How Financial Planners Actually Do Financial Planning (2023)

How Financial Planners Actually

Do Financial Planning (2023)

Volume 1, 2023

The Kitces Report

The Kitces Report, Volume 1, 2023

About The Authors

Lead Researcher

Dan Inveen

CFA

Biography

For more than two decades Dan has

directed a broad spectrum of industry

executives toward a better understanding

of how to succeed in the ﬁnancial

advisory marketplace. He has worked

with broker-dealers, asset managers,

leading RIAs, and every major industry

custodian, helping to identify emerging trends in the distribution and demand for

ﬁnancial advice as well as best practices in ﬁrm management.

Once part of the Moss Adams consulting team that pioneered the ﬁeld of advisor

“practice management” in the mid-2000’s, Dan later co-founded his own boutique

industry research and consulting ﬁrm, FA Insight. After just seven years he successfully

sold the ﬁrm to TD Ameritrade, one of the country’s leading providers of brokerage and

custody services.

His research and consulting experience covers a broad range of issues affecting ﬁnancial

advisors, including strategic planning, organizational design, compensation, operations,

and M&A. For over a decade Dan led the production of the FA Insight Annual Study of

Advisory Firms, a leading resource of critical intelligence for ﬁnancial advisory ﬁrms as

well as the institutions that serve them.

Dan began his career as a government economist, including several years leading the

Bureau of Economic Research in the U.S. Virgin Islands, before overseeing the marketing

research function for Russell Investments. Dan holds bachelor’s and master’s degrees in

economics from the University of Washington and is a CFA Institute charter holder.

Chief Financial

Planning Nerd

Michael Kitces

MSFS, MTAX, CFP®, CLU, ChFC,

RHU, REBC, CASL

Biography

Michael Kitces is the Chief Financial

Planning Nerd at Kitces.com, dedicated

to advancing knowledge in ﬁnancial

planning and helping to make ﬁnancial

advisors better and more successful,

and the Head of Planning Strategy at

Buckingham Wealth Partners, an independent RIA with more than $50 billion of assets

under management, that provides private wealth management to consumers and

turnkey asset management platform services to advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, New Planner

Recruiting, fpPathﬁnder, and FA BeanCounters, the former Practitioner Editor of the

Journal of Financial Planning, the host of the Financial Advisor Successpodcast, and the

publisher of the popular ﬁnancial planning continuing education blog Nerd’s Eye View.

Beyond his website and many businesses, Michael is an active writer and speaker

across the industry, and has been featured in publications including Financial

Planning, the Journal of Financial Planning, Journal of Retirement Planning, Practical

Tax Strategies, and Leimberg Information Services, as well as The Wall Street Journal,

BusinessWeek, CNBC PowerLunch, NBC Nightly News, and more. In addition, Michael

has co-authored numerous books, including “The Annuity Advisor” with John Olsen

(now in 5th edition), and “Tools & Techniques of Retirement Income Planning” with

Steve Leimberg and others.

The Kitces Report, Volume 1, 2023 About The Authors | 2 of 67

The Kitces Report, Volume 1, 2023 About The Authors | 3 of 67

Senior Research Nerd

Meghaan Lurtz

Ph.D., FBS™

Biography

Meghaan Lurtz, Ph.D., FBS™ is a Profes-

sor of Practice at Kansas State Univer-

sity where she teaches courses for the

Advanced Financial Planning Certiﬁcate

Program, a lecturer at Columbia Univer-

sity where she teaches Financial Psychol-

ogy, and an on-staff writer and researcher

of ﬁnancial psychology at Kitces.com.

Her research interests vary as she studies both practitioners of ﬁnancial planning

as well as ﬁnancial planning and ﬁnancial therapy practices and interventions. Her

research and expertise have been featured in Journal of Financial Planning, Journal of

Consumer Affairs, Financial Planning Review, Wall Street Journal, BBC, Million Dollar

Roundtable, and New York Magazine. She has also contributed chapters to the CFP

Board’s textbook, Client Psychology.

Meghaan is a past President and current board member for the Financial Therapy

Association and Financial Psychology Institute Europe.

The Kitces Report, Volume 1, 2023

About The Authors

FEATURED IN:

The Kitces Report, Volume 1, 2023

Table Of Contents

About The Authors .................................................................................2

Executive Summary ...............................................................................7

Key Findings .................................................................................................................................................... 7

‘The Plan’ Is Taking A Second Seat To Ongoing Planning ......................................................... 7

Financial Planning Increases In Complexity..................................................................................... 7

Financial Planning Technology Struggles To Keep Pace ........................................................... 8

Odds Favor Advisors Who Gain Control Over Their Time ........................................................... 8

Mid-Size Service Teams With 3–4 People Are The Sweet Spot ............................................... 8

Capability To Serve Afﬂuent Clients Eases The Path To Higher Productivity .................. 9

Capturing Opportunity By Taming Time With Moderation ...................................................... 9

Introduction ...........................................................................................10

Study Objectives And Coverage ............................................................................................................10

Survey Participants And Methodology ...............................................................................................11

Figure 1. Summarizing Survey Respondents .......................................................................................................11

It’s About Time ...................................................................................... 12

Figure 2. Hours Worked By Role ..................................................................................................................................12

Bigger Teams Lead To Busier Advisors ..............................................................................................12

Figure 3. Senior Advisor Hours Worked By Size Of Service Team .....................................................13

Commission Business Requires Greater Time Investment ......................................................13

Figure 4. Senior Advisor Hours Worked By Channel ...................................................................................13

Advisor Hours And Revenue ...................................................................................................................14

Figure 5. Senior Advisor Hours Worked By Revenue Per Advisor .................................................... 14

Where Does Time Go? ...............................................................................................................................14

Figure 6. Time Allocation By Front, Middle, And Back Ofﬁce ...............................................................15

Figure 7. Time Allocation By Speciﬁc Activity ...................................................................................................15

Optimizing The Senior Advisor Role .................................................................................................... 16

Figure 8. Senior Advisor Time Allocation By Revenue Per Advisor (Front, Middle,And

Back Ofﬁce) ....................................................................................................................................................................................16

Figure 9. Senior Advisor Time Allocation By Revenue Per Advisor (Speciﬁc Activities) ....17

The Planning Service Team ..............................................................18

Team Size And Composition ...................................................................................................................18

Figure 10. Service Team FTE Range ........................................................................................................................... 18

Figure 11. Revenue Per Advisor By Team Size .................................................................................................... 18

Figure 12. Revenue Per Team Member By Team Size ..................................................................................19

Figure 13. Frequency Of Roles Used ...........................................................................................................................19

Figure 14. Roles Teams Use By Team Size .............................................................................................................19

Figure 15. Typical Service Team Structure By Team Size ......................................................................... 20

External Resources .....................................................................................................................................20

Figure 16. Reliance On External Support To The Team ............................................................................. 20

Figure 17. Reliance On External Support By Frequency Of Roles Used ......................................... 21

Figure 18. Reliance On External Support By Channel And Support Type .................................... 21

Team Time Per Client ................................................................................................................................ 22

Figure 19. Total Team Time Per Client By Business Channel ................................................................22

Figure 20. Total Team Time Per Client By Client Size..................................................................................22

Figure 21. Total Team Time Per Client By Revenue Per Advisor .........................................................23

A Process Of Compromises .................................................................................................................... 23

Financial Plan Development ........................................................... 24

Putting Plans In Context .......................................................................................................................... 24

Figure 22. Planning “Intensiveness” By Revenue Source ........................................................................ 24

Figure 23. When Clients Are Provided Financial Plans ..............................................................................25

Figure 24. Plan Update Frequency ............................................................................................................................25

Planning Vs Plans........................................................................................................................................ 25

Depth And Breadth Of Financial Plans ............................................................................................ 25

Figure 25. Components Included In Financial Plans .................................................................................. 26

Figure 26. Plan Breadth ..................................................................................................................................................... 26

Figure 27. Trends In Plan Breadth (2018-2022) ................................................................................................ 26

Plan Approach ..............................................................................................................................................27

Figure 28. Primary Approach To Plan Development ...................................................................................27

Figure 29. Primary Method For Presenting Plan Results ........................................................................ 28

Financial Plan Preparation Time .......................................................................................................... 28

Figure 30. Service Team Time To Prepare A New Plan By Breadth ................................................ 29

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The Kitces Report, Volume 1, 2023

Figure 31. Service Team Time To Prepare A New Plan By Approach ............................................. 29

Figure 32. Service Team Time To Prepare A New Plan By Revenue Source ............................ 29

Figure 33. Days From Client Sign-On To Implementation By Plan Breadth ........................... 30

Working With Clients - Year One .................................................... 31

Year One Time ...............................................................................................................................................31

Figure 34. Year 1 Time Allocation Per Client By Activity..............................................................................31

Figure 35. Average Year 1 Time Per Client By Activity (2018-2022) .....................................................31

Figure 36. Year 1 Time Allocation Per Client By Activity By Team Role .........................................32

Figure 37. Year 1 Senior Advisor Hours Per Client By Activity By Team Size .............................. 33

Year One Meetings – Overview ............................................................................................................. 33

Figure 38. Client Meetings To Complete The Financial Planning Process ................................33

Year One Meetings – Schedule of Coverage ................................................................................... 34

Figure 39. New Client Planning Process (Typical Meeting Flow) ...................................................... 34

Year One Meetings – Format ................................................................................................................. 35

Figure 40. Share Of Meetings By Format And Meeting Order ............................................................ 35

Working With Clients - Ongoing ................................................... 36

Figure 41. Average Annual Time Per Ongoing Client By Activity .......................................................36

Figure 42. Typical Meeting Frequency With Ongoing Clients .............................................................36

Practice Lifecycle ........................................................................................................................................37

Figure 43. Ongoing Client Touchpoints Per Year By Client Size ........................................................37

Figure 44. Distribution Of Ongoing Client Touchpoints By Type ....................................................37

Client Size Or Season? ..............................................................................................................................38

Relationship Type – Transactional Or Relationship Focused .................................................. 38

Figure 45. Ongoing Client Touchpoints Per Year By Revenue Source ........................................ 38

Ongoing Client Work – Conclusion ..................................................................................................... 38

Tools Supporting Plan Production ................................................ 39

Financial Planning Software Tools Overview ................................................................................. 39

Figure 46. Software Used To Produce Financial Plans ...............................................................................39

Figure 47. Per Plan Team Hours By Software Type Used ........................................................................39

Third-Party Planning Applications ..................................................................................................... 40

Figure 48. Third-Party Financial Planning Software Usage ..................................................................40

Figure 49. Third-Party Financial Planning Software Satisfaction .....................................................40

Figure 50. Third-Party Financial Planning Software (Usage vs. Satisfaction) ........................... 41

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eMoney ............................................................................................................................................................. 42

MoneyGuide ................................................................................................................................................... 43

RightCapital ...................................................................................................................................................43

NaviPlan .......................................................................................................................................................... 44

Orion Financial Planning .........................................................................................................................45

MoneyTree ......................................................................................................................................................46

Asset-Map .......................................................................................................................................................46

Specialty Financial Planning Applications ......................................................................................47

Figure 51. Specialized Software Usage ...................................................................................................................47

Figure 52. Specialized Tax Software .......................................................................................................................... 48

Figure 53. Specialized Social Security Software ..............................................................................................48

Charging For Plans And Financial Advice In General .............49

Pricing Overview .........................................................................................................................................49

Figure 54. Majority Revenue Source ........................................................................................................................49

Figure 55. Number Of Different Charging Methods Used ..................................................................... 49

Figure 56. Typical Client Afﬂuence By Charging Method ....................................................................... 50

Typical AUM Fee Levels ............................................................................................................................50

Figure 57. Median Revenue As A Percentage Of Assets Managed ................................................. 50

Structuring Graduated Fee Schedules ............................................................................................... 51

Figure 58. Typical Blended Tier Fee Structure (Based On 4-Tier Median) ................................... 51

All-In Fees Including The Underlying Cost Of Investing ............................................................51

Figure 59. Expense Ratios For Underlying Client Funds By Advisor Channel ..........................51

Figure 60. All-In Fee By Advisor Channel By Portfolio Size (Moderate Risk Proﬁle) ...........52

Retainer Fee ................................................................................................................................................... 52

Figure 61. Distribution Of Typical Annual Retainer Fee .............................................................................52

Hourly Charges ............................................................................................................................................. 53

Figure 62. Extent Of Variance For Retainer Fees ............................................................................................53

Figure 63. Distribution Of Hourly Planning Fees ............................................................................................53

Paying For Financial Plans ...................................................................................................................... 53

Figure 64. Typical Charging Methods For Financial Plans ...................................................................... 53

Figure 65. Median AUM Fee (Plan Bundled Vs Unbundled) ................................................................ 54

Standalone Project Planning Fees ......................................................................................................54

Figure 66. Distribution Of Fees For Standalone Plan ................................................................................. 54

Figure 67. Typical Standalone Plan Fee By Plan Breadth ........................................................................ 55

Plans By The Hour ....................................................................................................................................... 55

Figure 68. Distribution Of Cost For Plan Based On Hourly Rate 55

The Kitces Report, Volume 1, 2023

Planning For Success ......................................................................... 56

Figure 69. Advisor Productivity By CFP And Experience ......................................................................... 58

Figure 70. Advisor Productivity By Designations ........................................................................................... 58

What Does It All Add Up To? ........................................................... 59

Figure 71. Income By Role .................................................................................................................................................59

Figure 72. Senior Advisor Income By Experience .......................................................................................... 60

Figure 73. Senior Advisor Income By Service Team Size ..........................................................................60

Figure 74. Senior Advisor Income By Practice Structure ..........................................................................61

Figure 75. Senior Advisor Income By Majority Revenue Source ..........................................................61

Conclusion ............................................................................................. 62

Appendix ................................................................................................ 63

Financial Planning Software Detail Ratings ...................................................................................63

Study Terms ................................................................................................................................................... 65

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The Kitces Report, Volume 1, 2023

Executive Summary

Key Findings

• Despite a decade of naysayers claiming that ﬁnancial advisors would be replaced

by ‘robots’ who can provide ﬁnancial planning advice and implement portfolios, in

reality, the ongoing pressure of technology is leading ﬁnancial advisors to do more

ﬁnancial planning and go even broader and deeper in their ﬁnancial planning

process.

• In turn, though, the work and service demands of doing more ﬁnancial planning for

clients are leading to several additional shifts that repeatedly arose throughout our

research, including the ‘levelization’ of ﬁnancial planning engagements over time

(to reduce the upfront burden with new clients and show ongoing value to clients

paying ongoing fees), the use of technology – not to make ﬁnancial planning more

efﬁcient but more effective, and the use of (the right-sized) teams to scale up the

efﬁciency of senior advisors.

• Notwithstanding the drive towards technology to improve advisor efﬁciency, we

found that adding staff support by growing a (3–4 person) team is a far greater

driver of productivity. However, one of the greatest predictors of advisor productivity

is simply the advisor’s ability to attract and retain more afﬂuent clients who pay

higher fees and compensate the advisor more for their time and expertise, which

happens as advisors specialize, pursue advanced degrees and designations, and

gain years of experience in managing client relationships and delivering advice.

‘The Plan’ Is Taking A Second Seat To Ongoing Planning

• In the past year, the typical ﬁnancial advisory team developed a new plan or

updated an existing one for over half of its clients (53%). However, most of their work

on plans, 71%, involved updates for ongoing clients. Financial planning work isn’t just

about ‘the plan’ anymore, as planning is increasingly both ongoing and dynamic as

more advisors build a base of recurring-revenue clients to whom they must show

their ongoing value.

• Even for new relationships, constructing The Plan only accounts for a minority of

the time that teams spend per client. Hours spent analyzing and evaluating the

new client’s ﬁnancial status, developing recommendations, and then preparing

deliverables accounted for just ⁄ of the total time a team typically commits in the

ﬁrst year of the relationship. More broadly, advisors are increasingly shifting from

delivering ‘The Plan’ to delivering ﬁnancial plans more collaboratively, or making

planning more about the multi-meeting process than delivering The Plan at all (with

1-in-7 survey respondents spending above-average time on planning analysis but

below-average time on preparing and delivering the plan because their time was

spent more on the Process than the Plan itself).

Financial Planning Increases In Complexity

• Financial planning is becoming more complex. Most advisors, 54%, now cover 13 or

more ﬁnancial topics in a typical client plan. Planning breadth is up from previous

related Kitces Research studies conducted in 2018 and 2020 when fewer than 40%

of advisors offered plans at that level of detail. The extent to which advisors prepare

custom-written ﬁnancial plans for clients is also on the increase.

• As a result, the total time a team allocates to a ﬁnancial planning client is on the rise.

The typical service team devoted 29 hours per client in the ﬁrst year of a relationship

and 21 hours in subsequent years. After falling some as a result of the pandemic,

average ﬁrst-year client time increased 13% from 2020 to 2022. The jump was

largely driven by a rise in time devoted to plan development, implementation, and

monitoring, which collectively was up more than 3 hours per client versus 2020.

• Despite fees holding mostly constant, signs are that advisors will continue to face

pressure to do more to substantiate and earn those fees. Of those advisors whose

clientele is predominantly 55 years or older, about half prepare Extensive plans for

their clients (13 or more topics). In contrast, ⁄ of those advisors serving a younger

client base prepare plans at this level of detail, suggesting a new generation of

clients that expects even more from the ﬁnancial planning they get from their

advisors.

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The Kitces Report, Volume 1, 2023

Financial Planning Technology Struggles To Keep Pace

• As advisors trend toward an increasingly greater level of comprehensiveness in their

planning, providers of ﬁnancial planning software appear to be struggling to keep

up. While 90% of advisors rely on third-party comprehensive ﬁnancial planning

applications, these programs rarely meet all the advisor’s technology needs for

planning. Of those advisors who used third-party comprehensive applications, nearly

⁄ further supported their planning work with either Word or Excel, and nearly half

needed specialized planning software to address speciﬁc needs such as planning

for taxes, retirement distribution planning, or Social Security, that aren’t covered

sufﬁciently by their general ﬁnancial planning software.

• Given the trend towards greater depth and breadth in ﬁnancial planning, the most

comprehensive planning tools (including RightCapital and eMoney) are winning

market share, though those applications with a strong portal and client-facing

experience in general (e.g., Orion Financial Planning and Asset-Map) appear to have

a steady (albeit niche) hold in the market.

Odds Favor Advisors Who Gain Control Over Their Time

• The challenge of client demand for increased depth and breadth in ﬁnancial

planning, however, can be – and is being – overcome. In the face of advisors offering

ever more comprehensive plans, the median direct time for plan preparation,

including evaluating the client’s status and preparing the deliverable, has not

increased in at least 4 years. Since 2018 ﬁnancial plan preparation time has held

steady at 10 hours.

• Growing adoption of the collaborative approach toward planning is helping to

facilitate advisors’ ability to better control planning time. Nearly half of advisors now

use planning software as a collaborative tool, developing plans with the client live

in ‘real time’. This compares to only about ⁄ of advisors just 4 years ago. At 8 hours

in typical prep time, collaborative plans are 2 hours below what is the norm across

all planning approaches. Overall, we ﬁnd that fewer than 50% of ﬁnancial advisors

even deliver ‘The Plan’ (whether via ﬁnancial planning software output or their own

custom-written plan) to clients now, as collaborative planning processes rise.

• In addition, the most productive advisors are ‘levelizing’ planning work across the

life of a client relationship, in place of investing increasingly inordinate amounts of

time upfront in the initial year. For the typical advisor managing $1 million or more

in revenue, ﬁrst-year time spent on a client, at 24 hours, is just 4% greater than the

23 hours in annual time spent in ongoing years. The comparable difference for less

productive advisors is signiﬁcantly greater, with a 45% drop from 29 hours in the ﬁrst

year to 20 hours in subsequent years.

Mid-Size Service Teams With 3–4 People Are The Sweet Spot

• The structure of an advisor’s service team is more impactful than the choice of

technology when it comes to advisor productivity and presents further opportunities

for the advisor to better manage time and raise productivity. The optimal team,

including senior advisors themselves, has 3 or 4 members. In addition to being a

sufﬁcient size to offer career paths, this is also the range where productivity peaks,

in terms of both revenue per advisor and revenue per all team members. Typically,

these mid-size teams will consist of a senior advisor assisted by an associate

advisor and a client service or administrative support role to handle back-ofﬁce

responsibilities. As the client count grows, a service advisor is added and delegated

relationship management of the team’s least complex relationships.

