60% Increase in Financial Plan Adoption with Goals-Based Intake

60% Increase in Financial Plan Adoption with Goals-Based Intake

Executive Summary

Vanguard Point Advisors faced a significant challenge: low adoption rates of financial plans due to clients struggling to articulate their financial goals. To address this, they implemented a structured, goals-based intake process powered by a customized RightCapital questionnaire. This new approach guided clients through identifying their key objectives, leading to a 60% increase in financial plan adoption and a subsequent 20% increase in revenue from financial planning services within the first quarter.

The Challenge

Vanguard Point Advisors, a growing RIA firm managing over $250 million in assets, recognized a bottleneck in their financial planning process. While they offered comprehensive financial planning services, the adoption rate was consistently below 40%. The core issue stemmed from a generic, one-size-fits-all intake process that failed to truly understand and address individual client needs and aspirations.

Specifically, the initial client meeting often involved broad questions about retirement, investments, and insurance. Clients, unfamiliar with the complexities of financial planning, struggled to articulate their specific goals beyond vague statements like "retire comfortably." This lack of clarity resulted in financial plans that felt impersonal and disconnected, leading to low client engagement and, ultimately, a reluctance to fully adopt the plan.

For example, a prospective client, John, a 52-year-old engineer, stated his goal as "retiring comfortably around 65." The initial plan presented to him focused heavily on generic retirement savings targets, overlooking John's specific desire to relocate to a warmer climate and pursue his passion for photography. The plan projected retirement income of $80,000 annually, but didn't address the higher cost of living in his desired location or the potential income he could generate from selling his photographs. This disconnect led John to delay implementing the plan, opting instead to maintain his existing investment strategy.

Furthermore, the existing intake process relied heavily on manual data entry, consuming valuable time for advisors and increasing the risk of errors. Advisors spent an average of 2 hours per client manually inputting data into RightCapital after the initial meeting, time that could have been better spent on strategy development and client relationship management. The lack of a structured framework for capturing client goals made it difficult to consistently create personalized and effective financial plans, costing Vanguard Point Advisors potential revenue and hindering client growth. They estimated losing out on approximately $50,000 in planning fees annually due to the low adoption rate and inefficiencies. This meant less capital was being actively managed, impacting overall AUM growth in the long term.

The Approach

Vanguard Point Advisors partnered with Golden Door Asset to redesign their client onboarding process, focusing on a structured, goals-based intake strategy. The strategic thinking centered on shifting the focus from generic financial products to understanding the client's individual aspirations and creating plans that directly addressed those goals.

The approach involved the following key steps:

1. Goal Identification Framework: Golden Door Asset worked with Vanguard Point Advisors to develop a comprehensive list of common client goals, categorized into areas such as retirement, education, major purchases (e.g., second home, boat), charitable giving, and legacy planning. Each goal was further broken down into specific, measurable, achievable, relevant, and time-bound (SMART) objectives. For example, "retirement" was refined into goals like "Maintain current lifestyle in retirement," "Travel extensively in retirement," or "Relocate to a specific location in retirement."

2. Customized Questionnaire: Based on the goal identification framework, Golden Door Asset designed a custom questionnaire within RightCapital. This questionnaire used a branching logic approach, presenting clients with relevant questions based on their initial responses. For instance, if a client indicated a desire to "Travel extensively in retirement," the questionnaire would then prompt them to specify their desired travel budget, destinations, and frequency of travel.

3. Scenario Planning: The questionnaire incorporated scenario planning questions to understand the client's risk tolerance and preferences for different financial scenarios. Questions included assessing their comfort level with market volatility, their preferred investment strategies (e.g., growth vs. income), and their willingness to make trade-offs between different financial goals. For example, clients were asked to consider the impact of delaying retirement by a year to fund a child's college education.

4. Automated Plan Generation: The data collected through the questionnaire was automatically fed into RightCapital, which generated personalized financial plan recommendations based on the client's specific goals and preferences. This automation reduced the time spent on manual data entry and allowed advisors to focus on refining the plan and providing personalized advice.

5. Client Education: The new process included a strong emphasis on client education. Advisors were trained to explain the rationale behind the recommended financial plan in clear and concise terms, emphasizing how the plan directly addressed the client's individual goals. They also provided clients with access to educational resources, such as articles, videos, and webinars, to help them better understand financial concepts and make informed decisions.

