Journal of Financial Planning: September 2010
Executive Summary
- After four decades, the financial planning profession still lacks an overarching framework for organizing and testing the strategy-making (that is, “planning”) activities of its practitioners.
- An integrating framework is proposed that consists of five modes of strategy-making: planner-driven, data-driven, policy-driven, relationship-driven, and client-driven.
- Each of these five modes represents a different relative role for the planner and client in the planning process. The modes also fall along a parallel dimension of planning versus emergence.
- The proposed model is tested against measures of client trust and relationship commitment, and the policy-driven mode is found to be the most powerful predictor of both.
- Client complexity is also analyzed as a predictor of client trust and commitment, and it is found that trust and commitment are inversely related to the complexity of a client’s circumstances.
- Finally, a factor analysis of planner strategy-making activities shows that planners in independent firms tend to favor data- and policy-driven approaches and those practicing at large financial services firms tend to be more dominant in the planner-driven mode.
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Topic
General Financial Planning Principles
Research