• While they may help to leverage productivity and capacity, a larger team doesn’t

necessarily reduce an advisor’s working hours, however. Typical senior advisors in

5-person teams work 22% longer annual hours than senior advisors in 2-person

teams. The time that advisors in bigger teams save by delegating to support staff is

offset by the greater oversight burden of managing a larger service team, though

productivity does rise as the team can support a higher number of (often more

afﬂuent) clients.

• The ability to delegate has positive beneﬁts on productivity, and the impact of

shifting just a few hours of advisor time away from back- and middle-ofﬁce tasks

toward more time in client meetings can be material. High-productivity advisors

(those managing $1 million or more in revenue) devote 39% of a typical work week

to front-ofﬁce activities, including meeting with clients as well as prospecting and

marketing. In contrast, lower-productivity advisors spend just 29% of their time

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The Kitces Report, Volume 1, 2023

conducting front-ofﬁce work. Client meeting time accounts for virtually all the

difference, where the most productive advisors are spending an average of 4.4 hours

more per week relative to less productive advisors. However, it’s also notable that

even the most productive advisors still spend ‘just’ 39% of their time on front-ofﬁce

activities, as advisors can still only manage and maintain a meaningful connection

with so many client relationships, even with technology and team support.

Capability To Serve Afﬂuent Clients Eases

The Path To Higher Productivity

• A clear correlation exists between advisor productivity (as measured by revenue per

advisor) and client wealth. Wealthier clients have more complex and demanding

needs, and a greater willingness and ability to pay for the higher level of advice it

takes to solve for those needs. For advisors managing $1 million or more in revenue,

the investable assets of a typical client are nearly double that of less productive

advisors.

• Advisors, however, need the right capabilities to serve wealthier – and typically more

complex – clients. These capabilities come in the form of their own education, skills,

and experience, in addition to other expertise they may have access to.

• Regarding external resources, those advisors serving more upmarket clientele are

far likelier to rely on outsourced support, typically centralized ﬁnancial planning

specialists that are within the ﬁrm but external to the service team. For example,

outsourced support is used by 55% of advisors serving clients with $3 million or more

in assets versus just 41% of advisors serving clients with $1 million or less.

• Relative to the expertise of others they may have access to, advisors’ capabilities

to serve a wealthier client are even more correlated with productivity. In terms of

revenue per advisor, the typical senior advisor with 10-plus years of client-facing

experience is more than twice as productive as a less-experienced senior advisor.

Education, in the form of specialized degrees and advanced certiﬁcations, also sets

an advisor apart in terms of greater productivity. Having only CFP certiﬁcation, for

example, correlates with an additional $100,000 in revenue per advisor.

Capturing Opportunity By Taming Time With Moderation

• Advisors have only so many hours in a day to adequately implement the ﬁnancial

planning process across increasingly demanding clientele. How these hours are

allocated, and with whom, has a signiﬁcant bearing on an advisor’s productivity and

income-generating potential.

• Real productivity boosts start with earning more on the advisor’s time, which

typically means establishing the skills and capabilities for attracting and retaining

more afﬂuent clients.

• Further, rather than going ‘all-in’ on expanding or enhancing a business function,

a more reserved approach is frequently more effective. Building out a service team

beyond 3 or 4 individuals, for example, appears to typically result in diminishing

returns. Similarly, compared to offering a custom-written plan, a collaborative

approach is less costly to deliver and likely a more satisfying experience for the client.

And while it may be unrealistic for an advisor to maintain focus when spending 70%

of a workday in client meetings, increasing meeting time to just 20% to 30% of the

workday would realize material productivity gains.

• The ﬁnancial planning environment may be growing more demanding, but

business complexity also means greater opportunity – opportunity that is within

reach of any advisor that can better leverage time.

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The Kitces Report, Volume 1, 2023

Introduction

Study Objectives And Coverage

In 1995, CFP Board (Certiﬁed Financial Planner Board of Standards Inc.) ﬁrst established

its set of Practice Standards. These standards helped to deﬁne the ﬁnancial planning

process and set a minimum level of expected professional practice for any individual

engaging in ﬁnancial planning. Recently revised in 2020, there are now 7 steps that

make up CFP Board’s ﬁnancial planning process, around which it has Practice Standards

to deﬁne what a competent professional would do within each step of the process.

The advisory profession is to be commended for the progress it has made in developing

and advancing this ﬁnancial planning framework. In many respects, however, deﬁning a

process framework for ﬁnancial planning may be the easy part. Exactly how a planner or

advisor should implement this 7-step process is a more difﬁcult question to answer. To

date, individual practitioners are largely left to resolve the implementation challenges on

their own, given the limited available guidance on the topic.

Since 2018, Kitces Research has sought to rectify this situation by researching and

reporting on exactly how advisors do ﬁnancial planning. More speciﬁcally, our primary

study objectives are as follows:

• Shed deeper insight into how advisors are ‘doing’ ﬁnancial planning, with a special

focus on the 4 domains of time, process, tools, and pricing;

• Highlight the ‘best practices’ of the most successful advisors; and

• Identify trends in ﬁnancial planning productivity over time.

This is the third report focusing on the ﬁnancial planning process. Following the

inaugural 2018 report, an update was released in 2020. With each successive study,

Kitces Research has provided advisors with more and deeper detail on how ﬁnancial

planning is getting done. This report is no exception – few, if any, research efforts

have ever produced this level of detail on how the ﬁnancial planning process is being

executed in practice.

Coverage is primarily organized according to 4 domains:

Time. How ﬁnancial planners spend

their time and how time is allocated

by role across the entire ﬁnancial

planning service team.

Planning Process. Service team

characteristics, plan development, and

ﬁrst-year and ongoing client servicing.

Planning Tools. Technology tools

usage and satisfaction ratings.

Advice Pricing. How advisors get paid

in terms of charging methods and

levels of fees.

Throughout, the overarching theme is “productivity” – particularly the effectiveness of

how the time advisors invest in the client translates into revenue generated for the advi-

sors’ services, knowledge work, and expertise. Given this focus, study participants were

restricted to only those individuals who have a direct role in ﬁnancial planning within an

advisory practice or ﬁrm.

Introduction | 10 of 67

The Kitces Report, Volume 1, 2023

Survey Participants And Methodology

This report utilized data collected online from September 15th through October 15th of

2022 via the Kitces.com platform. Participation in the Kitces Research survey was pro-

moted through articles on the Nerd’s Eye View blog as well as via email and social media.

Over 1,600 responded to the roughly ⁄-hour, 86-question survey. Of these, 767 were

usable responses that met our stringent qualiﬁcation and completeness criteria. To be

eligible for the study, respondents were required to represent a business that provided

ﬁnancial advice or implemented investment products. In addition, the practice had to

have been located in the United States and established in 2020 or earlier (such that it

served clients and earned revenue in 2021).

Different from past Kitces Research studies, the focus of this current study is at the level

of the client service team, as opposed to individual advisors (though obviously, for solo

advisors, the individual advisor still is the team). We focused on teams in recognition that

these are the core units within the ﬁrm that are most accountable for the ﬁnancial plan-

ning process. For the purposes of this research, a “service team” is deﬁned as a group

of individuals or a single individual with a practice that serves a deﬁned base of individ-

ual clients. (See Appendix - Study Terms for a more detailed deﬁnition of this and other

study terms.)

While the survey focused on all facets of the ﬁnancial planning process, the questions

also covered the general demographics of respondents and the characteristics of their

service team. Participants represented their own individual work with clients either as

unsupported solo advisors or as part of a bigger client service team.

Given that the survey drew from Kitces.com readers, it is important to also recognize

that this group is somewhat unique as a sample of the broader ﬁnancial advisor com-

munity. The readership is generally more advice-centric and planning-centric relative

to the broader industry that still has more of a product-sales tilt. This matters because

results by the very nature of those sampled may not be fully generalizable and represen-

tative of all those who call themselves ‘ﬁnancial advisors’. Conversely, the results should

be especially meaningful to ‘ﬁnancial advicers’ – those that are in the business of deliv-

ering ﬁnancial advice (not products) to clients and getting paid for ﬁnancial (planning)

advice itself.

Across respondents, the median age of the practice each was afﬁliated with was 12, with

years in business ranging from 1 to well over 20. In terms of service team size, the typical

respondent represented 3 full-time advisors and support team members (including the

lead advisor themselves). Teams handled a median of about $600,000 in revenue. Their

business channel was overwhelmingly RIA (58%) or Hybrid (26%), with most revenue

coming from AUM fees (73%). For most practices (68%), the typical client served was age

55 or older. Their client size was most often in the range of $750,000 to $1.5 million in

investable assets. Over half of the typical respondent’s clients (53%) were provided with a

new or updated ﬁnancial plan during the past year. (See Figure 1 for further detail.)

Figure 1. Summarizing Survey Respondents

Ranges represent 25th to 75th percentiles unless noted otherwise

Introduction | 11 of 67

The Kitces Report, Volume 1, 2023

It’s About Time

What is the most overwhelming dominant challenge for advisors aiming to succeed

at ﬁnancial planning? It’s that the process is time-consuming. More so than how to do

ﬁnancial planning, the greater concern for the typical advisor is simply how to make

time for what it takes to deliver ﬁnancial planning to each and every client. The prioriti-

zation is entirely rational.

Time is a ﬁnite resource. In a business that is heavily people-dependent, time is nearly

always the primary constraint on ﬁnancial planning capacity. And efﬁciency gains can

only take an advisor so far; many critical planning functions simply can’t be automated.

You can’t automate away the time needed to meet with clients in order to build rela-

tionships. You can’t automate the intellectual capital of good advice. Similarly, you can’t

completely automate the ability to get clients to modify their behavior and win their

buy-in and support to implement a beneﬁcial strategy.

Getting tighter control of time starts with a better understanding of how it is expended.

On average, a senior advisor works a manageable 41 hours in a work week, about 2 hours

less than the nearly 43-hour average for full-time U.S. workers of any type

Figure 2. Hours Worked By Role

https://www.bls.gov/charts/american-time-use/emp-by-ftpt-job-edu-h.htm

Relative to other common advisory ﬁrm roles, service advisors work slightly less, aver-

aging 40 hours (Figure 2). Executives and ﬁnancial planning specialists work a bit more,

averaging 43 hours. At 44 hours per week, workloads are highest for associate advisors

(the remaining role for which we have sufﬁcient reporting data). All 5 of these roles typi-

cally take 4 weeks off per year (combined vacation and sick leave).

The 41.4 hours averaged per week across all respondents is down notably relative to our

past ﬁnancial planning studies. In 2018 and 2020, weekly hours averaged 43.0 and 43.7,

respectively.

Covid is likely driving the recent decline, given that our 2020 study, representing the

peak for weekly hours, was ﬁelded in the Spring of that year. At that time, the pandemic

was just taking hold, and advisors were anxiously working overtime to ﬁeld calls from

worried clients while also re-crafting operating procedures to limit face-to-face inter-

actions and reduce the risks of infection. Now, 2 years later, this pandemic-induced

transformation appears to have resulted in lasting efﬁciency gains. Video meetings and

online collaboration between advisors and clients, for example, are now commonplace

and clearly reducing demands on an advisor’s time. We’ll explore this phenomenon in

more detail further ahead in this report. In addition, Covid may have prompted a ‘reset’

in terms of attitudes toward the importance of work/life balance, with workers not plac-

ing as high a priority on longer workweeks.

Bigger Teams Lead To Busier Advisors

While the average advisor may be working a shorter week, longer hours are charac-

teristic of certain advisor groups. One surprising example is a clear positive correlation

between the senior advisor’s number of hours worked and the size of the service team

they work with. Figure 3 displays the median weekly hours worked throughout the most

recent year, adjusting for weeks worked during the year. Counter to popular belief that

hiring and delegating will allow advisors to save time, a bigger team doesn’t always

synch with an advisor working any less. (Further, there is not a clear linear relationship

between team size and advisor productivity, as we will discuss more fully in our section

on service teams.)

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The Kitces Report, Volume 1, 2023

Figure 3. Senior Advisor Hours Worked By Size Of Service Team

In other words, while there are real advantages related to larger service teams, lower

hours for senior advisors are not one of them. As shown, senior advisors working with

5-person teams are logging 22% more hours annually than those within a 2-person

team. (We’ve avoided comparing to 1-person teams given that many of these are unsup-

ported solos who work less than full-time, either by preference or simply because they

haven’t reached a ‘full’ client base yet.) A similar trend is evident when team structures

become complex. Senior advisors within ensemble ﬁrms work 13% more hours annually

than those working as supported solos (likely at least partially attributable to the extra

hours that have to be invested into management and leadership, and employee com-

munications within a larger team).

The tendency for bigger and more structured teams to work with larger (and thereby

usually more demanding) clients also likely contributes to a greater senior advisor work-

load. But even more so, it appears to be the management burden on senior advisors as

they move to manage more people and more complex teams. This suggests that hiring

more support doesn’t necessarily represent the path for advisors to lighten their work-

loads, as the time saved from delegation is more-than-offset by the additional time to

manage those delegees.

Commission Business Requires Greater Time Investment

Advisor hours also vary widely according to their channel and, relatedly, the advisor’s

majority source of revenue. As Figure 4 shows (again, adjusted for time off), senior advi-

sors in broker-dominated channels work signiﬁcantly more hours than advisors afﬁliated

with an RIA. A typical IBD advisor without an RIA, for example, works 20% more hours

than a senior advisor in a ‘pure’ RIA—a difference of nearly 8 hours per week!

Figure 4. Senior Advisor Hours Worked By Channel

This occurs despite the broker-dealer afﬁliated advisor’s access to home ofﬁce support

resources. Which means even if a resource advantage exists for the broker-dealer-afﬁl-

iated advisor, it is more than offset by the greater time commitment associated with a

commission-based business. This may include a greater need to continuously ﬁnd new

clients, as well as increased compliance obligations of working within such a ﬁrm. In

turn, our results also show that senior advisors who are mainly dependent on commis-

sions work 20% more hours than those that primarily rely on AUM fees. The difference,

identical to that between RIA and IBD advisors, implies that the more transactional

nature of commission-based business requires a greater time commitment relative to

RIA advisors, who oversee practices that are largely relationship and fee-based.

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The Kitces Report, Volume 1, 2023

Advisor Hours And Revenue

Do longer hours pay off in terms of productivity? A loose correlation does exist – on an

annual basis, an additional 100 hours worked separates advisors generating $1 million or

more in client revenue from advisors under $1 million. Further parsing our data, however,

shows that the link between hours worked and revenue generation is hardly a smooth

upward trajectory (Figure 5).

Figure 5. Senior Advisor Hours Worked By Revenue Per Advisor

Typical hours worked seesaws as senior advisors increase their productivity, but overall,

advisors generating $1M+ of revenue are working nearly identical hours to those who

generate ‘just’ $250–$400k of revenue. As the saying goes, the key to success is to “work

smarter, not harder”, and this is reﬂected in our results. As discussed further ahead, the

key for advisors to lift their productivity is not working more hours to take on more cli-

ents; it’s to increase their expertise and the complexity of the problems they solve, which

allows them to work with more afﬂuent clients who pay higher fees to solve those more

complex problems, enabling the advisor to generate more revenue from the hours they

spend advising clients.

Notably, the relative stability of hours worked by revenue also suggests that the classic

desire of advisors to “just grow a little larger, to be able to hire another staff member to

free up time” remains unfounded. As noted earlier, on average, advisors who expand

their teams tend to spend more time in their businesses, not less. And given that the

overall average hours worked is relatively stable as revenue rises, this implies that for

every advisor who adds headcount as their revenue grows (increasing their time), there

is another advisor who doesn’t add headcount and manages to reduce their time spent

at higher revenue (again, by working with fewer, more afﬂuent clients, who are willing to

pay the advisor substantively more for the value of their time to generate greater reve-

nue in fewer hours worked).

Where Does Time Go?

What exactly individual advisors do

with the time they commit to their

roles offers a deeper perspective

on time management. Our survey

respondents, in addition to report-

ing on the practices of their teams

at large, also provided very speciﬁc

detail on their roles as individuals

within the team. This included inven-

torying their weekly time on the job,

bucketed according to 13 different

activity groups (summarized on the

right).

For the 5 different advisory ﬁrm roles

where sufﬁcient data were available,

Figure 6 summarizes the allocation

of respondents’ time grouped at

a high level according to whether

time was spent on a back, middle,

or front-ofﬁce function. Figure 7,

which follows, offers a more detailed

accounting by speciﬁc activity.

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The Kitces Report, Volume 1, 2023

Figure 6. Time Allocation By Front, Middle, And Back Ofﬁce

At a high level, there is only modest differentiation across roles. The minimum share

any role devotes to front ofﬁce work is 20%. Of all roles, the senior advisor spends the

most time on client-facing front-ofﬁce activities, as should be expected. The bulk of this

front-ofﬁce time, about 60%, is devoted to client meetings, with prospecting and other

marketing activities making up the remainder.

More surprising, however, is that as critical as the senior advisor is to the success of client

relationships, only 30% of their time is focused in that direction (and just 17% of the advi-

sor’s time is in meetings with clients, with the rest spent on marketing)! Which means

that during a typical workweek, actual client meetings take 7 hours. This is likely 1–2

hourly client meetings per day (or, more commonly, 3 days per week with 2–3 meetings

per day, with time for meeting preparation and follow-up set for Mondays and Fridays).

Which, on the one hand, implies a tremendous opportunity for ﬁrms to better leverage

their senior advisors so that they can become more truly client-focused. However, as

discussed later, this may also be a signal that advisors can only manage ‘so many’ client

relationships requiring high-focus client meetings in the ﬁrst place, as advisors with

larger teams and more support still don’t exhibit signiﬁcantly higher amounts of time

allocated to client meetings!

Figure 7. Time Allocation By Speciﬁc Activity

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The Kitces Report, Volume 1, 2023

As their more support-oriented roles would imply, service advisors and associate advisors

allocate the most time to back-ofﬁce functions, each at 27%. The bulk of their time in this

area goes to client servicing tasks. Advisory ﬁrms may be under-utilizing administrative

support for their service advisors, however, given that service advisors are in ‘lead’ posi-

tions of managing client relationships.

Middle-ofﬁce activities are clearly the domain of executives, ﬁnancial planning special-

ists, and, to a lesser extent, associate advisors. All 3 roles spend more than half of their

time on middle-ofﬁce functions. Unsurprisingly for executives, general management

accounts for the most time they spend in this area. While for the others, middle-ofﬁce

time is most impacted by the time spent on ﬁnancial planning analysis and related

knowledge work for clients (as would be expected), with nearly half of middle-ofﬁce

time (and about ⁄ of all time) for ﬁnancial planning specialists going directly to ﬁnancial

planning preparation. To a lesser extent, planning prep is also the most prominent mid-

dle ofﬁce activity for associate advisors. Except for less time on planning and more time

servicing clients, the average associate advisor’s distribution of time closely resembles

that of the ﬁnancial planning specialist.

Optimizing The Senior Advisor Role

What potential exists for senior advisors to better allocate their time, take the best

advantage of the roles that support them, and raise their productivity? While the alloca-

tion of time varies little by the experience level of the advisor, there are notable shifts as

advisors grow more productive. Reviewing these differences offers some key lessons.

Figure 8 compares the distribution of time spent on front, middle, and back-ofﬁce

functions as senior advisors increase their productivity in terms of the revenue they are

responsible for. For the most productive advisors, those generating $1 million or more in

revenue, front-ofﬁce time is 39% of their typical work week versus just 29% for advisors

generating less than $1 million in revenue. The $1 million-plus advisor, relative to others,

devotes less time to both middle and back-ofﬁce activities to focus more time directly

on clients. Their reduction in back-ofﬁce work is especially signiﬁcant.

Figure 8. Senior Advisor Time Allocation By Revenue Per Advisor (Front, Middle,

And Back Ofﬁce)

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The Kitces Report, Volume 1, 2023

Figure 9 details the speciﬁc shifts in emphasis that take place when an advisor crosses

the $1 million divide. Most notable is the increase in client meeting time (also accom-

panied by a slight increase in meeting prep time). While on the one hand, shifting

another 10% of a workweek toward more client-facing time may not seem signiﬁcant –

it amounts to a little more than 4 hours per week, with less-productive advisors aver-

aging 6.4 hours of weekly client meetings versus 10.8 hours for the most productive

advisors (there is no meaningful difference related to business development between

the 2 groups) – over the span of a year, an extra 10% time allocation permits the most

productive advisors to add nearly 200 1-hour client meetings per year, allowing for a sub-

stantively deeper level of client relationships by sheer virtue of increased meeting and

contact frequency.