6. Regular Review and Adjustment: The financial plans were not static documents. The team implemented a review process that emphasized continual adjustments and tweaks to the plan to align with the client's changing goals and circumstances. Each quarter, advisors would conduct a call with the client to review the existing plan and adapt where needed.

Technical Implementation

The technical implementation centered around leveraging the flexibility and customization capabilities of RightCapital, integrated with the structured framework developed by Golden Door Asset.

• Custom Questionnaire Development: A custom questionnaire was built directly within RightCapital using the platform's questionnaire functionality. The questionnaire utilized a branching logic design to tailor the questions presented to each client based on their prior responses. For instance, a client indicating a desire to purchase a second home would be presented with follow-up questions regarding the desired location, budget, and timeline for the purchase. The questionnaire captured both quantitative data (e.g., income, expenses, assets) and qualitative data (e.g., risk tolerance, financial priorities, values).

• API Integration: The RightCapital API (Application Programming Interface) was utilized to streamline the data transfer between the questionnaire and the financial planning software. This ensured that the data collected through the questionnaire was automatically populated into the relevant fields within RightCapital, eliminating the need for manual data entry.

• Automated Plan Generation Logic: Rules-based logic was implemented within RightCapital to automatically generate personalized financial plan recommendations based on the client's responses to the questionnaire. This logic considered factors such as the client's age, income, risk tolerance, and financial goals to determine the optimal asset allocation, savings rate, and insurance coverage.

• Monte Carlo Simulation: RightCapital's Monte Carlo simulation capabilities were leveraged to project the probability of the client achieving their financial goals under different market conditions. The simulation considered factors such as inflation, interest rates, and investment returns to assess the potential impact of various risks on the client's financial plan. The results of the simulation were presented to the client in a clear and understandable format, helping them to make informed decisions about their financial future. Specifically, the success rate (probability of meeting all goals) was highlighted.

• Goal Prioritization Algorithm: To handle competing goals, the algorithm prioritized goals based on client responses and weighted values to determine allocation recommendations. For example, retirement planning might be weighted 50%, education 30%, and purchasing a vacation home 20%, thus helping RightCapital recommend the right balance of investment allocations to achieve each goal.

Results & ROI

The implementation of the goals-based intake process yielded significant positive results for Vanguard Point Advisors.

• Financial Plan Adoption Rate: The financial plan adoption rate increased from 38% to 61%, representing a 60% increase.

• Revenue from Financial Planning Services: Revenue from financial planning services increased by 20% within the first quarter following the implementation of the new process. This translated to approximately $10,000 in increased revenue per month.

• Client Satisfaction: Client satisfaction scores, measured through post-planning surveys, increased from an average of 7.5 out of 10 to 9.2 out of 10. Clients reported feeling more understood, more engaged with the financial planning process, and more confident in their financial future.

• Advisor Efficiency: Advisors reported a significant reduction in the time spent on manual data entry and plan preparation, freeing up an average of 1.5 hours per client. This allowed them to focus on building stronger relationships with clients and providing more personalized advice. This efficiency gain effectively freed up approximately 45 advisor hours per month.

• AUM Growth: With increased client retention and satisfaction, AUM (Assets Under Management) grew by an incremental $3 million over the course of the year.

Key Takeaways

For other RIAs and wealth managers looking to improve client engagement and financial plan adoption, here are some key takeaways from Vanguard Point Advisors' experience:

1. Focus on Goals, Not Just Products: Shift the focus from selling financial products to understanding and addressing the client's individual goals and aspirations.

2. Structure Your Intake Process: Implement a structured, goals-based intake process that guides clients through identifying their key financial objectives and priorities. Use questionnaires with branching logic to customize questions based on individual client responses.

3. Automate and Integrate: Leverage technology to automate data entry and plan generation, freeing up advisors to focus on building stronger relationships with clients. Invest in platforms with robust API integrations.

4. Prioritize Client Education: Provide clients with access to educational resources and explain the rationale behind your recommendations in clear and concise terms.

5. Regularly Review and Adjust Plans: Financial plans should not be static documents. Implement a process for regularly reviewing and adjusting plans to align with the client's changing goals and circumstances.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors build personalized financial plans tailored to individual client goals, leading to increased client engagement and plan adoption. Visit our tools to see how we can help your practice.