ESI launched a new Financial Planning and Consulting process designed to enhance our IAR’s ability to provide these services. The new process offers more definition, structure and clarity into the process at ESI.
Financial Planning
Financial Planning represents a significant tool for engaging clients in an advisory capacity. The new Financial Planning Agreement includes a cover page which defines the types of activities that may be conducted under a financial plan. Under the new Financial Planning Agreement, clients can execute one agreement to engage with an advisor for either:
- A single, one-time plan, or
- An initial plan with reoccurring annual updates
Payment options for financial plans include:
- Pay-by-check: pre-payment in whole or in part, or following plan delivery
- AdvicePay: full/partial payments, or monthly/quarterly installments
Financial planning culminates in the presentation of a financial plan generated by an ESI-approved planning software such as MoneyGuide Pro, eMoney or Fidelity Retirement Planner. Fees for the creation and presentation of the plan are based on the complexity of the client’s financial situation and needs, client’s assets, and the advisor’s experience.
ESI is pleased to provide more guidance and structure to the planning process and fees and has created a Financial Plan Scoring Matrix and a Financial Planning Pricing Matrix. The Scoring Matrix will be included and submitted with the documents viewed by the client.
Consulting Agreement
Financial Consulting provides an opportunity for clients to engage ana advisor in a much more limited capacity. Financial Consulting is typically done as a one-off engagement with a focus on one, or perhaps a few, financial topic(s) specific to the client’s situation. The financial advisor will execute a Financial Consulting Agreement. Financial Consulting should not be an ongoing relationship, is considered to provide a discrete service, and does not utilize the planning software used for more comprehensive financial planning.
Fees for Financial Consulting are based on the complexity of the client’s needs, advisor experience and estimated hours of work performed by the advisor.
Under the new Financial Consulting Agreement, clients can execute an agreement to engage an advisor on a one-time consulting basis. Future consulting engagements must be conducted under separate agreements.
Payment options for financial plans include:
- Pay-by-check: pre-payment in whole or in part, or following plan delivery
- AdvicePay: full/partial payments
Reoccurring periodic payments are not available under Financial Consulting agreements.
The new Financial Consulting Agreement includes a cover page which defines the types of activities that may be conducted under Financial Consulting. Many non-securities related activities do not fall under Financial Consulting and must be conducted under an approved outside business activity (OBA).
What is NOT Financial Planning and Consulting?
Activities that are not covered by a Financial Planning or Consulting Agreement include:
- Employee Benefits Consulting on a plan/sponsor level
- Tax Advice and/or services,
- Accounting services,
- Creation of a will or trust documents or other legal services,
- Business valuation
- Divorce planning
Advisors who provide such services for a fee must do so through an approved outside business activity (“OBA”) and be appropriately licensed to provide a fee for such services. OBAs must be reviewed and approved prior to engaging in the activity.
Certain other activities for which advisors may not charge a separate fee include:
- Reviews of existing accounts in AUM (advisory or non-advisory)
- Providing specific investment advice for assets in AUM
- Reviews of existing insurance products for which that rep is agent of record,
- Gathering information to prospect for clients,
- Assisting in securitization of businesses,
- Participating in the creation of registered or non-registered securities (i.e. private placement offerings, private securities transactions, viatical settlements, etc.)
- Providing advice about non-registered private placement securities,
- Providing specific investment advice on assets that are not part of the IAR’s AUM,
- Any service that is not otherwise enumerated above unless specifically preapproved by an ESI Suitability Principal.
Planning/Consulting Fees
Financial Planning
To assist with determining appropriate fees for financial planning, ESI has developed the new Financial Planning Scoring Matrix and EFA Planning Pricing Matrix. The Scoring Matrix allows you to score the client with respect to the client’s financial needs and the plan provided. The client’s score is carried over to the Pricing Matrix, which provides the acceptable range of fees.
Financial Consulting
For Financial Consulting, the client and advisor agree upon the fee to be charged based on the service(s) to be provided.
Financial Planning and Consulting Resources and Marketing:
Financial Consulting Agreement
For a customizable Financial Planning client flyer, visit CoBrand on Demand and search for Cat #107314
For Questions, contact Dan Randall at drandall@nationallife.com or Dan House at dhouse@nationallife.com
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