Regarding what the $1M-plus advisor does less of in order to free up time for clients,

reductions are evident across all middle and back-ofﬁce activities, except for a slight

increase for general management (likely a result of having more of a support team to

delegate to in order to free up their time, but this requires at least some management

load to oversee them). The largest reduction occurs in ﬁnancial planning preparations,

driven by support from associate advisors or centralized (or outsourced) ﬁnancial plan-

ning specialists. The most notable reductions in back-ofﬁce activity are for client servic-

ing and administrative tasks, as administrative staff support is also expanded for such

advisors. Though notably, most time allocations in these areas shift by no more than 1

or 2 percentage points of the senior advisor’s time, amounting to only 30–60 minutes of

time savings in each area in any particular week.

In sum, focusing on face time with clients is clearly a path to greater productivity, but it

is far more a ‘game of inches’ than one of radical change. The most productive advisors

are doing this largely through saving ½ –1 hour per week on ﬁnancial planning prepara-

tions as well as time on client servicing and administrative tasks (whether automated or,

more likely, via delegation to other roles, in particular, an associate advisor, paraplanner,

or ﬁnancial planning specialist). In turn, these few hours of savings can then be reallo-

cated to pick up ‘just’ another 2–4 client meetings each week.

Lastly, it’s also notable that even the most productive advisors look to have further

potential to limit time spent on less essential middle and especially back-ofﬁce functions

(where even the most productive advisors still spend 17% of their time or about 6–7 hours

per week on back-ofﬁce tasks), yielding even more time for clients and ultimately being

able to achieve even higher rates of revenue productivity.

Figure 9. Senior Advisor Time Allocation By Revenue Per Advisor (Speciﬁc Activities)

It’s About Time | 17 of 67

The Kitces Report, Volume 1, 2023

The Planning Service Team

Team Size And Composition

Kitces Research deﬁnes “service team” as 1 or more individuals, working within a ﬁnancial

advisory ﬁrm, that are collectively serving and delivering ﬁnancial planning advice to a

deﬁned client base. Shared resources, such as centralized ﬁnancial planning specialists,

an investment/trading team, operations staff, or outsourced support external to the prac-

tice, were not considered as part of the service team for the purposes of the research.

At a minimum, service teams will have at least 1 individual managing client relationships

and leading the delivery of ﬁnancial planning advice. Most often, this is a senior advi-

sor who is accountable for client relationships, business development, and mentoring

others. Occasionally, in the absence of a senior advisor, a service advisor (accountable

for managing and retaining existing clients but typically with little or no new business

development responsibilities) will lead the team. Support roles within the team may

include an associate advisor, paraplanner, or client service administrator (CSA).

By this deﬁnition, the median size of ﬁnancial planning teams participating in this sur-

vey was 3 – most often consisting of a senior advisor (who may be an owner/founder), a

second service or associate advisor, and a client service administrative employee. Only

about  of respondents reported a team size greater than 3 (Figure 10).

Figure 10. Service Team FTE Range

The typical 3-member team is not coincidental; our results show a 3, or possibly 4-per-

son team is most often optimal. At this size range, the team is small enough to limit the

challenges and burdens of people management but also big enough to provide some

redundancy for limiting service gaps and leveraging the lead advisor’s time. In addition,

there is sufﬁcient size for a simple career path to better facilitate employee development.

Larger teams tend to serve more afﬂuent clients and generate more revenue per client,

likely due to broader capabilities. The mid-size team, however, is a sweet spot in terms

of productivity. This is true in terms of both the most revenue generated and the most

clients served per advisor across the entire range of team sizes. As shown in Figure 11, the

typical revenue per advisor in a 3-member team, at $610,000, is 57% greater than advi-

sors in 2-person teams and 44% greater relative to 5-person teams.

Figure 11. Revenue Per Advisor By Team Size

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The Kitces Report, Volume 1, 2023

The typical 4-person team does nearly as well in terms of revenue per advisor while

achieving the highest productivity in terms of revenue per team member (revenue

across the service team divided by the total number of team members, including

advisors). At $278,00 in median revenue per team member, 4-person teams are $3,000

higher in productivity by this measure than their 3-person counterparts (Figure 12).

Figure 12. Revenue Per Team Member By Team Size

Even more impactful than the number of individuals on the team, however, may be the

roles that constitute a team and how roles evolve as the team grows. The most common

role, after the senior advisor, is the CSA – 60% of teams employed at least 1 (Figure 13).

Less than  of teams employed a service advisor, associate advisor, or paraplanner.

Figure 13. Frequency Of Roles Used

Using this data, it is safe to assume that most 1-person teams are simply a sole senior

advisor, with the hiring of a CSA typically marking the progression to a 2-FTE team. Fig-

ure 14, displaying the prevalence of each role by the size of the service team, conﬁrms

that the CSA is the second-most common position in a 2-person team, following the

senior advisor.

Figure 14. Roles Teams Use By Team Size

From Figure 14, in combination with analysis of the actual team rosters of respondents, a

more complete continuum emerges. Below, Figure 15 summarizes a typical progression

in terms of team composition by roles as a team increases its members. As shown, with

3 members, a team most often consists of a senior advisor, an associate advisor, and CSA.

4-member teams are often distinguished by the addition of a second advisor account-

able for client relationships – this comes in the form of a service advisor, who may either

be hired anew or promoted from the associate advisor (who becomes a service advisor

and is then back-ﬁlled with a new associate advisor). The addition of a second senior

advisor (i.e., a second person responsible for business development) typically rounds out

the 5-person team, either by addition or the promotion of a more growth-oriented ser-

vice advisor. A typical 6-person team might have a similar make-up but with 1 additional

CSA to support what is now typically a 4-advisor team.

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The Kitces Report, Volume 1, 2023

Figure 15. Typical Service Team Structure By Team Size

Median Team Size: 3

Note that while our illustration represents what is typical, there are many variations to

this theme.

Paraplanners, for instance, were utilized overall by 23% of teams, but the role was left

out of our progression summary. As it turns out, paraplanners are not actually a com-

mon hire for any team size! Amongst 2–3 person teams, as noted above, advisors are far

more likely to hire an associate advisor to work alongside them in client meetings than a

paraplanner to provide behind-the-scenes ﬁnancial planning support. Consequently, to

the extent that they are present, paraplanners are typically only employed by the largest

teams. This is because paraplanners appear in practice to be primarily used to leverage

multiple advisors at once, which typically means after a team has at least 2 advisors in

place and, more commonly, after 3 or more (usually a combination of senior, lead, associ-

ate, and service). However, even among the largest teams (5 or 6 members), fewer than

half have a paraplanner, and their frequency appears to drop as teams reach 6+ team

members… in all likelihood, because as ﬁrms reach this size, they don’t include paraplan-

ners directly on teams at all, and instead utilize them as part of a centralized ﬁnancial

planning support unit that assists multiple service teams of advisors.

Of course, teams don’t need to grow by whole numbers, either. Of all surveyed teams

ranging from more than 1 FTE up to 2 FTEs,  were less than 2 FTEs. In other words,

many solos preferred to build up gradually by making a part-time hire ﬁrst rather than a

full-time hire. In virtually every instance, this was a part-time CSA that the ﬁrm was using

(either on a sustaining basis or until it was ready for a full-time CSA hire).

External Resources

External staff resources, either from elsewhere within the advisory ﬁrm or outside of it,

often supplement a direct service team. Across survey respondents, while 57% reported

their teams had no access to external planning support, ⁄ of teams tapped into out-

sourced support, and about 1 in 6 teams made use of centralized planning or technical

specialists within their own ﬁrms (Figure 16). (Note: teams may have reported using

more than 1 form of external resource support.)

Figure 16. Reliance On External Support To The Team

Surprisingly, teams that rely on outside support tend to be larger than teams without it.

2 FTEs make up the typical team that does not access outside support, compared to 3

team members for those that do. Despite bigger teams, no particular role seems more

prevalent with teams that tap into outsourced support. As Figure 17 shows, every team

role tends to be more prevalent.

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The Kitces Report, Volume 1, 2023

Figure 17. Reliance On External Support By Frequency Of Roles Used

Why do bigger teams access outside help more than smaller teams? Why do teams out-

source at all? The advisor’s distribution channel provides a partial answer to these ques-

tions. Further explanation is that bigger teams and extra resources are often required to

fulﬁll the growth strategy of the practice.

Figure 18 summarizes key outsourcing differences by channel. The less independent

their channel, the more likely advisors are to get support from outside their own teams.

For example, just 37% of RIA teams access outside support, compared to 70% of W2 Bro-

ker teams. RIA’s, in particular, tend to lack the in-house ﬁnancial planning and technical

resources that are often more readily available within the brokerage channels. In both

the IBD and W2 Broker channels, less than half who use outside support access support

that is outside their own ﬁrm (instead of from somewhere else within the advisory ﬁrm).

By contrast, at least 50% of RIA and Hybrid teams rely on outside support from beyond

their own ﬁrms.

Figure 18. Reliance On External Support By Channel And Support Type

Growth and business strategy, in terms of the kind of client a team targets, also inﬂu-

ence outsourcing and service team resources. Teams that serve bigger (i.e., more afﬂu-

ent and typically more complex) clients not only tend to be bigger in terms of FTEs, but

they are also more likely to access expertise outside of the internal team. While 55% of

the teams whose typical client is $3M or more access outsourced support, this share

declines to only 41% for teams whose typical client is $1M or less.

Teams focused on a niche market, although similar in size to those without a niche, are

also more apt to use outside support. In teams where  or more of their clients ﬁt a niche

proﬁle, about half (51%) of teams outsourced, compared to just 40% for other teams. Out-

sourcing also correlates positively with the breadth of ﬁnancial plans provided.

In essence, then, the leveraging of external support resources for ﬁnancial planning

appears to be less a matter of delegating tasks and services (e.g., a department to do

the labor-intensive work of building ﬁnancial plans) and more a matter of being able to

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The Kitces Report, Volume 1, 2023

tap specialized knowledge resources outside of the typical generalist expertise that is

available within a team. For instance, niche advisors may leverage external support for

ﬁnancial planning expertise that is unique to their niche, and advisors who work with

the most afﬂuent clients may leverage external support speciﬁc to addressing the spe-

cialized problems of HNW clientele.

While outsourcing may be a requirement for more specialized or comprehensive

approaches to advice, it also looks to be warranted in terms of greater reward. The more

productive the advisor, the greater the likelihood that they are associated with a service

team that accesses outsourced support. By tapping more robust expertise through

outsourcing, a team is better equipped to handle more afﬂuent clients, who tend to pay

higher fees to access solutions to more complex problems. As a result, revenue gener-

ated per advisor is $420,000 when a team outsources, 20% greater than the $350,000

median for those advisors who do not seek outside help.

Team Time Per Client

Whatever the composition of a service team, optimally it will be positioned to best meet

the needs of targeted clients. This includes devoting sufﬁcient time to adequately serve

these clients. Including establishing the relationship, setting up accounts, and initial

planning work, the ﬁrst year of the new client relationship is the most time-consuming.

Across all service team members, the median time devoted per client is 29 hours in the

ﬁrst year of the relationship. Time per client drops signiﬁcantly, 38%, to 21 hours per year,

in the subsequent ongoing years of the relationship.

Time committed to clients will vary, however, according to the unique characteristics

of the advisor’s business model. One clear example relates to the distribution channel

of the advisor, which is often correlated with how clients are charged, the nature of the

client relationship, and the wealth of the client. As shown in Figure 19, RIA advisors spend

the greatest amount of time with clients, both during the initial year and ongoing. Com-

pared to a commission-based IBD broker, the RIA advisor spends 60% more ﬁrst-year

time and 35% more on an ongoing basis.

The differences in time are a likely result of serving different types of clients in differ-

ent ways. The RIA advisor typically charges for providing expert advice exclusively via

an ongoing AUM fee and, as a result, tends to form long-term relationships in order to

retain that recurring revenue. The IBD broker, relying only on commissions, often has

more transactional relationships, as once the purchase is made, the broker is not com-

pensated for the ongoing relationship (until/unless there’s an additional transaction).

Figure 19. Total Team Time Per Client By Business Channel

Time devoted to clients also tends to increase when serving larger portfolio clients,

similar to the relationship between team size and client wealth. As Figure 20 illustrates,

larger clients tend to get more of a team’s time, most notably in the ﬁrst year. (The data

also shows that RIAs tend to serve more afﬂuent clients than brokers, which likely further

contributes to the higher time-per-client that RIAs provide relative to brokers.)

Figure 20. Total Team Time Per Client By Client Size

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The Kitces Report, Volume 1, 2023

More than double the time is spent in Year One on a $10M+ client versus a client

between $250,000 to $750,000 in investable assets. This compares to an increase of just

44% in ongoing years. The greater ﬁrst-year disparity likely reﬂects more time to com-

pete for and cement these more sought-after relationships. Further, the larger client is

typical more complex, with planning needs that require more analysis and deeper rec-

ommendations and implementation.

Surprisingly, though, the most productive advisors have managed to ‘ﬂip the script’

regarding how time is apportioned across Year One and ongoing clients. For teams with

lead advisors generating $1M or more in client revenue, little difference exists between

time spent in Year One versus the following years of a client relationship (Figure 21). Rela-

tive to teams with less productive advisors, they are typically spending 5 hours less per

client in the initial year but 3 hours more on an ongoing basis. These results suggest that

economizing time in the ﬁrst year of a client relationship is a critical contributor toward

greater overall productivity and, more generally, that advisors may be ‘over-servicing’

clients in the ﬁrst year of the relationship relative to what the most productive advisors

have been able to implement in a more levelized-service manner.

Figure 21. Total Team Time Per Client By Revenue Per Advisor

A Process Of Compromises

In summary, team structure has very real implications for the kind of clients the team

can attract and productively retain. Developing the right planning service team can be

a challenging process of compromises. This includes compromises of time, allocating

work to be done, addressing client needs, and managing advisor capacity (including,

ironically, the capacity of the advisor to manage more people in addition to their own

client capacity!) – all of which are pushing and pulling at different times and at different

strengths. What type of client the team intends to serve, and how, can provide invalu-

able guidance for managing these compromises.

All that said, our data provides actionable advice for any advisor looking to structure an

optimal team. The following considerations are important to bear in mind, regardless of

an advisor’s speciﬁc business objectives:

• Maximal productivity peaks at 3-person teams (though productivity for 4-person

teams is very close).

• The typical hiring path starts with a CSA (client service associate for administrative

work), followed by an associate advisor to support the senior advisor and their clients

as the third team member, with the next hire usually a service advisor to take on full

responsibility for a portion of the team’s client relationship.

• Centralized/external resources are less about delegating labor for time savings and

more about expanding access to expertise, which can enhance service to attract and

retain niche or high-net-worth clientele.

• ‘Levelizing’ ﬁrst-year client service closer to the time typically devoted to service an

ongoing relationship will likely improve advisor productivity.

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Financial Plan Development

Putting Plans In Context

Preparing a ﬁnancial plan may not exactly equate with ‘doing ﬁnancial planning’ (more

on this later), but the development of a ﬁnancial plan typically provides the central

premise for how ﬁnancial planners work with their clients. In any given year, over half of

the typical team’s clients (53%) either have a new ﬁnancial plan developed for them from

scratch or have had an existing plan updated. The majority of ﬁnancial planning work,

71% for most ﬁrms, involves updating plans for ongoing clients.

The extent to which plan development occurs often varies according to the practice,

however. Teams that are just starting out and those working with younger clients are

more apt, for example, to be preparing or revising plans, compared to those advisors

that have a more established and older clientele (and in stages of life where life events

may be less frequent). More signiﬁcantly, the frequency of work on plans (the ‘intensive-

ness’ of the advisor’s offering of ﬁnancial plans, either new or updated) is also a function

of the advisor’s business model.

Across channels, about  of the clients of ‘pure’ RIAs are provided new or updated plans

each year, and notably, over ⁄ of the planning work done at RIAs (77%) is updates for

existing clients (not the delivery of new ﬁrst-year ﬁnancial plans). This compares to just

¼ of clients with non-RIA IBD teams receiving ﬁnancial plans of any kind, with just 62%

of this plan work involving plan updates. In other words, brokers are signiﬁcantly less

likely to provide ﬁnancial planning of any kind and slightly less likely to update those

ﬁnancial plans if they were delivered initially.

Related, teams that are primarily reliant on commissions tend to be least apt to provide

ﬁnancial plans for their clients (Figure 22). By revenue source, retainer-based ﬁrms are

far and away most actively doing ﬁnancial planning work for clients, with typically 78% of

the clients getting a new or updated plan each year.

In addition to the level of plan activity varying signiﬁcantly across revenue models, the

extent to which activity relates to new or updated plans varies as well. For AUM clients,

¾ of the ﬁnancial planning work they do involves updates for existing clients (which

doesn’t necessarily mean that AUM ﬁrms aren’t doing ﬁnancial planning for the bulk of

their new clients; it may simply be a recognition that the overwhelming majority of their

clients aren’t new, and it’s those ongoing clients who consume the majority of the plan-

ning work and time). This ratio is reversed for hourly clients, where  of activity is new

plans for new clients.

Figure 22. Planning “Intensiveness” By Revenue Source

For 70% of respondents, a new plan is most often provided at the start of the client’s

relationship with the ﬁrm (Figure 23). Of these, it is a roughly even split as to whether the

plan is prepared before or after the client’s assets have been transitioned to the team.

For about 1 in 6 respondents, plans are offered as part of the team’s sales process before

a client is even onboarded. The remaining approximately 1 in 6 respondents only provide

ﬁnancial plans more reactively (e.g., at the client’s request or only when driven by an

external event need in the client’s life).

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Figure 23. When Clients Are Provided Financial Plans

More common are ﬁnancial plan updates. Of all clients receiving ﬁnancial planning

services, 71% are getting an updated plan at some ongoing point. Nearly half of advisors

(48%) regularly update clients’ plans annually (Figure 24), and another 12% provide plan

updates every 2–3 years. Another , however, update plans only on an ‘as needed’ basis.

Figure 24. Plan Update Frequency

Planning Vs Plans

Do all ﬁnancial planners routinely engage in the development of a ﬁnancial plan (i.e., a

physical ﬁnancial plan deliverable that is provided to clients)? Not necessarily. A signif-

icant minority of advisors update a plan only when needed. Furthermore, 1 in 7 survey

respondents simultaneously ranked below the median in terms of clients with a new

or revised plan and above the median regarding per-client hours devoted to recurring

planning analyses.

In other words, a sizable minority share of advisors are engaged in ongoing advice pro-

cesses, delivering advice incrementally, but are less active in delivering ‘The Plan’ as an

upfront or ongoing deliverable. As a result, the static plan itself is less important; the

value these advisors deliver is done primarily through the dynamic process of ongoing

planning.

Service teams that fall into this group tend to be afﬁliated with more established prac-

tices and more experienced advisors. Over half of advisors within the low plan/high

recurring analyses group have over 20 years of client-facing experience versus about a

third who work with other teams. Their clients are older as well – ¾ are 55 years or older,

compared to 60% for all other respondents. When ﬁnancial planning work does take

place, it tends to be on an as-needed basis.

Depth And Breadth Of Financial Plans

Advisors clearly vary in the extent to which they prepare and maintain ﬁnancial plans for

clients. Differences also exist in terms of the makeup of a plan and how it is utilized in an

advisor’s relationship with the client.

Our survey respondents had the opportunity to report up to 20 different topical areas

that are covered in the typical ﬁnancial plans they prepare. Figure 25 shows how fre-

quently these areas are included in a typical plan. 5 topics, garnering 89% or more

of mentions, tended to be covered in most every advisor’s standard plan. In order of

frequency, these are retirement spending and distribution, investments, tax planning,

savings, and life insurance. Other common areas that are covered – consistent with the

traditional ﬁnancial planning educational curriculum – include cash ﬂow/budgeting,

estate planning, college planning, and disability and long-term care insurance. Notably,

while tax planning is very common (at 90%), tax preparation is still relatively rare at only

16% of advisory ﬁrms.

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The Kitces Report, Volume 1, 2023

Figure 25. Components Included In Financial Plans

From this data, respondents were grouped according to the number or areas typically

addressed in the plans they prepare. These groupings, summarized in Figure 26, offer

a simple but effective way to grade the ‘breadth’ of the various plan types prepared.

‘Targeted’ providers, accounting for just 5% of advisors, addressed just 5 topics or fewer.

