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Why more firms need a chief planning officer

It’s time for some advisory firms to pull up a new chair to their boardroom tables.

The past five years have brought a revolution in the delivery of financial services. Whereas firms used to construct their business models around products or investment advice, they are now focused on providing holistic advice and assuming planning responsibilities for clients.

The message is clear — the future lies in comprehensive financial planning advice. But holistic planning requires time and resources — and an ability to understand the changing needs of a rapidly expanding customer base.

This will not be easy for many firms. Some may find implementing changes daunting, especially with more experienced advisors who may be comfortable with the status quo.

Kevin Keller CFP Board

So where do firms begin? They can change their training and onboarding practices, provide continuing education programs and certifications, such as the CFP certification, and they can purchase and build more sophisticated financial planning tools.

But that is not enough.

To be successful, firms large and small need to give advisors a strong financial support system and have someone who can own that system. Now is the time for firms to introduce a new kind of C-level executive, with the same authority as other C-suite members, to elevate and reorganize business strategy around comprehensive financial planning.

Just like companies need chief technology officers to handle complex IT needs, advisory firms need a chief planning officer (CPO) to oversee the similarly complex planning needs of clients and the advisors who work with them.

A CPO would serve as an agent of change within a firm to build and sustain a culture of comprehensive advice and planning. They would create processes that ensure the firm leads with planning and delivers planning recommendations that meet the fiduciary standard without being organized around products or services. They would lead the firm’s strategic decision-making to revise or eliminate existing models in areas such as hiring, onboarding, training and support.

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CPOs would also ensure that financial planning is institutionalized within the firm and make it clear to all stakeholders that it is critical to the firm’s success. Every aspect of the firm’s operations, from compensation to goals and incentives, will be aligned and reflected in this new focus on comprehensive financial planning. This role will become a critical factor in the value proposition of the company, sending a powerful message about its direction and priorities.

This role will become a critical factor in the value proposition of the company, sending a powerful message about its direction and priorities.”

Although many RIAs and small firms have already hired a CPO or someone in a similar capacity to focus on holistic planning, many larger firms have not yet made this change. A CPO will make the transition easier, especially as they work with other firm leaders to transfer the focus to financial planning and ensure the firm’s success. This is not a fad, but a necessary change that will allow the firm to not only survive but thrive in the decades ahead.

Cerulli data shows that more than 60% of advisors agree that demand for financial planning is growing, and that it’s becoming a differentiator for their practices. Financial planning isn’t just for the wealthy and it’s not a one-size-fits-all service. It is a dynamic process involving consistently changing financial goals that adapt to shifts in lifestyle or circumstances such as an inheritance, career change, marriage, house purchase or growing family. Firms today must meet the needs of all clients looking for financial planners.

Among clients who work with an advisor, 87% of those working with a CFP professional say they are satisfied or very satisfied. A CPO is the most tangible way to ensure that clients continue to be satisfied as firms initiate change, focus on holistic financial planning and allow advisors to provide their clients with a plan that best meets their unique needs.

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