over the next five years. This was followed by embracing technology (60%) and shifting client service to a holistic model of financial planning (59%).