At the top of the range were those offering ‘Extensive’ plans, covering 13 or more topics.

Over half of the responses (54%) fell into this category.

Figure 26. Plan Breadth

Relative to our past surveys, advisors have made a signiﬁcant shift in delivering Extensive

plans (Figure 27). In years past, fewer than 40% were in this group, compared to well over

half today. This implies growing pressure on advisors to do more for their clients on the

ﬁnancial planning side in the wake of investment management becoming an increas-

ingly commoditized offering. Industry research is yet to demonstrate competitive

pressure on advisory ﬁrm pricing, but clients look to be demanding more for the money

they provide advisors. Given this trend, only continued advances in efﬁciency will protect

against any potential future erosion of proﬁt margins (as otherwise, an ever-increasing

scope of ﬁnancial plans, and the time they take to produce, will eventually lead to rising

staff costs that impair ﬁrm proﬁtability).

Figure 27. Trends In Plan Breadth (2018-2022)

Note: Parentheses indicate the number of topics covered

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The Kitces Report, Volume 1, 2023

Depending upon the characteristics of an advisory practice, typical levels of plan

breadth vary in key ways. Broader planning correlates with advisors whose work with

clients is more relationship-focused than transactional. The highest prevalence of

Extensive plans is found among advisors operating under a retainer-based revenue

model. While 70% of retainer-related advisors offer Extensive plans, just 36% of commis-

sion-based advisors do. Additionally, broker-afﬁliated advisors are also less likely to be

more comprehensive planners.

By client type, it is age rather than client assets that is the strongest determinant of plan

breadth. About  of advisors whose clients are primarily younger than 55 years old offer

Extensive plans. This compares to only about half of advisors who serve older clients. In

contrast, there is no clear tendency for plans to differ in their breadth based on the size

of a client served in terms of assets.

Several factors could explain advisors providing broader plans to younger clients. The

most benign explanation is that younger clients, just starting on their journeys toward

ﬁnancial security, simply have more issues to think about and prepare for. Another view,

however, is that younger clients, relative to older generations, may be driving market-

place change by demanding more complete plans than the generations before them.

The latter argument has very real implications for the ability of advisors to continue win-

ning new clients – offering broader plans may be an increasing prerequisite to remain

competitive with the next generation of clientele.

Plan Approach

In addition to the breadth of topics that they cover, ﬁnancial plans can also vary in the

methods advisors use to prepare and present them. Kitces Research outlined 4 different

approaches for survey respondents to choose which one best described their primary

approach for creating and delivering ﬁnancial plans:

• Calculator: Financial plan analyses are used to calculate the client’s needs or gaps

(e.g., in retirement savings or insurance coverage), which helps the advisor identify

products to implement.

• Comprehensive: Printed reports from ﬁnancial planning software are used to show

a more holistic picture of the client’s current and projected ﬁnancial situation.

• Custom: A custom-written ﬁnancial plan is developed for each individual client’s

circumstances.

• Collaborative: Planning software is used as a collaborative tool (e.g., via screen shar-

ing or a conference room screen) live in client meetings.

As shown in Figure 28, nearly half of all advisory teams (47%) take a collaborative

approach toward planning. This is an increase from just 35% of advisors who cited a

collaborative approach 4 years ago and slightly fewer still in 2020 (although there were

some slight revisions to the wording of the question this year that could account for

some of the increase). Again, Covid is likely at least a partial facilitator for advisors’ rapidly

growing embrace of collaborative planning. During the pandemic, both advisors and

their clients were compelled to work and meet remotely, at which point it made sense

to use the collaborative tools that were already increasingly being built into ﬁnancial

planning software… and the trend towards collaboration appears to have stuck even as

many advisors have come back to their ofﬁces.

More collaboration may also be due to a recognition by advisors that certain clients

expect a higher degree of inﬂuence or ‘say’ in the planning process and its outcomes.

Rather than relying on static printouts, advisors and their clients are seeing the value in

the ability to tweak plans and model alternative scenarios in real-time, with collaborative

software facilitating this higher level of engagement.

Also on the increase from previous surveys are advisors preparing customized plans –

another likely sign of more demanding clients who want advice tailored exactly to them.

Figure 28. Primary Approach To Plan Development

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The Kitces Report, Volume 1, 2023

In contrast to the growth of collaborative and customized planning, the 2022 survey

showed a decline in the use of “comprehensive” plans. The process of developing a com-

prehensive plan largely involves inputting data into ﬁnancial planning software, which

runs the calculations and puts out a detailed – but largely standardized – report. In 2022,

fewer than ⁄ of advisors primarily used a comprehensive approach, compared to nearly

half just 2 years ago.

Simply put, advisors appear to see rapidly declining value in preparing ﬁnancial plans

using the traditional printed outputs of comprehensive ﬁnancial planning software ver-

sus plans that provide more customization and/or are developed more collaboratively

with the client in the room.

Along with preferring a collaborative approach toward developing ﬁnancial plans, advi-

sors also most often use a collaborative approach when presenting plans as well (Figure

29). For the largest proportion of teams (30%), a live collaboration using planning soft-

ware is the primary method for client presentations. Another 14% of advisors deliver plan

results live on screen but don’t do so collaboratively.

With or without collaboration, on-screen planning can easily be accommodated in

both in-ofﬁce (using a large monitor in a conference room) and virtual meetings (using

a screen share feature in applications like Zoom or Teams), which makes those styles

well-suited to the remote work era. In fact, overall, the 44% of advisors delivering ﬁnan-

cial plans on-screen almost equals the 46% delivering custom or software-generated

written plans.

Figure 29. Primary Method For Presenting Plan Results

Financial Plan Preparation Time

As the range of approaches toward developing and presenting plans shows clearly, one

advisor’s ﬁnancial plan can be very different from another’s. But how do differences

between plans translate to differences in the resources required to prepare them?

Survey respondents reported detailed data on the number of hours per client that their

service team members spent on various ﬁnancial planning tasks. Tasks were categorized

based on each step of the CGADPIM planning process as deﬁned by CFP Board’s Prac-

tice Standards. To evaluate the time it takes to produce the plan itself – i.e., the actual

building and construction of a ﬁnancial plan – Kitces Research focused on the hours that

teams reported for the following 2 steps:

• Analyzing and evaluating the client’s current ﬁnancial status; and

• Developing recommendations and preparing plan deliverables.

To accommodate for the difference in time required to build a new plan from scratch

versus simply updating an existing plan with fresh data, the steps were further divided

between plans produced for new clients and those created for existing clients. The

results provide a good proxy for the commitment involved in producing a new plan for a

new client.

The survey results show that the typical service team collectively spent 10 hours to

produce a ﬁnancial plan for each client, split roughly equally between the analysis and

developing recommendations stages. This 10-hour total has remained constant since the

ﬁrst Kitces Research report on the ﬁnancial planning process in 2018. The consistency is

noteworthy given both the trend toward broadening plan coverage and the increasing

share of advisors preparing custom-written plans. Advisors are clearly gaining efﬁcien-

cies from their use of technology, but the end result of those efﬁciencies is not ‘faster’

ﬁnancial planning (which would show up as fewer hours required to produce each plan)

but ‘better’ plans – greater in scope and in depth – in the same amount of time.

As expected, the time needed to prepare a plan increases with the number of topics

the plan covers (Figure 30). However, because so much of the ‘overhead’ of a ﬁnancial

plan is made up of the time spent on inputting data into the software, building and

double-checking projections, formulating recommendations, and ﬁnally creating and

formatting the actual plan deliverable, the additional time needed to produce a broader

plan versus one more narrow in scope is remarkably limited. At 10 hours, time spent on

Extensive plans is only 2 hours greater than the 8 hours typically spent on a Targeted

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The Kitces Report, Volume 1, 2023

plan – or viewed another way, even ‘just’ a targeted plan still averages 8 hours of plan

production time, while additional elements can be added on relatively efﬁciently.

Figure 30. Service Team Time To Prepare A New Plan By Breadth

Note: Parentheses indicate the number of topics covered.

Preparation time is further inﬂuenced by the planning approach (Figure 31), whether

using an AUM or retainer model to compensate for the ongoing planning relationship.

Not surprisingly, at 12 hours per client, custom plans are the most time-consuming. In

contrast, the typical collaborative plan at 8 hours is prepared in just ⁄ of that time. The

difference between the two emphasizes the substantial time saving that comes from

presenting a ﬁnancial plan collaboratively since collaborative plans reduce (or eliminate

altogether) the need to create a physical plan deliverable.

Figure 31. Service Team Time To Prepare A New Plan By Approach

Similar to ﬁndings from past Kitces Research studies, time spent preparing a ﬁnancial

plan also correlated with an advisor’s fee model. Plan preparation typically took 10 hours

for advisors with ongoing fee models like AUM and retainer fees (Figure 32). In con-

trast, advisors charging clients on a more transactional basis – both hourly planners and

commission-based advisors – invested much less time. With the caveat that the sample

size was very small (7 responses), this was especially true for advisors relying primarily

on commissions. Typically taking 4 hours to prepare a ﬁnancial plan, the time commis-

sion-based advisors spent on a plan was just 40% of what was typical for ongoing fee

advisors.

Figure 32. Service Team Time To Prepare A New Plan By Revenue Source

*Based on a sample of just 7 respondents.

For the most part, plan scope and approach is far more inﬂuential on preparation hours

than the afﬂuence (e.g., portfolio size) of the client, but those serving the very wealth-

iest clients look to be an exception. Again with a small sample size caveat since just 7

respondents serving clients with $10 million or more in investable assets reported team

hours, the median preparation time for this group, at 30 hours, is 3 times the typical 10

hours spent by other service teams.

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The Kitces Report, Volume 1, 2023

A different perspective on plan preparation time is the number of days that it takes

to progress from the sign-on of a new client to actual plan implementation, a period

signiﬁcantly longer than just the total hours directly spent working on the plan. By this

measure, the median plan development time is 42 days. Accounting for plan prepara-

tion time by this start-to-ﬁnish measure is helpful for managing client ﬂow and smooth-

ing service team capacity.

Again, plan approach and breadth play inﬂuential roles in the length of the process. For

example, getting a custom plan to the point of implementation takes 51 days, relative

to 35 days for a calculator plan. Likewise, the preparation period for Extensive plans is 49

days versus just 30 for Targeted plans (Figure 33).

Notably, the differences in plan development time are largely driven by the fact that

more extensive plans take additional time to create, not that they require more meet-

ings to deliver. Perhaps surprisingly, advisors delivering the most Extensive plans did not

require any additional client meetings to get their plans to the implementation stage

than those who delivered more Targeted plans. Regardless of plan breadth or approach,

the median advisor required 3 client meetings during the initial planning process (client

meetings are discussed in more detail ahead).

Figure 33. Days From Client Sign-On To Implementation By Plan Breadth

Note: Parentheses indicate the number of topics covered

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The Kitces Report, Volume 1, 2023

Working With Clients - Year One

Year One Time

Service teams devoted an average of 35.6 hours to a ﬁrst-year client relationship in 2022

– notably higher than the median number of 29.0 hours due to the fact that a few high-

service teams are especially in-depth in their service hours (dragging up the average

time over the median). This distinction – that the median ‘typical’ advisor’s experience is

a bit lower than the average due to a small number of very-high-service teams – will be

important to remember throughout the discussion of time spent working with clients.

Financial plan production makes up a signiﬁcant portion of the hours a team commits

to new client relationships, but it is not the only area of attention given to a ﬁrst-year

client. In fact, only about ⁄ of the hours a team devotes to a Year One client is directly

devoted to producing the ﬁnancial plan in the narrowest sense, i.e., analyzing client data

and developing recommendations. Roughly another third of Year One client time goes

toward implementing and monitoring plan recommendations (Figure 34).

Figure 34. Year 1 Time Allocation Per Client By Activity

Figure 35 details the average time a service team spends per client by activity over the

span of the entire ﬁrst year of the ﬁnancial planning relationship. Included are current

2022 results as well as similar data from comparable Kitces Research ﬁnancial planning

studies in 2018 and 2020. With one key exception, the distribution of time spent with

ﬁrst-year clients has remained roughly constant since 2018.

Time spent on developing and implementing recommendations, however, has

increased, offset by fewer hours devoted to all other activities. In 2022, 34% (12 total

hours) of ﬁrst-year time went to plan development and implementation, compared to

just 28% (10 hours) in 2018. The increase in the average development and implemen-

tation time is likely a result of there being more advisors preparing ﬁnancial plans that

cover a wider breadth of topics. Which, notably, also appears to be leading to a moder-

ate uptick in the time it takes to implement those recommendations as well.

Figure 35. Average Year 1 Time Per Client By Activity (2018-2022)

Figure 35 also highlights a notable drop, and then recovery, in time spent per new client

over the last 4 years, with the total average hours to complete the ﬁrst-year planning

process dropping from 34.5 hours in 2018 to 31.6 in 2020 and then climbing to 35.6 in

2022. Reduced time in 2020 is likely largely due to the pandemic, as advisors moved to

limit in-person time, resulting in fewer meetings and/or what may have been shorter

meetings in the transition to virtual.

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The Kitces Report, Volume 1, 2023

Accordingly, relative to 2018, the Year One per client time in 2020 contracted for every

meeting-based activity, including establishing the relationship and data gathering

upfront, as well as presentation, implementation, and monitoring of recommendations

later on. Because the depth of planning work was still substantively the same, however,

the analysis and recommendations stage of planning dropped the least during the

pandemic.

It’s also notable that with 2022’s slow ‘recovery’ from the COVID era, meetings at the

beginning of the planning relationship have still not fully rebounded to pre-pandemic

highs – signaling perhaps some efﬁciencies gained from the forced shift to virtual client

interactions and the pandemic-driven adoption of technology. However, consistent with

the broader theme of deeper and more comprehensive plans, not only are the analysis

and recommendations stages of plan construction above their pre-pandemic highs of

2018, but the time spent on implementation and monitoring of those more comprehen-

sive ﬁnancial plans is also at a new high.

These recent trends highlight the beneﬁts as well as the limitations of ongoing improve-

ments in ﬁnancial planning technology. The ‘developing’ phase, in particular, has not

beneﬁted from technology efﬁciency at all, showing remarkably little change over the

past 4 years and through the pandemic. The exact decision of what recommendations

to provide to the client is still a matter of advisors themselves making the determination

– a very human element of individual advisor expertise combined with an understand-

ing of the client.

By role, all types of advisors – encompassing senior, service, and associate advisors –

report having fairly similar time allocations across activities. Senior advisors, however,

tend to spend comparatively more time on activities that can make the greatest impres-

sion on the client – establishing the relationship, developing recommendations, and

presenting them.

In contrast, paraplanners generally spend the most time on data gathering, followed by

analysis and developing recommendations. The CSA is heavily invested in assisting with

implementing recommendations (which can involve a lot of paperwork) and, to a lesser

extent, data gathering and monitoring recommendations.

More Year One allocation detail by role is provided in Figure 36, which illustrates the

potential for senior advisors to leverage paraplanner and CSA support into better focus

on activities that best impact the client’s relationship with the team. In particular, while

CSAs appear to be substantively aiding in the data gathering and implementation

process, paraplanners appear to be somewhat underutilized in the process of actually

preparing the ﬁnancial plan, as paraplanners, on average, still spend less of their time on

analysis and developing recommendations than the senior advisors whom they’re sup-

posed to be supporting in those domains.

Figure 36. Year 1 Time Allocation Per Client By Activity By Team Role

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The Kitces Report, Volume 1, 2023

Surprisingly, however, while additional team members allow senior advisors to spend

less total time on each ﬁrst-year client, the way advisors allocate that time changes very

little as the team grows. Figure 37 shows senior advisor time per client dropping consis-

tently from an average of 26.9 hours while working solo to a little more than half that as

the service team grows to 4 FTEs.

Figure 37. Year 1 Senior Advisor Hours Per Client By Activity By Team Size

Despite the additional personnel and lower per-client workload, the senior advisor role

remains virtually unchanged in terms of how time is allocated between different tasks.

Bigger teams may provide more capacity to handle more (or bigger) client relationships,

but the role of the senior advisor, and the relative amount of time they spend on ﬁnan-

cial plan analysis and client meetings, does not evolve with the size of the team. Instead,

the senior advisor with a larger team increases their number of clients as they decrease

their time per client while holding their total time across activities relatively constant.

On the one hand, this implies that growing teams may be missing out on the opportu-

nity to achieve greater efﬁciency by reallocating advisor time to its ‘highest and best use’

as new members are added to the service team – though it also may simply highlight

that even with the best staff leverage, senior ﬁnancial advisors can still only spend ‘so

much’ time focused in client meetings before reaching their personal capacity (at which

point they backﬁll their remaining time into other ﬁnancial planning tasks and work

that is less mentally taxing).

Year One Meetings – Overview

Many ﬁrst-year client service activities necessitate client meetings, with activities often

organized around when these meetings take place. In addition to affecting the quality of

the client experience, the schedule and structure for client meetings are other inﬂuential

factors on team efﬁciency.

Most advisors (80%) hold between 2 and 4 client meetings to complete the ﬁrst-year

ﬁnancial planning process, with 3 meetings being by far the most common (Figure 38).

Meetings are typically spaced 14 days apart, although the time between the second-to-

last and last meeting is often longer. The longer time leading up to the ﬁnal meeting

could be a result of advisors wanting some extended time to pass after initial imple-

mentation before bringing the client back to discuss follow-up monitoring. Alterna-

tively, the longer break might signify a 2-part planning process for some advisory ﬁrms

(e.g., a retirement and investments phase, followed by a separate insurance and estate

planning phase), where both the client and advisor may need time to prepare for this

second phase.

Figure 38. Client Meetings To Complete The Financial Planning Process

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The Kitces Report, Volume 1, 2023

Year One Meetings – Schedule of Coverage

As meeting frequency varies, the timeline for activities scheduled around those meet-

ings obviously varies as well. To provide advisors with more insight into typical coverage

schedules, Kitces Research asked survey respondents to summarize when their teams

typically conduct key activities during the ﬁrst-year planning process. Activities were

again structured to mimic each step of the CGADPIM planning process, as deﬁned by

CFP Board’s Practice Standards.

Figure 39 summarizes the standard ﬂow for these activities based on the number of cli-

ent meetings an advisor holds, using the most common 2, 3, and 4-meeting series. Cov-

erage ﬂow (i.e., the location of each step in the timeline) is based on when the greatest

share of respondents reported addressing the activity.

Figure 39. New Client Planning Process (Typical Meeting Flow)

Percentage of respondents in parentheses.

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The Kitces Report, Volume 1, 2023

As shown, regardless of the number of meetings in the initial planning process, advi-

sors most often gather ﬁnancial data before Meeting 1, with Meeting 1 itself reserved for

focusing on non-ﬁnancial data discovery and identifying goals and objectives. Con-

ducting analysis and developing recommendations between Meetings 1 and 2 is also a

constant.

The 2-meeting series typically wraps up with Meeting 2 covering the ﬁnancial plan

along with plan implementation. A 3-meeting series most often dedicates Meeting 2 to

presenting the initial plan before addressing the ﬁnal plan and plan implementation in

Meeting 3. A 4-meeting series typically splits the ﬁnancial plan delivery into 2 meetings

(e.g., a ‘preliminary’ plan and a ‘ﬁnal’ plan, or the retirement and investments portion of

the plan followed by the insurance and estate portion of the plan), with a layer of analysis

and developing recommendations preceding each, and reserving Meeting 4 for subse-

quent plan implementation.

Year One Meetings – Format

Regardless of how many meetings an advisor conducts, the preferred format of these

meetings remains fairly standard. As shown in Figure 40, advisors most often meet

with clients on a video call, in the advisor’s ofﬁce, or they vary the format as needed or

preferred. Undoubtedly COVID has had an impact on where ﬁnancial planners conduct

meetings – likely increasing video calls and format variation as both advisors and their

clients have become more comfortable with video and online meeting tools.

As the data shows, the likelihood of using a video call increases with the number of

meetings an advisor holds. While 26% of advisors overall hold the ﬁrst meeting via video

call, by the ﬁfth meeting (of those advisors that hold 5 meetings), 40% do. Conversely, at

nearly no other time other than the ﬁrst meeting do advisors commonly hold a meeting

by phone. This is likely a result of advisors preferring to conduct their ﬁrst prospecting

meeting by phone (which may be sufﬁcient to screen prospects for appropriate ﬁt with-

out the formality of a face-to-face meeting) before the prospects come in for a longer,

more formal second meeting which may take place either in an ofﬁce or via a video call.

Even in the case of an initial meeting, however, an advisor is 3 times as likely to conduct

a video call over a phone call, reﬂecting the continued evolution of consumer communi-

cation preferences.

When it comes to ongoing meetings, advisors are remarkably evenly split between

meetings with clients at their ofﬁce, via video call, or simply deferring to client prefer-

ences between the two. Given the visual nature of most ﬁnancial plan presentations,

though, advisory ﬁrms clearly prefer a ‘visual’ medium above all else, as phone calls

make up a trivially small proportion after the initial introductory meeting.

How and where plans are presented has thankfully adapted to changing times as well as

changing preferences – even before the use of video calls mushroomed during COVID,

some planners had online-only practices, showing that there was at least some demand

for the format. But since the pandemic, advisory ﬁrms seem to have only become more

comfortable with the face-to-face nature of video calls, with ﬁrms increasingly adopting

more video-based meetings as the total meeting count rises.

Figure 40. Share Of Meetings By Format And Meeting Order

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Working With Clients - Ongoing

As the data shows, establishing a ﬁnancial planning relationship (and the related deliv-

ery of the initial ﬁnancial plan) is a time-intensive process. But investing in relation-

ships early on does pay dividends over time, and the same is true of ﬁnancial planning.

Accordingly, in the ﬁrst year of a client relationship, the average time spent per client

was 36.5 hours, but in subsequent years (as the focus shifts from developing and imple-

menting the initial plan to ongoing maintenance of the relationship), this team time

drops to 26.8 hours – shaving more than a day’s worth of work off for each client in the

following years.

The hours-per-client reduction for ongoing versus ﬁrst-year clients comes from the

fact that the ongoing tasks are different than ﬁrst-year tasks as the client relationship

evolves. For instance, in the ﬁrst year, there is a heavy investment of time in establishing

the client relationship and initiating the ﬁnancial planning process, commonly including

3 separate client meetings. But an ongoing client with no major life events will require

fewer meetings, accounting for only about 4 hours of the service team’s time in a year

(Figure 41). Preparing for those meetings also takes about 4 hours, followed by nearly 3

hours of post-meeting work, but this is still substantially less than the preparation and

follow-up work required for the initial construction and delivery of the ﬁnancial plan. In

total, meeting-related activities for a typical ongoing client require an average of about 11

hours of work over the span of the year.

Figure 41. Average Annual Time Per Ongoing Client By Activity

Notably, advisors do at least partially ﬁll in the time saved with additional recurring plan-

ning tasks or deliverables for clients (2.8 hours on average) and/or with ad-hoc planning

tasks that pop up when clients do have issues arise (2.6 hours). Still, 2.8 hours per year (or

maybe a total of 5.4 hours if both recurring and ad-hoc planning happen) is a signiﬁcant

reduction from the average of 21.4 hours that it takes to go through the steps of creating

an initial ﬁnancial plan (analyze, recommend, present, get feedback, and implement).

Advisory teams’ time in ongoing years is predominately dedicated to holding meetings,

preparing for meetings, and handling client correspondence and service requests. Most

advisors (42%) meet with ongoing clients twice per year, averaging 1 to 1.5 hours for each

meeting. 26% meet with clients annually, and another 20% hold quarterly meetings (Fig-

ure 42). The decision to hold more frequent meetings can demand a signiﬁcant amount

of team resources since, as noted earlier, the time spent on each client meeting includes

not only the meeting itself but also nearly 2 hours of meeting prep and follow-up service

tasks for each 1-hour meeting.

Figure 42. Typical Meeting Frequency With Ongoing Clients

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The typical advisor connects with ongoing clients a total of 18 different times throughout

the year. In addition to in-person meetings, these touchpoints also include phone calls,

emails, newsletters, and more. However, client touches do vary by the amount of client

assets, with the largest clients tending to receive more touchpoints from the advisor

each year (Figure 43).

Figure 43. Ongoing Client Touchpoints Per Year By Client Size

In terms of the actual touchpoints used, the most frequent way for advisors to connect

with clients is via a standardized email or newsletter that is sent out to all clients, which

accounts for 41% of annual touches (Figure 44). Another 21% of touchpoints, however,

involve emails tailored to speciﬁc clients. Telephone or video calls follow in terms of

frequency. In fact, it’s notable that the email, telephone, and video touchpoints that fall

between in-person meetings add up to far more client interactions each year on aver-

age than the meetings themselves.

Figure 44. Distribution Of Ongoing Client Touchpoints By Type

In general, the variations in client communications stem from 3 main factors, which will

be discussed in depth below: The lifecycle stage of the advisor’s practice (e.g., the degree

of importance placed on attracting new clients versus maintaining existing relationships),

client characteristics (e.g., wealthier clients tend to get more touches), and the degree

to which the relationship is transactional (e.g., RIAs with recurring revenue models like

retainer and AUM-based fees tend to be more relationship-based compared to advisors

at broker-dealer ﬁrms working on commission or RIAs who engage on an hourly basis).

Practice Lifecycle

The number of touchpoints an advisor has with clients tends to vary with the lifecycle

stage of an advisor’s practice, dictated by the need for new clients and the capacity to

serve them.

For instance, advisors still in the start-up stage (primarily focused on simply adding

new clients in order to reach a critical mass of clients and revenue) have a median of 17

touches per year, slightly below the median of 18 for all ﬁrms. A reason for the smaller

number of touches on average may be that start-ups are very busy – often single-person

ﬁrms – and perhaps it simply isn’t possible to connect with clients more often, given the

demands of constantly prospecting and onboarding new clients.

Median touches increase to 19 for advisors that are more established but not yet at their

capacity and still looking to grow. An established ﬁrm often has more staff support than

just a single advisor, so there is more capacity among the service team member to have

more touches for each client. In addition, an advisor in this stage may have a greater

focus on retaining (and not just adding) clients; additionally, they may also be trying to

attract new clients via referrals from existing clients, giving them an additional interest

in demonstrating a high-touch service. Conversely, advisors who are established but at

capacity average only 15 touches, as the burden of serving clients when the ﬁrm is at full

capacity leads it to be less proactive in generating additional client touchpoints.

In turn, mature ﬁrms (who are not actively looking to add clients) have the fewest client

touches at only 13. At this stage, advisory ﬁrms are often more focused on maximizing

proﬁts than investing in growth. This results in typically more limited staff support for

advisory teams (creating reduced capacity for frequent client touch points) and dimin-

ished resources to provide proactive service in general. Although notably, advisory ﬁrms

in the mature stage often have very high average client tenure, meaning that lim-

ited touchpoints may simply be a recognition that more proactive service simply isn’t

needed for retention; long-standing clients know who to call if they need advice, and are

able to engage on their own terms.

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Client Size Or Season?

Client size, as noted, positively correlates with the number of touchpoints during the

year. However, the relationship is not always exact.

Very wealthy clients (above $10 million in investable assets) get 22 touches annually, likely

due to the complexity of their situation and the heightened importance advisors place

on retaining large clients. However, clients between $1.5 million and $10 million receive

over 30% fewer touches compared to those in the top tier. The 15 annual touches typical

for clients in this range is also fewer than 19 median touches for clients between $250,000

to $1.5 million in assets. In other words, clients at the high and low ends of the wealth

scale tend to receive comparatively higher touchpoints than those towards the center.

Client assets can also provide a proxy for the seasons of life: those with fewer assets are

often in earlier life stages when there are more major life transitions (births, deaths, mar-

riages, divorces, job changes, etc.) that might require more check-ins; meanwhile, those

with more assets maybe closer to or in retirement and have fewer transitions to navigate

(and therefore less need frequently to touch base with their advisor). This is consis-

tent with our data that shows a modest difference in touchpoints by client age, where

advisors serving clients predominantly under the age of 55 have more touches (18) than

those advisors serving older clients (17).

Relationship Type – Transactional Or Relationship Focused

Commission-based advisors, as well as advisors who charge hourly, reach out to cli-

ents less frequently than advisors who use retainer or AUM fees (Figure 45). While there

are many differences between advisors who use the hourly revenue model and those

who use the commission model, one way in which they are similar is that their service

model revolves around a one-time transaction. When the focus is on serving clients on

an as-needed basis – whether the need is for a ﬁnancial product or an hour of advice –

the number of touches drops signiﬁcantly compared with service models that entail an

ongoing relationship.

Notably, recent years have seen the growth of the advice-only model, where advisors

only receive compensation for their advice and do not (and typically cannot) manage

portfolios on a discretionary basis. Such advisors may work with clients on an ongoing

basis via a subscription or retainer model, or they may offer one-time plans that the cli-

ent implements on their own (hourly planning). Our results show that in practice, advice-

only advisors touch base with clients less often (12) than their AUM-based counterparts

(18), as while advice-only includes some ongoing service models like retainer fees, it also

encompasses more transactional models like hourly and one-time fee-for-service plan-

ning – both of which engage with clients on more of an as-needed basis compared to a

retainer or AUM-oriented relationship model.

Figure 45. Ongoing Client Touchpoints Per Year By Revenue Source

Ongoing Client Work – Conclusion

As client relationships evolve over time, so too does much of the ongoing work com-

mitment in maintaining the relationship. But that commitment is also governed by

the needs and goals of the business itself. Advisors who are more relationship-oriented,

employ ongoing fee models, and aim to grow their business (and have the capacity to

do so) tend to have the most touchpoints with their clients, while those whose business

models are more transactional – and those who are at capacity in their workload – tend

to engage less often. The client’s characteristics also shape the relationship – wealthier

clients, along with those clients in a busier life season, also appear to demand or require

more touchpoints, either because of the greater complexity that comes along with

higher wealth or because of the advisor’s desire to provide a high-end service to attract

such clients.

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Tools Supporting Plan Production

Financial Planning Software Tools Overview

Financial planners use many tools to support the production and delivery of a ﬁnancial

plan. Every single ﬁrm taking the survey reported using some kind of software tools

to support the plan production process. Also of note (and previously identiﬁed in past

ﬁnancial planning process studies), most ﬁrms use not just one piece of software but

a variety of tools in concert with one another (Figure 46). To name just one prominent

example, the majority of ﬁnancial planners use Microsoft Excel to supplement the fea-

tures of standalone ﬁnancial planning software.

Figure 46. Software Used To Produce Financial Plans

While 90% of advisors use third-party comprehensive ﬁnancial planning software (e.g.,

eMoney, MoneyGuide, and others), overall, we ﬁnd that ﬁnancial planners do not exclu-

sively rely on a single piece of ﬁnancial planning software for analysis or output but

instead are (increasingly) relying on additional tools to supplement their ‘core’ ﬁnancial

planning software.

Beyond their comprehensive ﬁnancial planning software, more than half of advisors

use Excel (55%, up from 49% in 2020), and a little less than half use Microsoft Word (41%,

up from 37% in 2020) to supplement their planning application; in total, 63% of advisors

were using at least Word or Excel to supplement their ﬁnancial planning software. Fur-

thermore, nearly half (48%) also use more specialized software to go beyond what their

standard ﬁnancial planning software might cover, going deeper into certain areas like

tax. The use of specialized software has increased dramatically from both 2018 (29%) and

2020 (30%). Simply put, advisors appear to be going deeper with their ﬁnancial planning

and are increasingly looking beyond their comprehensive ﬁnancial planning software to

engage in the desired level of depth that their clients expect or demand.

However, nearly all advisors rely ﬁrst and foremost on third-party planning software; very

few have built their own in-house planning tools. For the minority of those ﬁrms that

do use proprietary software, 51% still use another third-party application to supplement

their own. In addition, 56% use specialized software, 69% use Excel, and 49% use Word,

suggesting that even ‘home-built’ planning software customized to the ﬁrm using it still

doesn’t alleviate the need to rely on multiple software tools.

The hours that service teams spend working with third-party comprehensive ﬁnancial

planning software further demonstrate the central role played by these applications.

Figure 47 shows the median team time spent using different tools to produce a ﬁnancial

plan. The greatest amount of time is spent using third-party ﬁnancial planning software

– typically 4 hours. For perspective, this is 40% of the median time devoted to prepar-

ing a plan. Time spent per plan working with third-party planning software is double or

more than the time spent with other technology tools used to support plan production.

Figure 47. Per Plan Team Hours By Software Type Used

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The Kitces Report, Volume 1, 2023

In summary, advisors really like tools that help them go deeper in their planning – but

no tool, at this point, is truly an all-in-one solution, and supplementing planning software

with other general or specialty applications remains commonplace.

Third-Party Planning Applications

Figure 48 shows usage rates across leading third-party comprehensive planning

applications. Like previous years, eMoney and MoneyGuide continue to be the market

leaders. And the market continues to be top-heavy, as while eMoney (used by 39% of

respondents) and MoneyGuide (32% of respondents) combine to cover more than half of

the market share, only 5 other providers garnered usage rates of 2% or greater. Though

notably, “Powerpoint” also garnered a signiﬁcant portion of the “Other” responses, indi-

cating that a small but growing number of advisors are eschewing traditional ﬁnancial

planning software altogether to create their own ﬁnancial planning outputs.

Figure 48. Third-Party Financial Planning Software Usage

While advisors’ satisfaction with software certainly inﬂuences which tools they decide to

adopt, the most-used applications aren’t necessarily the ones that are rated the high-

est. Figure 49 shows average overall satisfaction ratings for the 7 most-used third-party

planning applications. (Detailed satisfaction ratings for these 7 applications are provided

in the appendix.) On a scale of 1-10, with 10 being the highest possible satisfaction score,

RightCapital rates the highest at 8.6. Likely not coincidentally, RightCapital also had the

most signiﬁcant gains in adoption rates when compared to the 2020 data. The lowest

overall satisfaction score was for NaviPlan at 7.2, which also saw one of the largest rela-

tive drops in adoption.

Figure 49. Third-Party Financial Planning Software Satisfaction

Simply put, satisfaction ratings do appear to be a good indicator of future advisor adop-

tion trends, as advisors – particularly independents who control their own software

decisions – do ultimately vote with their feet. Frequently, however, adoption rates lag

satisfaction ratings (in both directions). Awareness of a high performer that is new to

the market may be slow to spread, slowing market growth in turn. And even if they are

dissatisﬁed with a provider, advisors may hesitate to switch to another due to the incon-

venience of doing so. They may also be limited due to constraints placed on them by an

afﬁliate or obstacles created by other legacy technology.

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The Kitces Report, Volume 1, 2023

Figure 50 shows the connection between satisfaction and usage, where some (but not

all) providers beneﬁt from rising adoption when satisfaction increases. A prime example

of such a beneﬁciary is RightCapital, which has consistently increased its market share

as satisfaction has improved as well. Just in the last 2 years, its market share is up sub-

stantially, from 13% in 2020 to 23% in 2022.

Figure 50. Third-Party Financial Planning Software (Usage vs. Satisfaction, 2018-2020)

Note: Satisfaction represents the average advisor rating based on a 1–10 scale, with “10”

representing the highest possible satisfaction.

In contrast, as reﬂected in our Kitces AdvisorTech study, interest continues to wane for

MoneyGuide’s simpler goals-based approach compared to other more-in-depth tools

like eMoney and RightCapital. As a result, eMoney now leads all providers with usage

improving from 34% to 39% since 2020, while MoneyGuide dropped from 35% to 32%

during the same period. Notably, though, the technical planning capability of a piece of

software isn’t sufﬁcient on its own; if the software doesn’t have a strong user interface,

it may also suffer in satisfaction and, subsequently, adoption – exempliﬁed by NaviPlan

(which has long struggled with the complexity of its interface), which saw adoption fall

to 4% in 2022 from 6% in 2020.

Asset-Map and Orion also had a 4% market share in 2022, whereas, in previous years,

adoption was lower or non-existent. MoneyTree saw its usage fall from 5% to 2% in the

last 2 years, but this coincided with a change in leadership and substantial redevelop-

ment of the tool. MoneyTree is now generating rising satisfaction ratings, suggesting

that it may see at least a partial rebound in market share in the coming years.

Clearly, the different comprehensive ﬁnancial planning applications have different

strengths and weaknesses, and advisors appear to be doing relatively well in ‘self-sorting’

into the tools that are the best ﬁt for them. Which means in practice, companies that are

winning market share appear to be doing so in large part by either being best-in-class

within a particular segment of planning software users or by beneﬁtting from broader

changes in advisor preferences for planning tools in the ﬁrst place.

In practice, there appear to be a few consistent clusters of advisor users: those who want

to do the broadest and most comprehensive ﬁnancial plans for clients (who are skew-

ing towards eMoney and especially RightCapital), those who want to get through the

planning process faster and easier (who use MoneyGuide and MoneyTree), those who

want to have a particularly strong visual interface for collaboration with clients (where

RightCapital is currently winning but Asset-Map is also growing), and those who want to

leverage a ﬁnancial planning portal with their clients (where eMoney was historically a

leader but today appears to be losing market share to RightCapital and Orion).

Notably, the fact that RightCapital shows up near the top of the advisor satisfaction rat-

ings across several of these sub-categories (see Appendix for further detail) – for depth

and breadth of planning, its client portal, and its collaboration capabilities – helps to

explain why it is gaining market share so rapidly. While the overall shift of ﬁnancial plan-

ners towards increasingly comprehensive plans with greater depth – a trend we’ve seen

throughout the study – helps to explain why MoneyGuide is continuing to lose market

share and why MoneyTree may be struggling as well.

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The Kitces Report, Volume 1, 2023

Perhaps of greater signiﬁcance, though, is that no ﬁnancial planning software in the

market today is anywhere close to providing a genuine ‘all-in-one’ solution for advi-

sors. Instead, there is the widespread use of specialized planning software along with

more manual tools like Word or Excel to supplement either the analysis or the client

deliverable, with the majority of advisors using every comprehensive planning software

employing at least one (and often, several) other tools to ‘ﬁll in the gaps’.

Given these broad considerations, ahead are proﬁles of each of the leading third-party

ﬁnancial planning applications for those readers interested in more detail in the features

and prominent applications of each. Summarized for each application are the following:

• Who uses it in terms of team revenue, distribution channel, and whether the advi-

sor has attained CFP certiﬁcation.

• How they use it in terms of plan approach and plan breadth.

• Impact on planning in terms of the application’s use in coordination with other

tools and the median hours spent with the software developing plans.

• Unique considerations outlining standout considerations for the software, which

may relate to niche, clients, fee structure, and other characteristics.

eMoney

Who Uses It. eMoney is most often used by larger

advisory ﬁrms. For instance, relative to an overall adop-

tion rate of 39%, just 20% of service teams with less

than $100,000 in revenue use the software, compared to 55% of teams with revenue of

$2 million or higher. The difference in usage is driven by a combination of cost (eMon-

ey’s premium price point is less affordable for newer advisors with limited revenue) and

its depth (which is most effective for higher-net-worth clients who tend to be served by

larger ﬁrms with more revenue).

eMoney is most popular with IBD service teams (46% adoption) and amongst Hybrids

(44%). It’s not necessarily unpopular among RIAs (36% adoption), but at least a segment

of RIAs (who don’t have access to the enterprise-level discounts of advisors at indepen-

dent broker-dealers) may be priced out. On the other hand, only 14% of W2 brokers

reported using eMoney, as its depth likely goes beyond the more product-based focus of

brokers who don’t have an RIA afﬁliation. eMoney is also more popular among CFP pro-

fessionals (40% adoption) compared to non-CFP professionals (35%).

How They Use It. By plan approach and breadth, eMoney is most popular among those

doing Collaborative and Extensive ﬁnancial plans. eMoney is used by 43% of those who

apply a Collaborative approach to deliver plans and by 45% of those who create Exten-

sive plans by breadth.

Impact On Planning. Advisors that reported using eMoney commonly combined it with

other software, though no more so than users of other comprehensive planning soft-

ware. For instance, of eMoney users, 48% also used specialized software, 55% used Excel,

and 41% used Word, compared to 48%, 55%, and 41%, respectively, of all users of third-

party comprehensive planning software.

The median team time spent using eMoney to build a plan is 5 hours or 1 hour more

than what is typical across all ﬁnancial planning software applications. However, there

is also considerably wide variability in time spent using eMoney from one advisor to the

next, with a long tail of advisors who spend a lot of hours in eMoney (a mean time of 7.5

hours with a standard deviation of 8.1).

This doesn’t appear to be a function of eMoney being inefﬁcient planning software but

instead a reﬂection of its greater use for the most time-intensive Extensive plans. In

other words, the typical ﬁnancial plan takes longer in eMoney simply because the typical

ﬁnancial plan in eMoney is a longer, more in-depth plan in the ﬁrst place. In that context,

it’s notable that advisors who choose to produce thorough, in-depth plans appear to

have a strong preference for eMoney as their in-depth planning software of choice.

Unique Considerations. eMoney’s success appears to be driven by its sheer depth and

breadth of capabilities, as it scores highest amongst advisors in both the comprehen-

siveness of its planning capabilities and the depth of its analysis. Notably, along with

the increased planning functionality comes some additional ‘complexity’ in its applica-

tion, and as a result, eMoney scores lower than most of its peers in terms of simplicity of

design and ease of use. Nonetheless, to the extent that advisors would rather showcase

their expertise than streamline the planning process, eMoney’s depth trumps its lack of

simplicity in advisor ratings, leading it to one of the highest user ratings – and similarly,

a plurality of advisors as the new leader in market adoption. Though as noted, eMoney’s

pricing has tilted its usage towards larger and more established advisory ﬁrms (who

tend to have more revenue to afford the software and more afﬂuent clientele to merit

its depth).

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The Kitces Report, Volume 1, 2023

MoneyGuide

Who Uses It. MoneyGuide is found most often in

service teams that are mid-range by revenue. For

instance, while MoneyGuide has an overall adoption

rate of 32%, it is the software of choice for 39% of teams between $250,000 and $1 million,

placing the software squarely in the middle of advisory ﬁrms that typically serve mass

afﬂuent clientele.

MoneyGuide is the overwhelming software of choice amongst W2 brokers (owing to

MoneyGuide’s sizable enterprise relationships). Its adoption rate within this channel, at

79%, is double that of any other channel.

MoneyGuide was also a more common software for non-CFP professionals (36% adop-

tion) compared to CFP professionals (31%).

How They Use It. Looking at its planning approach, MoneyGuide was the most popu-

lar application for ﬁnancial planners creating Comprehensive plans (where the advisor

inputs data and then presents the standard planning software output to clients): 39%

of Comprehensive planners use MoneyGuide, a higher rate than the 32% adoption rate

among all planners. MoneyGuide was also slightly more popular among advisors using

a Calculator approach (at 35%), i.e., using the software primarily to determine what prod-

ucts to implement. Advisors who follow the Custom approach were the least likely to use

MoneyGuide, with an adoption rate of just 26%.

In terms of plan breadth, MoneyGuide was signiﬁcantly less likely to be used for creat-

ing Extensive plans (at only 28% adoption, compared to 32% across all advisors), while

all other (less comprehensive) breadth categories saw comparatively greater adoption

of MoneyGuide (at 38% for Broad plans, 38% for Narrow, and 39% for Targeted). Given

MoneyGuide’s more limited depth, it also, not surprisingly, had a slightly higher rate of

advisors who reported using other specialized planning tools to supplement their Mon-

eyGuide analysis.

Impact On Planning. MoneyGuide is also commonly used in concert with other soft-

ware to support planning. Excel (56%) and specialized software (52%) were both used

more than half of the time (compared to rates of 57% and 46% across all planners,

respectively). Word was only used about ⁄ of the time (38%), less often than the broader

advisor average of 41%.

The median team time spent using MoneyGuide, at 4 hours, was no different than what

was typical across all third-party ﬁnancial planning applications.

Unique Considerations. MoneyGuide has long been known for its goals-based plan-

ning approach, which emerged as a way to do more expedited and simpliﬁed ﬁnancial

plans by eliminating the need to enter ‘every’ client cash ﬂow, and instead focusing only

on the details necessary to articulate whether a client is on track for a particular speci-

ﬁed goal. 2 decades later, MoneyGuide still operates primarily in a domain of doing less

in-depth ﬁnancial plans (leading to higher usage rates among advisors that offer more

narrow breadth plans as well as those who use a calculator approach to illustrate prod-

uct needs). This is consistent with MoneyGuide’s above-average ratings in ease of use

and simplicity, as well as its below-average ratings in the comprehensiveness of capabil-

ities and analysis depth. Which helps to explain why MoneyGuide appears to be losing

market share as advisors are increasingly producing deeper and broader ﬁnancial plans.

Though notably, MoneyGuide still shines with its interactive capabilities for doing Collab-

orative planning, which may help to explain why the application leads in usage among

both hourly planners and advice-only planners who have proven more likely to take a

Collaborative approach.

RightCapital

Who Uses It. RightCapital is the most popular ﬁnan-

cial planning software for low-revenue advisor teams.

Nearly half (49%) of teams with revenue of $250,000

or less use RightCapital, versus just 15% of teams beyond $250,000 in revenue— dramati-

cally higher and lower, respectively, compared to the overall usage rate of 23%.

However, RightCapital is a newer tool compared to eMoney or MoneyGuide, and ﬁnan-

cial planning software has historically had a very low switch rate amongst ﬁnancial advi-

sors (largely due to the lack of data portability from one tool to the next, which makes

switching platforms a time-consuming process). As a result, new entrants like RightCap-

ital typically must focus primarily on new advisory ﬁrms that are starting ‘fresh’ and don’t

need to worry about the barriers of switching software. RightCapital’s concentration

amongst smaller advisory ﬁrms appears to be less a function of it ‘only’ being appropri-

ate for smaller ﬁrms and more a reﬂection of its go-to-market strategy. If true, the expec-

tation is RightCapital will be seen more often in larger ﬁrms as its current users grow in

size. In fact, the sheer rate of RightCapital adoption amongst smaller ﬁrms suggests that

its growth rate in market adoption will likely continue, as it appears to be capturing a

highly disproportionate share of new advisors starting ﬁrms today (as MoneyGuide and

eMoney did when they began and gained their initial traction decades ago).

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The Kitces Report, Volume 1, 2023

By channel, RightCapital is most common in RIAs (27% adoption rate) compared to

Hybrid (18%) and IBD (17%). More CFP professionals (23%) compared to non-CFP profes-

sionals (20%) use RightCapital.

How They Use It. In terms of planning approach, RightCapital is used by 28% of Custom

plan creators and 24% of Collaborative plan creators. Conversely, RightCapital is only

used by 18% of advisors using ﬁnancial planning software as a product Calculator, and by

only 15% of advisors who report creating out-of-the-box Comprehensive plans that they

simply print and deliver to clients.

Not surprisingly, given its popularity among planners using a Custom approach, by plan

breadth RightCapital is more common among advisors making Extensive plans (25%

adoption rate) compared to Broad (22%), Narrow (20%), and Targeted (15%).

In practice, users rank RightCapital most similar to eMoney in the depth of analysis.

Though notably, RightCapital ratings equal eMoney in comprehensiveness while also

scoring the highest in satisfaction across all applications in simplicity and ease of use,

which helps to explain its relative win in market share.

Impact On Planning. Only 41% of advisors using RightCapital also used specialized plan-

ning software, compared to 48% of all advisors using comprehensive planning applica-

tions. This suggests RightCapital is doing a better job of actually incorporating the full

breadth of analyses that advisors tend to conduct, reducing the need for advisors to

invest in other software to supplement. The propensity for RightCapital users to rely on

any other applications for ﬁnancial planning remained similar to overall averages.

The median time spent using RightCapital per plan was 5 hours, 1 hour greater than

typical for users across all third-party comprehensive applications. However, the time

spent is the same for eMoney users, which was the other software most commonly

used to create Extensive plans. This suggests that RightCapital, like eMoney, isn’t a more

time-consuming software per se, but rather one that is more likely to be used by advi-

sors who want to take the time to create the most in-depth (time-consuming) plans in

the ﬁrst place. In turn, given that RightCapital users tend to have reduced reliance on

other specialized software as well, RightCapital is effectively proving itself to be the most

efﬁcient at creating Extensive ﬁnancial plans by more consistently operating as a ‘one-

stop-shop’ compared to its competitors.

Unique Considerations. RightCapital showed by far the biggest increase in market

share over our 2020 study, which appears to be driven by a combination of its low price

point and its highest overall satisfaction rating of all comprehensive ﬁnancial planning

software. Which, in turn, is borne by the fact that RightCapital rates highly in depth and

comprehensiveness – but without sacriﬁcing ease-of-use and simplicity to get there

(as most of its competitors do). Also notable was RightCapital’s top ratings (by a large

margin) in its Client Portal, a domain where competitor eMoney historically excelled.

The end result is that while RightCapital remains most popular among pure solo ﬁrms,

teams with less than $250,000 of revenue, and practices under 4 years old, that is not a

reﬂection of any limitations inherent in the software. Rather, it simply chose to enter the

market and grow by pursuing newer advisory ﬁrms that wouldn’t have to switch plan-

ning tools in order to gain initial traction. Which leaves RightCapital very well positioned

for growth if it can continue to capture the bulk of new advisory ﬁrms while its high sat-

isfaction ratings and word-of-mouth accolades win harder-to-achieve defections from

competitors.

NaviPlan

Who Uses It. NaviPlan, with an overall market share

of 4%, has deep roots as being one of the most com-

prehensive ﬁnancial planning software tools. Conse-

quently, like eMoney, NaviPlan tends to be utilized

by teams with higher revenues and more afﬂuent clients. NaviPlan usage is highest (9%)

in teams with revenues between $1 million to $1.5 million, followed closely in usage for

teams with revenues over $2 million (8%) – double its overall usage rate.

On the other hand, NaviPlan has lost what RightCapital has won in adoption with new

advisors; there was not a single instance of a team under $100,000 in revenue using

NaviPlan. By channel, owing to its deep roots in large-ﬁrm enterprise sales, NaviPlan was

far more common in IBDs (9% usage) and with W2 brokers (7%), compared to RIA (4%)

and Hybrid (3%) advisors.

How They Use It. In terms of planning approach, NaviPlan is most used among ‘product

calculator’ planners, with 7% adoption. Conversely, NaviPlan was least popular among

Collaborative planners (3% adoption). With the exception of advisors preparing Targeted

plans, advisor usage was fairly consistent in terms of plan breadth: Consistent with the

comprehensiveness for which it is historically known, there was no instance of NaviPlan

being used to create a Targeted plan (5 or fewer planning topics covered in a single

plan).

Impact On Planning. NaviPlan was used in concert with other technology tools more

than any other application. Whether it was specialty software, Word, or Excel, about ⁄

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of NaviPlan users were accessing each of these additional applications to supplement

analysis or output for clients. This suggests that NaviPlan, notwithstanding its depth and

breadth, is still not able to analyze client scenarios or produce client output in the man-

ner that its advisors most desire.

Despite the greater tendency to use supplemental software, the median time per plan

spent using NaviPlan was no different than for advisors across all third-party compre-

hensive applications – 4 hours. Further, teams using NaviPlan typically took just 9.5 hours

in total to prepare a ﬁnancial plan, a half hour less compared to service teams overall.

Unique Considerations. While RightCapital has found the sweet spot of offering analy-

sis depth and coverage comprehensiveness without suffering in ease of use or simplic-

ity, NaviPlan has struggled. NaviPlan was competitive in the categories of depth and

breadth (and a leader in categories like estate planning), but advisors ranked it lowest

of all comprehensive applications in terms of satisfaction with ease of use and simplic-

ity, and substantially lower than its peers with its client portal. In addition, NaviPlan also

ranked substantially lower in its interactivity capabilities and its aesthetics, which leaves

NaviPlan poorly positioned as advisors increasingly adopt a more collaborative approach

to ﬁnancial plan construction and delivery with clients. As a result, overall advisor satis-

faction and adoption appear to be materially impaired, leading to the continued erosion

of NaviPlan’s market share.

Orion Financial Planning

Who Uses It. Orion Financial Planning tends to be

used by large-revenue teams, which is likely due

to Orion’s history with larger and more established

teams with substantial AUM. These are the teams (who tend to purchase Orion’s core

portfolio-management and performance-reporting software) to whom Orion Financial

Planning was recently rolled out after Orion acquired Advizr in 2019. Relative to a baseline

adoption rate of 4%, Orion’s market share among teams with $750,000 or more in reve-

nue is 5.2%, more than double its 2.4% share with teams less than $750,000 in revenue.

By channel, 6% of Hybrid advisors used Orion, a usage share more than double that of

other channels. It is also more popular among non-CFP professionals (6%) compared to

CFP professionals (3%).

How They Use It. Orion Financial Planning is most often used as a product calculator

to illustrate the client’s gaps and needs; among advisors with this approach, there is

a 7% usage rate. Orion’s lowest usage by plan approach, 1%, is among Comprehensive

advisors who use planning software output to provide a holistic picture of the client’s

ﬁnancial situation.

Orion, in terms of plan breadth, is most often used for narrow plans. This aligns with

Orion’s satisfaction ratings, where the application scored last for comprehensiveness

and near-last for depth of analysis and, in general, was last or near-last in ratings for

most planning categories (e.g., life insurance, long-term care insurance, estate planning,

retirement distribution planning). However, Orion scored extremely well for its client

portal and for its account aggregation of cash ﬂows and net worth, signaling that, in

practice, Orion Financial Planning is being used less as comprehensive ﬁnancial plan-

ning software, per se, and more as a ﬁnancial planning portal (attached to the broader

Orion performance reporting portal for clients).

Impact On Planning. While Orion is used in concert with specialized software and Excel

at rates similar to users of any other third-party comprehensive application, just ⁄ of

Orion users also use Word. Usage is much lower than the 41% of respondents who use

Word overall, again an indicator that advisors are more likely to simply let Orion’s portal

stand on its own as a ﬁnancial planning interface for clients.

The median time per plan team spent using Orion was 4 hours, no different than those

who used other third-party comprehensive applications.

Unique Considerations. Orion’s Financial Planning tool is utilized substantively dif-

ferently than other traditional ﬁnancial planning software. As per advisor satisfaction

ratings, its relative weaknesses – depth of analysis, comprehensiveness of coverage, and

individual ﬁnancial planning modules – suggest it is not widely adopted by advisors

who do in-depth comprehensive ﬁnancial planning and instead is used primarily as a

ﬁnancial planning portal (as reﬂected in its category-leading scores for client portal and

account aggregation).

This makes sense relative to the Orion ﬁnancial planning software addition to the exist-

ing Orion system – which historically was used for portfolio management and perfor-

mance reporting. Advisory ﬁrms that are not deep in ﬁnancial planning have begun to

use Orion’s ﬁnancial planning portal to do ‘something’ in ﬁnancial planning for clients

(which explains why it is far more used within hybrid broker-dealers than amongst

standalone RIAs who tend to be more planning-centric). However, this also raises ques-

tions of whether Orion’s ﬁnancial planning software will ﬁnd a stable base of advisors

who are content to do that level of ﬁnancial planning (and live within that niche), or if

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those ﬁrms progress to deeper planning work and deliverables over time, which may

draw them away from Orion to competing planning software tools that accommodate

analyses in greater depth.

MoneyTree

Who Uses It. Relative to its overall adoption rate of

2%, MoneyTree is used most often by mid-sized ser-

vice teams with revenues between $500,000 and $1.5

million (at 4% usage), but like most competing planning software tools, it is used by at

least some ﬁrms at all team revenues. MoneyTree was signiﬁcantly more popular in IBDs

(5% usage in the channel) compared to RIA (2%) and Hybrids (1%).

How They Use It. By planning approach, the use of MoneyTree is most pronounced in

the product calculator group (6% usage) and the custom plan group (3%), compared to

use by planners doing comprehensive (2%) or collaborative plans (only 1% of the time).

By plan breadth, MoneyTree is most common among targeted (3%) and Broad plan

creators (3%). It is least common among Extensive (2%) and Narrow plan creators (1%).

This split – broad and targeted plans – aligns with MoneyTree’s overall 2-tier approach

of tools, with Plan (a MoneyTree solution for building broader plans) and Advise (Money-

Tree’s solution for producing narrower and more targeted goal-based plans).

Impact On Planning. MoneyTree is signiﬁcantly less likely to be used in concert with

specialized software. Just ⁄ of MoneyTree users use specialized planning software com-

pared to 48% of all respondents using a comprehensive planning application, which

speaks to the more targeted (not as in-depth and comprehensive) use of Advise that

tends not to incorporate other more advanced planning analysis. MoneyTree users’

accompanying use of Excel and Word was similar to other planning tools, though.

While Money Tree has a bit of a hold with many different types of ﬁrms doing var-

ied types of planning, it lacks signiﬁcant market share. Its use may be limited to more

non-traditional ways – for instance, a money coach with their own practice, focusing on

middle-of-the-road clients for one-off plans—which may explain why the median time

spent using MoneyTree to produce a ﬁnancial plan was 3 hours, 1 hour less than typical

users of third-party comprehensive applications.

Unique Considerations. MoneyTree has a storied history as one of the earliest ﬁnancial

planning software tools going all the way back to the late 1970s… which unfortunately

had given it a relatively lagging aesthetic and limited cloud adoption capabilities. Similar

to Orion, however, MoneyTree also experienced a change in ownership in 2019. Over the

past 3 years, this new ownership has substantially reinvested into overhauling the look

and interface of MoneyTree, which is reﬂected in its rising overall satisfaction ratings and

bodes well for its future market share growth opportunities.

However, MoneyTree still lags in some key areas – in particular, its client portal and

account-aggregation capabilities – and in practice, the tool appears to be used simulta-

neously by those who want a ‘ﬁnancial planning lite’ tool that can do quick calculations

to illustrate basic needs (with MoneyTree Advise), and a segment that still wants to use

MoneyTree to support more in-depth custom ﬁnancial plans (with MoneyTree Plan). As

a result, MoneyTree does not appear to have any particular area where it stands out, and

as such, may struggle to ﬁnd opportunities to win market share from competitors, not-

withstanding its rapidly rising overall satisfaction ratings thanks to its recent re-designs.

Asset-Map

Who Uses It. Asset-Map tends to be used with mid-

sized and larger, more established advisor teams.

Relative to an overall adoption rate of 4%, 5% of teams

with revenues between $250,000 and $1.5 million used Asset-Map, but only 2% of teams

with less than $250,000 in revenue used the application. By channel, Hybrid advisors are

the clearest adopters of Asset-Map. Their 7% adoption rate is more than double usage in

any other channel.

How They Use It. In terms of approach toward delivering plans, Asset-Map is most com-

mon among collaborative planners, who tend to share plan results with the client in a

live setting. Asset-Map has a 6% market share among these advisors, a share more than

double what it maintains among others.

According to the typical breadth of plans prepared, Asset-Map is more commonly used

by Extensive plan creators, accounting for a 5% market share with that advisor group.

However, while Asset-Map supports advisors in covering a wide breadth, the software

itself does not go nearly as deep with the tool compared to traditional planning software

like eMoney (as Asset-Map ranked lowest for depth of analysis and second lowest for

comprehensiveness according to satisfaction ratings). Interestingly, though, Excel usage

is quite low for Asset-Map users – signifying that Asset-Map has found a niche of advisors

who are happy with its “broad but not as deep” approach to planning.

Impact On Planning. While Asset-Map users tend to make greater use of supplemental

specialty software for plan preparation (54% of users), their use of Word and (especially)

Excel is much less prevalent; just 31% of Asset-Map users deploy Excel to support plan

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The Kitces Report, Volume 1, 2023

production, compared to 55% of users of other comprehensive applications. These differ-

ences are consistent with Asset-Map being most likely to appeal to collaborative planners

presenting output directly to clients (coupled with its satisfaction ratings that are near-

ly-top-scoring visual appearance of the software and highest-scoring in report output).

The median number of team hours per plan spent using Asset-Map, at 4, was similar to

that of other comprehensive applications.

Unique Considerations. Asset-Map is truly unique from other ﬁnancial planning soft-

ware applications as it originated to provide 1-page mind-mapping-style visualizations

of a client’s household ﬁnancial picture; only later did it include expanded ﬁnancial

planning and analysis tools. As a result, it is a leader in advisor satisfaction with respect to

aesthetics and report output as well as ease of use and simplicity, but near last in terms

of satisfaction with its comprehensiveness of coverage and depth of analysis.

Notably, Asset-Map also has deeper roots in the insurance and broker-dealer channels,

which is again reﬂected in its functionality, where Asset-Map leads in advisor satisfaction

related to life insurance, disability insurance, and long-term care insurance modules, but

lags in retirement savings and retirement distribution planning. Ultimately, Asset-Map

appears to have carved a strong niche for itself in providing visualizations that are sim-

pler to use and understand for clients with ‘light’ planning capabilities, which also helps

to explain why it is signiﬁcantly more popular in use with younger clientele.

Specialty Financial Planning Applications

As discussed throughout this study, the ongoing pressure for advisors to do increas-

ingly complex work for clients is driving the rapidly growing use of specialized planning

software tools. While only 30% of advisors used specialized tools in 2020 (and only 29% in

2018), a whopping 46% reported using them in 2022. Of those using specialized tools, 93%

of them also indicated that they were using comprehensive ﬁnancial planning software

(e.g., eMoney and MoneyGuide). In other words, specialized tools are speciﬁcally used to

go beyond to ﬁll in the gaps of what general ﬁnancial planning software cannot do.

Advisors often use multiple types of specialized software. For instance, of those advisors

who reported using a specialized tax tool, 56% also use special Social Security planning

tools, and 53% use specialized retirement planning tools. Likewise, advisors who use

Social Security planning tools also very commonly use specialized tax (75%) and retire-

ment (63%) planning software.

The use of specialized tools is largely driven by advisors charging fees for advice to work

with more complex clients whose needs outstrip standard ﬁnancial planning software

tools. Half of RIA advisors use specialized planning software. It is less common for IBD

and W2 Brokers, where fewer than ⁄ rely on specialized software.

Not surprisingly, then, specialized software is used by just 30% of advisors working mainly

on commissions but far more common with advisors who actually charge fees for advice

(and have a greater incentive to go deeper with planning). These include advisors primar-

ily reliant on fees – either through retainers (50% usage), AUM (47%), or hourly (43%).

Specialized tools also become more common as ﬁnancial advisors work with increas-

ingly larger clients, who tend to have greater complexity and require more in-depth

analysis; as such, 61% of advisors serving $2 million-plus clients use specialized tools com-

pared to 27% of advisors with typical clients with less than $500,000 in AUM. Interest-

ingly, the use of specialized tools had no unique relationship with niche, plan approach,

or plan breadth.

Figure 51 shows specialized software usage by software type for the 46% of respondents

indicating any use of specialized applications. Within this group, tax applications were

the most common, with 80% usage – a substantial shift since 2020, when just 60% used

tax-planning tools. Social Security applications follow with 60% usage, down from 66% in

2020. The use of broader retirement-distribution tools, at 51%, was also up substantially,

compared to 30% in 2020.

Figure 51. Specialized Software Usage

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Given the overall increase in the use of specialized planning tools in the aggregate, all

categories – including Social Security – are showing increases in total advisor adoption as

advisors go increasingly deep into their ﬁnancial planning work with clients.

Of all the types of specialized planning tools reviewed, only 2, tax and Social Security, had

large enough sample sizes to make any meaningful conclusion about about usage of

individual tools within these categories. For tax and Social Security planning, there were

clear leaders. Tax is led by Holistiplan, with 79% adoption among those using tax soft-

ware (Figure 52).

Figure 52. Specialized Tax Software

Social Security is led by SSAnalyzer (49% market share) but faces more robust compe-

tition, including 22% of advisors using Maximize My Social Security, 9% using Horses-

mouth, and 7% using Social Security Timing (Figure 53).

Figure 53. Specialized Social Security Software

And although responses regarding estate planning software were fewer than 20, it is

still notable that 74% of those that reported using an estate planning tool fell into the

category of “Other”, suggesting there is no clear leader in Estate planning software for

advisors.

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The Kitces Report, Volume 1, 2023

Charging For Plans And Financial Advice In General

Pricing Overview

Financial advisors who participated in our Kitces Research study relied on a range of

business models to generate revenue as compensation for their services. As has been

the case for many years running, however, the Assets Under Management (AUM) fee still

reigns supreme. For 89% of respondents, at least some compensation from clients was

in the form of a fee tied to a percentage of AUM. For 82%, the AUM fee represented more

than half of revenues (Figure 54). The remaining advisors primarily relied on retainers

(including subscription fees), hourly or project fees, or commissions.

Figure 54. Majority Revenue Source

While the AUM fee is dominant, though, it is unlikely to be an advisor’s only revenue

source. Nearly ⁄ of respondents generated revenue from multiple charging methods

(Figure 55). For example, of the respondents that used an AUM fee, at least ⁄ also used

an hourly/project, retainer/subscription, or commission charge with at least some clients.

Generally, however, if an AUM fee was applied to clients, it generated the bulk of an advi-

sor’s revenue. The AUM fee accounted for 85% of revenue for the typical advisor that also

used other types of charges.

Figure 55. Number Of Different Charging Methods Used

To some extent, the tendency for advisors to use multiple charging methods results

from the recognition that certain methods are more suitable for different client types.

For instance, the AUM fee model is very limited for working with clients who may have

higher income or net worth levels and who are willing to pay for advice but simply don’t

have investable assets available to delegate to an advisor to manage.

Accordingly, Figure 56 shows that clients who pay via an AUM fee tend to have sub-

stantially more investable assets than those served by any other type of revenue model.

Other fee-for-service models serve clients of similar income and net worth but who don’t

have the portfolio sizes to ‘ﬁt’ the AUM model.

At the other end of the spectrum, the typical client subject to commission charges is far

less afﬂuent by any measure (investable assets, net worth, and income) than those who

are subject to other charging methods. In fact, whether measured by income, assets,

or net worth, the wealth level of commission clients is roughly half that of other clients.

Though it’s not entirely clear whether other advice models can’t be used to serve more

afﬂuent clients or if, instead, there is simply such a shortage of ﬁnancial advisors that

more afﬂuent clients are effectively ‘bidding up’ their fees in other advice models and

crowding out (or pricing out) the rest of the consumer marketplace.

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The Kitces Report, Volume 1, 2023

Figure 56. Typical Client Afﬂuence By Charging Method

More often, however, advisors look to be simply layering on additional fees to the same

client to ensure full cost recovery for all services provided. A good example of this is

when a client is charged separately for a ﬁnancial plan on top of already paying an AUM

fee for ongoing portfolio management services (explored in more detail ahead).

Typical AUM Fee Levels

As the advisor’s value proposition has evolved far beyond simply managing a client’s

assets, industry pundits have projected the demise of the AUM fee for some time

now. Yet while there are clear signs that advisors are increasing their use of alternative

charging methods, the AUM fee continues to be a dominant revenue source. Across

survey respondents, nearly ¾ of advisor compensation on average came through an

AUM fee.

With an AUM fee, clients are typically charged through either a graduated or ﬂat-fee

rate. Graduated rates, used by 59% of advisors with an AUM fee, are based on a blend of

different fee rates across graduated AUM tiers. Another 37% of advisors apply a ﬂat rate

for calculating the AUM fee, where a single ﬂat fee rate is applied retroactively back to

‘dollar one’ of the client’s assets when the next asset threshold is reached.

In practice, blended fee structures are likely more common because they reduce the risk

of price shocks – for both the advisor and the client – by reducing the potential for small

changes in portfolio value to dramatically impact client charges. For example, with a ﬂat

fee, a client might pay the advisor 100 basis points annually on a portfolio of less than $1

million, with the total fee dropping to 85 basis points for portfolios between $1 million

and $2 million. In this case, with just a $1 increase in portfolio value to $1 million, advi-

sor revenue on such an account drops 15%. Going the other way, if the market declines,

pushing the value of a portfolio down from $1.1 million to just under $1 million, the client

fee would increase at nearly the same rate as the drop in portfolio value (at the worst

time to deliver the news of a fee increase to the client)!

Whether the fee rate is graduated or ﬂat, the larger a client’s portfolio, the less the

charge. As shown, the typical 50 basis point revenue yield on a $10 million portfolio is half

that of a $1 million portfolio (Figure 57). The sliding scale implies the advisor’s recognition

that the cost to serve a client does not increase linearly as portfolios increase in size. This

is particularly true for larger portfolios.

Figure 57. Median Revenue As A Percentage Of Assets Managed

That being said, there is no change in the typical AUM revenue yield for account sizes

of $1 million or less, with the median holding constant at 100 basis points. Regardless of

client size, there are ﬁxed costs for onboarding and maintaining a relationship that the

ﬁrm needs to cover. By maintaining a higher AUM fee across this range, advisors are bet-

ter assured of covering these costs.

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The Kitces Report, Volume 1, 2023

Additionally, 63% of respondents mandate a minimum account size for AUM clients,

another effective means to ensure client revenue exceeds client servicing expenses for

the smallest account sizes. The typical minimum is $100,000 for those advisors that have

one. Surprisingly, the existence of a minimum makes no difference to the typical AUM

fee an advisor charges on accounts of $1 million or less, which hold steadfast at 1%. This is

consistent with typical AUM fee schedules showing little variation across different prac-

tice characteristics in general. Nonetheless, advisors generating $1 million or more in rev-

enue typically maintain a minimum account size of $250,000 for AUM clients, compared

to a minimum of just $100,000 for other advisors, and those with higher minimums do

tend to have greater advisor productivity.

Structuring Graduated Fee Schedules

Given the widespread use of the graduated method for determining a client’s AUM fee,

Kitces Research collected additional details from respondents on the structure of these

fees. Figure 58 summarizes a typical structure based on these responses. As shown, a

4-tier structure is most common, with the ﬁnal tier topping out at $5 million or more in

assets. Note that whether advisors adhere to a ﬂat fee or blended approach, the fee on a

$1 million account is identical at 100 basis points.

Figure 58. Typical Blended Tier Fee Structure (Based On 4-Tier Median)

All-In Fees Including The Underlying Cost Of Investing

While AUM fees reﬂect what goes to the ﬁrm, the amounts that clients actually end

up paying are typically more, as most client portfolios consist of a mix of mutual or

exchange-traded funds packaged and overseen by outside managers, which each hav-

ing management expenses of their own. Layering in these underlying fees results in an

all-in fee that is a more complete representation of the client’s total expenses.

To capture these additional costs, survey respondents were asked to estimate approxi-

mate blended expense ratios for 3 different portfolio types: conservative, moderate, and

aggressive (in recognition that costs of bond funds, in terms of expense ratios and some-

times outright billing rates, tend to be lower than equity funds). Unlike the advisor’s

AUM fee, these underlying expense ratios do show some signiﬁcant variation, especially

in relation to the advisor’s distribution channel (Figure 59).

Figure 59. Expense Ratios For Underlying Client Funds By Advisor Channel

As shown, regardless of their portfolio’s level of risk, pure RIA clients have the beneﬁt of

the lowest expense ratios. They are roughly half what IBD or W2-broker clients pay, as

those platforms tend to generate a portion of their own revenue from asset managers

and consequently are more likely to use higher-cost versions of common funds. Expense

ratios for Hybrid channel clients fall in the middle between pure RIA and pure broker

channels, likely as a reﬂection of the blending of expense ratios between RIA-channel

funds and broker-sold funds.

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The Kitces Report, Volume 1, 2023

Given these typical expense ratios, a $1 million client who was invested in a moderate

portfolio would pay an all-in fee of 125 basis points if working with an RIA advisor (100

basis points directly to the advisor plus 25 points to the underlying portfolio managers).

In comparison, this same client portfolio would pay an all-in fee that is 150 basis points

(20% higher) if being served by a W2 broker or 147 basis points (18% higher) if served by

an advisor at an IBD. The gap between IBD and RIA all-in fees grows even wider as client

portfolios decrease below $1 million (Figure 60).

Figure 60. All-In Fee By Advisor Channel By Portfolio Size (Moderate Risk Proﬁle)

In essence, as competition for top-line payouts has become increasingly intense for

broker-dealer recruiting, it appears that broker-dealers are increasingly generating a

portion of their revenue from underlying products – whether in the form of revenue

sharing, platform fees, or participation in 12b-1 fees – and those additional costs for the

broker-dealer intermediary are showing up in the form of higher costs for the solutions

their advisors implement.

As pricing becomes increasingly transparent to consumers, broker-dealer afﬁliated

advisors will need to be prepared to justify these higher costs or offset them with price

reductions in their own fees. In addition, broker-dealers may increasingly feel pressure

to make additional lower-cost investment options available to their advisors to remain

competitive. Concurrently, RIA advisors may gain another effective point of differentia-

tion in the competition for new clients by being able to demonstrate lower all-in costs

without the additional cost layer introduced by the broker-dealer intermediary.

Retainer Fee

Retainer fees were used by 39% of advisors, but fewer than 3% relied on them exclusively.

Instead, of those advisors using retainer fees, 81% also collect revenue via an AUM fee. For

the typical advisor that employs both AUM and retainer fees, retainer fees account for

13% of revenue. This minor revenue share suggests that retainer fees are primarily being

used as a model to charge for ﬁnancial planning alongside AUM fees for portfolio man-

agement services.

While the median annual retainer fee was $3,000, what clients paid varied across advi-

sors, as well as across clients of the same advisor. For the middle 50% of responses clus-

tered closest to the median, typical retainer fees ranged from $2,300 to $6,000 (Figure 61).

Figure 61. Distribution Of Typical Annual Retainer Fee

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The Kitces Report, Volume 1, 2023

Further, as shown in Figure 62, just 20% of advisors charging retainers maintained a

standard retainer fee for all clients. Nearly half tailored retainer fees speciﬁc to each

client, with the remainder determining fees by assigned tier (e.g., by providing multiple

tiers of services such as Bronze, Silver, and Gold and allowing clients to select which tier

of service they wanted for the associated subscription fee).

Hourly Charges

The application of hourly charges was

about the same as for retainer fees, with

40% of advisors generating revenue from

an hourly rate. Exclusive use of an hourly

charge was equally rare as well, with less

than 3% of advisors operating on an hour-

ly-only model. In much the same way

advisors use retainer fees, hourly charges

frequently play a minor supporting role

to AUM fees. The majority of those using

hourly charges (81%) also used an AUM fee.

Hourly fees represent just 5% of revenue

for the typical advisor using both AUM and

hourly fees, suggesting that advisors most often apply hourly charges in a role that is

supplementary to the AUM fee. For those that charged hourly, the typical rate was $250,

with half of the responses clustered between $223 and $300 per hour (Figure 63).

Figure 63. Distribution Of Hourly Planning Fees

Paying For Financial Plans

How advisors charge for their services can send a quiet but powerful signal that shapes

client perception of the value that advisors provide. Many advisors have evolved their

primary role as they’ve transitioned from broker to investment manager to true ﬁnancial

planners getting paid for providing ﬁnancial advice (ﬁnancial “advicers” in Kitces nomen-

clature). Despite this evolution, the AUM fee still dominates advisor pricing.

The end result is an increasingly bundled approach to advice fees, where ﬁnancial advi-

sors provide more and more ﬁnancial planning as a bundled part of their existing AUM

fee. In practice, our Kitces Research ﬁnds that 62% of advisors bundle the cost of devel-

oping a ﬁnancial plan into their AUM fee (Figure 64). While just 27% of advisors charge

separately for developing a ﬁnancial plan, either via a standalone project fee (22%) or

hourly rate (11%). (Note: advisors could choose one or more charging methods as typical,

such that response totals add up to more than 100%).

Figure 64. Typical Charging Methods For Financial Plans

Figure 62. Extent Of Variance For

Retainer Fees

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However, as discussed earlier, with the rise of retainer fees, a growing number of advisors

are beginning to decouple their ﬁnancial planning services from their AUM fee and are

instead bundling them into an ongoing subscription fee for ﬁnancial planning services,

effectively shifting to a ‘2-fees-for-2-separate-services’ approach that helps to ensure

each service generates sufﬁcient revenue to cover the cost of their services. However,

the practice still appears to be inconsistent within many advisory ﬁrms, suggesting that

ﬁrms may more often be using the approach as a way to set a minimum fee for their

smaller relationships (to ensure the necessary revenue is being generated to service the

client at the ﬁrm’s standards) rather than a full decoupling as a standard offering.

Figure 65 compares the AUM fee schedules for the majority of advisors who still bundle

the cost of a ﬁnancial plan into their AUM fee versus those who do not. The 2 schedules

are nearly identical, except for the $1 million to $5 million account range, where advisors

that bundle are actually charging less than those who do. The fact that the fee schedules

are so similar across the board, despite the substantial work entailed in delivering ﬁnan-

cial planning, suggests that, in the long run, AUM advisors are ﬁnding that bundling in

ﬁnancial planning so deepens and enriches the client relationship that they are able to

more than make up for a lower fee with the higher retention that comes as a result of

making ﬁnancial planning the included default for clients.

Figure 65. Median AUM Fee (Plan Bundled Vs Unbundled)

Which highlights the long-standing challenge that advisors continue to face in charging

separately for ﬁnancial planning – while it takes a substantial amount of time to do

ﬁnancial planning, it so enriches the advisor-client relationship that a large segment of

advisors continue to ﬁnd it proﬁtable to not charge, or even charge less, to clients who

engage with their ﬁnancial planning process!

Standalone Project Planning Fees

For those that do charge separately for an upfront ﬁnancial plan, the most common

method is to charge per plan via a standalone fee. Across all respondents who provide

plans, about ⁄ charged in this manner. The median standalone fee for a comprehen-

sive ﬁnancial plan was $3,000, representing a 20% increase over the $2,500 typical fee in

2020 and up 33% from the median fee of $2,250 just 4 years ago in 2018. In 2022, stand-

alone plan fees for half of the respondents were grouped within a range of $2,125 to

$3,657 (Figure 66).

Figure 66. Distribution Of Fees For Standalone Plan

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The Kitces Report, Volume 1, 2023

Exactly why standalone-plan charges vary so broadly is not entirely clear. Surprisingly

little correlation exists between a plan’s standalone price and the breadth of the plan.

Figure 67 does show that the typical price of an Extensive plan (covering the most ﬁnan-

cial planning topics) is about 18% higher than that of a Broad plan. Targeted or Narrow

plans (combined to improve our sample size), however, are just 2% cheaper than the

Broad median price – hardly a material difference. Which continues to emphasize that

the sheer overhead in establishing the ﬁnancial planning relationship, doing the anal-

ysis, and delivering the ﬁnancial plan continues to be the driver of its cost – not the incre-

mental amount of depth or breadth in the ﬁnancial planning analysis stage.

Figure 67. Typical Standalone Plan Fee By Plan Breadth

There is also weak justiﬁcation that standalone prices for a ﬁnancial plan vary accord-

ing to plan preparation costs, as prices are slightly (but only slightly) correlated with

hours that a service team invests in preparing a plan. For example, at $2,750, the median

charge for a standalone plan taking less than 8 hours to prepare is just 8% less than the

$3,000 median fee for plans taking 13 or more hours to prepare.

These results suggest limited price competition when it comes to what advisors charge

for plans, as well as a lack of understanding on behalf of clients regarding what might be

a fair price to pay. This includes clients’ inability to distinguish between a higher-value

plan that would have a higher fee relative to a less valuable ﬁnancial plan for a materi-

ally lower fee. At present, advisors may simply be charging based on their best guess of

what they think the market may bear. Alternatively, advisors could be discounting what

they perceive to be the market plan price in order to improve the chance of winning or

maintaining an ongoing client relationship, given that very few advisors generate their

revenue solely from ﬁnancial plan fees, and most who charge for ﬁnancial plans are still

doing so as a lead-in to an ongoing AUM or retainer fee relationship.

Regardless, there may be an opportunity for premium pricing of high-quality standalone

ﬁnancial plans if advisors can better articulate and differentiate the comparatively supe-

rior value of their ﬁnancial plans relative to competitors.

Plans By The Hour

One obvious way to ensure that the prices of ﬁnancial plans reﬂect their underlying

preparation cost is to charge by the hour. Just 11% of advisors charge hourly for a ﬁnan-

cial plan, though. For those that do, resulting plan charges closely mirror standalone

planning fees. Multiplying the team’s hourly charge with the typical hours required to

prepare a plan results in a median fee of $3,000. For the 50% of respondents grouped

nearest the median, plans by the hour ranged from $2,125 to $3,900 (Figure 68).

Figure 68. Distribution Of Cost For Plan Based On Hourly Rate

As would be expected, the median hourly total of $3,000 for a Broad plan is 10% greater

than a Targeted or Narrow plan. Surprisingly, however, the typical hourly price for a

Broad plan is nearly the same as that of an Extensive plan, signaling again that the big-

ger driver of plan production cost is not the time it takes to analyze a broader range of

planning issues, but what it takes to establish the relationship, input the data into the

planning software, and generate the planning output or deliverable (while the planning

software itself appears to be making it efﬁcient at the margin to add more planning

topics with little additional time investment). As a result, advisors charging by the hour

invest a similar amount of time at a similar rate to advisors who charge for and deliver

standalone ﬁnancial plans with other compensation models.

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The Kitces Report, Volume 1, 2023

Planning For Success – What The Most Productive Advisors Are Doing

By design, this report devotes extensive coverage to the speciﬁcs of how advisors carry

out the ﬁnancial planning process with clients. This insight offers useful guideposts for

advisors in determining how close (or far off) their process implementation is relative to

their peers. But even more importantly, what do our ﬁndings suggest for advisors who

want to outperform their peers? What are the commonalities of the most productive

ﬁnancial advisors (measured by the revenue they are responsible for) as distinguished

from the rest?

Summarized here, organized by the most critical areas of inﬂuence, are the key distinc-

tions that have emerged from this research and that align with the most productive and

successful advisors.

Time Management. For the most productive advisors in our survey, working longer

hours doesn’t necessarily equate with greater productivity. While a senior advisor that

generates $1 million or more in revenue typically maintains a work week that is 9% lon-

ger than less productive advisors, a more critical distinction relates to how more produc-

tive advisors are spending their time.

Productivity correlates positively with how much time an advisor directly allocates to

clients. senior advisors with $1 million or more in revenue spend 39% of their time on

front-ofﬁce work (e.g., meeting with clients and/or prospects and other activities related

to business development) compared to other advisors (generating less than $1M of rev-

enue) who spend just 29% of their time on similar activities. Much of this 10%-of-time dif-

ference involves higher-productivity advisors spending more time meeting with clients,

with the capacity to do so created by working on and leveraging themselves through

teams, as discussed further below.

In addition to allocating more time to clients, more productive advisors refrain from

over-investing time in the ﬁrst year of a client relationship. Teams led by $1 million-plus

senior advisors typically spend just 1 hour more in the ﬁrst year of a client relationship

than they do in following years. Compared to others, they spend 5 hours less in the ﬁrst

year of a client relationship and 3 hours more in subsequent years.

Team Structure. Generally, the larger the client service team, the greater the team’s

capabilities to attract and serve more afﬂuent (and more proﬁtable) clients. However, the

most productive advisors tend to work within 3-person service teams, likely due to larger

teams being more time-consuming for advisors as the people-management respon-

sibilities grow. With a 3-person team – typically consisting of the senior advisor, a client

service administrator, and an associate (or sometimes, service) advisor – median reve-

nue per advisor is greater than that of other advisors in both smaller and larger teams.

Not only is a 3-person team correlated with maximum productivity, but it is also large

enough to facilitate career pathing. In turn, the next most productive teams are 4-per-

son teams that typically include a senior, service, and associate advisor, all supported by

a client service administrator.

More productive advisors also tend to seek ﬁnancial planning support beyond the con-

ﬁnes of their dedicated service teams. Compared to others, teams with revenue per

advisor of $1 million or more are about twice as likely to rely on centralized specialists

within the ﬁrm. Centralized resources primarily drive productivity by providing advisors

with the specialized expertise that better enables service to be provided to niche and

other more complex (and often more afﬂuent and proﬁtable) clients. By contrast, low-

er-productivity advisors, to the extent they made use of resources outside of their teams,

were more likely to rely on other external resources (e.g., home ofﬁce specialists or

outsourced providers) rather than developing an in-house centralized team of ﬁnancial

planning specialists.

Clients. In terms of clients served, higher advisor productivity correlates with a client

base that is more afﬂuent. Comparing advisors managing $1 million or more in revenue

with others, typical client net worth is ⁄ greater, and investable assets are nearly double

that of less productive advisors. Simply put, the most productive advisors tend to work

with more afﬂuent clients, who can pay them higher fees for their service and expertise.

As wealth often correlates with age, it’s not surprising that these more productive advi-

sors are also slightly more likely to serve older clients. The median share of clients 55

years or older is 65% for $1 million-plus advisors, compared to 60% for other advisors.

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The Kitces Report, Volume 1, 2023

Financial Planning. The most productive advisors manage client assets while also pro-

viding ﬁnancial planning but don’t overcomplicate the ﬁnancial planning process.

Without assets to generate revenue, the advice-only model challenges advisor produc-

tivity. The typical advisor who both manages assets and provides ﬁnancial planning

advice for clients generates $400,000 in revenue. Revenue per advisor for those provid-

ing advice-only services, at $162,500, is less than half that.

In addition, there is no clear correlation between ﬁnancial plans that are broader in cov-

erage and productivity of advisors that prepare more extensive plans – in other words,

to the extent that some advisors create more comprehensive ﬁnancial plans, they have

been unable to command higher fees commensurate with the extra work it takes to

produce such plans. If a trend is at all apparent, it is in favor of moderate breadth. The

typical advisor that offers Extensive plans generates $360,000 in revenue, a rate 7% lower

than all other advisors preparing less extensive ﬁnancial plans. Related to this, advisors

who customize written ﬁnancial plans for each client are 13% less productive than advi-

sors who do not produce customized plans. The planning approach that correlates with

the highest productivity is Comprehensive, where software generates a holistic picture

of a client’s ﬁnancial situation, and the advisor delivers the ﬁnancial planning software

output with no substantive customization. Planners delivering plans simply using soft-

ware output generated 18% more revenue per advisor than others.

More productive advisors are also somewhat distinct in terms of the tools they rely upon

to support the planning process. Like their peers, advisors with $1 million or more in

revenue have a strong tendency to rely on third-party comprehensive planning applica-

tions. By contrast, however, the more productive advisors are nearly twice as likely to use

ﬁrm-created ﬁnancial planning software and much less likely to rely on Word or Excel

to support their planning process. Firm-created planning software is used by 16% of $1

million-plus advisors versus just 9% for others.

Relative to advisors generating less than $1 million in revenue, more productive advisors

have a greater tendency to use eMoney, MoneyGuide, Naviplan, or Asset-Map for a third-

party planning application, with most (43%) using eMoney. At just 12% usage compared

to 28% for others, high-productivity advisors are far less likely to use RightCapital. How-

ever, RightCapital is still newer on the market and has yet to make deep inroads with

more established and typically more productive advisors. This raises the question as to

whether its adoption rate amongst the most productive advisors may rise over time. On

the other hand, RightCapital tends to have greater use among planners who use more

customized approaches and have more extensive plan breadth – planning traits where

RightCapital shines, but traits that are less associated with more productive advisors due

to the time-consuming nature of producing extensive customized ﬁnancial plans.

Pricing. In terms of revenue model, advisors that generate the majority of their revenue

from an AUM fee have a signiﬁcant productivity edge over those advisors more depen-

dent on other charging structures. The median of $433,333 revenue per advisor under

the AUM revenue model is more than double that for advisors working under different

revenue models.

To better ensure coverage of ﬁxed client costs, more productive advisors also set higher

minimum account sizes for AUM clients. Advisors generating $1 million or more in reve-

nue typically maintain a minimum account size of $250,000 for AUM clients compared

to a typical minimum of just $100,000 for other advisors.

While hourly, retainer, and standalone plan fees are similar across advisors regardless of

their productivity, higher productivity clearly correlates with higher AUM fees. Relative

to others, advisors overseeing $1 million or more in revenue have AUM fees that are typ-

ically 5-10 basis points higher across a range of account sizes. Further, unlike other advi-

sors, these more productive advisors set higher AUM fees if providing a ﬁnancial plan is

bundled within the AUM fee.

Experience And Expertise. Last but hardly least important is the relationship between

the advisor’s productivity and their experience and expertise. The nature of the advice

business will always require that advisors commit a certain amount of face time to their

clients. This time requirement, however, handicaps the advisor’s ability to scale the prac-

tice, as there are only so many hours in a workday. Building up experience and expertise,

however, is one important means of spending client time more efﬁciently and raising

advisor productivity as a result.

As shown in Figure 69, experienced advisors maintain a signiﬁcant productivity advan-

tage over those less experienced, with expertise in the form of CFP certiﬁcation only

adding to this advantage. For all senior advisors without the CFP marks, those with 10

or more years of client-facing experience are more than twice as productive in terms of

revenue per advisor compared to less-experienced senior advisors.

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The Kitces Report, Volume 1, 2023

This advantage is a result of more experienced advisors being more efﬁcient at serv-

ing clients and more capable to serve more complex clients (resulting in the advisor

outright generating more revenue with their time from clients who can and are willing

to pay more for the advisor’s services). Accordingly, experience also correlates with an

advisor having a more reﬁned (and more afﬂuent) base of clients. Which is also often

supported by a more established business development network for attracting these

types of clients.

Figure 69. Advisor Productivity By CFP And Experience

Advanced certiﬁcations further bolster productivity by both enabling an advisor to work

more effectively with more complex clients and providing an advisor with more imme-

diate credibility when prospecting for clients. With CFP certiﬁcation, advisors with 10 or

more years of experience are 10% more productive than others with similar experience. A

greater 13% advantage exists for less experienced advisors with the CFP marks, demon-

strating the particular effectiveness of CFP certiﬁcation early in an advisor’s career to

help overcome disadvantages inherent to lack of experience.

Notably, though, the beneﬁts of advisor degrees and designations do not appear to be

speciﬁc to the CFP marks but instead a marker of advisors reinvesting into their educa-

tion more broadly (Figure 70). Accordingly, advisors with other substantive designations

of similar impact to the CFP marks – such as the CFA, the PFS designation for CPAs,

and the ChFC marks – saw a similar productivity boost (even without the CFP marks

themselves). And advisors who pursued additional advanced designations beyond the

CFP marks – such as CPWA for working with high-net-worth clients, RICP or RMA for

working with retirees, or CIMA or CFA certiﬁcation to go deeper on investments – saw a

further productivity boost.

Figure 70. Advisor Productivity By Designations

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The Kitces Report, Volume 1, 2023

What Does It All Add Up To?

While there are obviously intrinsic rewards related to helping clients achieve ﬁnancial

as well as personal goals, one key measure of success as a professional ﬁnancial advisor

is the income the advisor can generate for themselves with their expertise. In addi-

tion to reporting on the characteristics of their advisory business, survey respondents

also provided data on the income that they received from their business. Respondents

reported a total income-derived ﬁgure that included both compensation from perform-

ing work within the practice as well as any proﬁts received resulting from ownership in

the practice.

Figure 71 shows the aggregated results for this income data by role, where sufﬁcient

data were available (the number of respondents is in parentheses). In addition to the

median income for each of these 5 common advisory roles, income at both the 25th and

75th percentiles show the degree to which income varies for these roles.

Figure 71. Income By Role

Given the role’s critical inﬂuence on the success of an advisory service team, it’s not

surprising that the median income for senior advisors is highest at about $230,000. Rel-

ative to the median revenue per advisor of $370,000 (including both senior and service

advisors), this amounts to compensation that is 62% of the revenue that a typical advi-

sor is responsible for. Senior advisor income represents a substantial premium that is

earned by being responsible for business development; by contrast, service advisors who

have similar client relationship management responsibilities but not material business

development obligations have a median income of only $140,000 – equivalent to 38% of

median revenue per advisor. In turn, associate advisors – who are not yet able to manage

client relationships on their own and support service or senior advisors – have a median

income of just $85,000. Which helps to reﬂect the substantial increases in income that

advisors can unlock by learning to independently manage and retain client relationships

(a $55,000 increase in median income) and to engage in business development (an

$89,000 increase in median income).

At the same time, our results also show sizable opportunities for those who seek cen-

tralized non-revenue-producing roles… at least in larger advisory ﬁrms that can afford

to hire for them. The median compensation of an internal ﬁnancial planning specialist

– for instance, a Director of Financial Planning or senior technical expert – was $170,500

(though particular compensation depends on speciﬁc roles and responsibilities), and

the median compensation for an advisory ﬁrm executive was $190,000. Though nota-

bly, income varies widely for executives, with those above the 25th percentile earning

$850,000 or more. However, this is likely a result of many different types of executive

roles responding to the Kitces survey (e.g., CEOs, COOs, etc.), with the variety of account-

abilities likely driving the variability in reported income.

Further exacerbating differences is that the most senior executives often have signif-

icant ownership shares (in many cases because they are the original founders), with

much of their income coming in the form of proﬁts from the business. A more in-depth

analysis of executive income, in particular, will necessitate a separate follow-on study.

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The Kitces Report, Volume 1, 2023

While not as exaggerated as the difference between the median and 25th percentile

income for executives, all roles in advisory ﬁrms show a more signiﬁcant long-tail distri-

bution at the high end of the income range. That is, the distribution above the median

income level is much wider than below the median income. Again, ownership is a likely

factor driving much of the disparity above the median. Further, this difference is accen-

tuated in more proﬁtable years, when returns on shares could represent ⁄ or more of

total income, depending upon the ownership share.

Beyond ownership, a host of other factors can drive compensation as well. Not surpris-

ingly, experience is a major inﬂuence. As shown in Figure 72, income roughly doubles as

senior advisor experience doubles. Typical senior advisors with 20+ years of client-facing

experience, for example, earn 117% more than those with 5 to 9 years of experience. This

is likely a combination of the raw experience capabilities of the senior advisor, the fact

that senior advisors tend to accumulate more (and more afﬂuent) clients as they add

years of experience, and the tendency for senior advisors to be more effective at busi-

ness development (if only by having more years to establish personal networks and hav-

ing more clients to refer them) as their years of experience increase.

Figure 72. Senior Advisor Income By Experience

In addition, staff support is also strongly correlated with senior advisor income. As shown

(Figure 73), a senior advisor earns roughly $100,000 more in additional income for each

person that is added to the service team. Typical income increases by $221,000 when

a senior advisor evolves from working independently (1 FTE) to being a member of a

3-person team. A similar $205,000 jump in income occurs when the advisor progresses

from a 3 to 5-person team. Though, as discussed earlier, senior advisors don’t appear to

spend less time in their roles as their team expands; instead, they simply become more

leveraged in their time, realizing greater revenue of their service team (and greater take-

home pay as an advisor) with the additional support infrastructure. And as noted below,

there appears to be a particular capacity barrier when adding the 4th team member

(typically a service advisor to begin taking the lead on clients as the senior advisor hits a

client capacity wall), before the expanded team creates additional operational leverage

with the 5th team member addition.

Figure 73. Senior Advisor Income By Service Team Size

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The Kitces Report, Volume 1, 2023

Similarly, by practice structure, unsupported solo advisors earn far less relative to senior

advisors working under supported solo, silo, or ensemble structures. The median income

for the unsupported solo is $105,000, compared to $306,000 for senior advisors working

as supported solos (Figure 74). Ensembles offer senior advisors the highest income of

any practice structure, given the structure’s tendency to provide more robust support.

Figure 74. Senior Advisor Income By Practice Structure

A ﬁnal key inﬂuence on advisor income is the revenue model for the practice (i.e., how

clients are charged). The highest-earning senior advisors generate the majority of reve-

nue from an AUM fee (Figure 75). Their median income of $300,000 is more than 3 times

that of all senior advisors working under hourly ($78,000) or retainer ($82,500) revenue

models. The wide gap in income is further evidence that it may take some time before

advisors move away from the AUM fee. Income for senior advisors mostly reliant on com-

mission is about midway between the medians for AUM and hourly or retainer revenue

models.

Figure 75. Senior Advisor Income By Majority Revenue Source

Figure 75 also illustrates, however, that some of the income differences for advisors

across revenue models could be due to differences in experience. The typical client-fac-

ing experience of advisors that are reliant on an AUM fee is 17 years, compared to about

10 years for advisors under different revenue models.

Restricting our income comparison to only advisors with 7 or more years of client-facing

experience still shows the AUM advisor on top, but the median income for hourly advi-

sors with at least 7 years of experience jumps dramatically, growing closer to the level

of a commission-based advisor. Retainer-based advisors also show a sizable (but lesser)

jump in income when adjusting for the level of experience. This suggests hourly and

retainer revenue models may have more income-generating potential than what was

revealed initially and that this potential is better realized as an advisor becomes more

experienced in adapting to, and scaling up, these less traditional charging structures.

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The Kitces Report, Volume 1, 2023

Conclusion

This Kitces Research report likely contains more detail on the ﬁnancial planning pro-

cess than any other previously published. Across the breadth of its coverage, a few key

themes are easily identiﬁed.

First, ﬁnancial planning is an increasingly complex undertaking. The number of topics

addressed in a typical ﬁnancial plan is rapidly expanding, while many of these plans are

increasingly custom-written. As a result, service teams are spending more time with

each client. The fact that younger clients have a greater propensity to receive more com-

prehensive plans suggests that advisors will not have it any easier in the future. A gener-

ational shift is likely underway, with clients continuing to expect more ﬁnancial planning

depth and breadth from their advisors.

Technology tools are only going so far in helping advisors meet growing service

demands while maintaining fees at competitive levels. Most advisors using a compre-

hensive ﬁnancial planning application must also rely on Word, Excel, and additional

planning applications that are more specialized to support their planning processes.

The most effective path toward a more productive – and ultimately more proﬁtable –

ﬁnancial planning practice centers on an advisor’s ability to leverage time better. More

speciﬁcally, this will come in the form of serving more afﬂuent clients and having the

capabilities to do so not just efﬁciently but effectively. Having the right team in place

and ﬁnding a moderated approach toward planning that strikes the right balance to

minimize wasted effort will also be required.

Serving wealthier clients can boost the return on an advisor’s time, but this means an

advisor must have the capabilities to serve these more demanding and typically high-

er-revenue clients. Toward this end, experience, specialized degrees, and advanced pro-

fessional certiﬁcations all correlate with an advisor’s ability to serve more afﬂuent clients

and generate greater revenue as a result.

But the most productive advisors aren’t doing it by themselves – they are typically work-

ing within a team of 3 or 4 and tapping into the expertise of other (typically centralized)

specialists outside of their teams. Further, they are delegating back- and middle-of-

ﬁce tasks to others, freeing more time to meet with their more afﬂuent clients (though

notably, even the most productive advisors spend no more than 40% of their time on

front-ofﬁce activities as advisors reach their personal-relationship capacity).

Lastly, throughout these research ﬁndings, there is the theme of the most productive

advisors ﬁnding the right balance in how they conduct the ﬁnancial planning process.

This comes in the form of working with the right-sized team, a team that is big enough

to provide sufﬁcient service capabilities and ﬂexibility to delegate but not so large that

management is cumbersome. Other examples of balance include planning more col-

laboratively with clients as opposed to preparing custom-written plans and striving for

more meeting time with clients (but recognizing that spending most of a workday in

client meetings is unrealistic).

In any profession, and for ﬁnancial advisors, in particular, time is a precious and ﬁnite

resource. As William Penn once said, however, “Time is what we want most but use

worst.” By better leveraging time, advisors will continue to uncover opportunities in the

increasingly complex and demanding marketplace for ﬁnancial planning.

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The Kitces Report, Volume 1, 2023

Appendix

Financial Planning Software Detail Ratings

Appendix | 63 of 67

The Kitces Report, Volume 1, 2023

Financial Planning Software Detail Ratings, cont.

Appendix | 64 of 67

The Kitces Report, Volume 1, 2023

Study Terms

Appendix | 65 of 67

Practices & Terms

Practice Structure

Advisory Firm Roles

Practice

Unsupported Solo

Executive

Supported Solo

Senior Advisor

Silo

Service Advisor

Ensemble

Service Team

Description

Any entity for which there is a common business vision, budget, client base, and service standard. Across the entity, resources and

proﬁts are pooled. A practice could be an entire ﬁrm or an individual or team of individuals afﬁliated with a larger ﬁrm. Afﬁliations,

for example, could include a broker-dealer, an independent RIA, or a platform service provider

Advisors with no other advisors or W-2 employees.

General term for any executive role within the ﬁrm dedicated to full-time or management responsibilities. Speciﬁc job titles

included Chief Executive Ofﬁcer and Chief Operating Ofﬁcer.

Senior advisor with ultimate responsibility for all clients of the practice, supported by 1 or more W-2 employees, which may include

associate advisors.

Accountable for managing the most valued client relationships as well as business development and mentoring other advisors.

Multiple advisors or advisor teams, each independently responsible for their own distinct client base and proﬁts.

Primarily accountable for relationship management and retention of existing clients.

Multiple advisors or advisor teams pooling all resources and proﬁts, where clients are clients of the ﬁrm and are served under a

consistent standard.

A service team is typically a subset of a practice that consists of a group of individuals or a single individual within the practice

that serves a deﬁned client base. At a minimum, the service team will have at least 1 individual managing client relationships

and leading the delivery of ﬁnancial planning advice. Support roles could include associate advisor, paraplanner, or client service

administrator. (Shared resources, such as centralized ﬁnancial planning specialists, were not considered part of a service team for

the purposes of this research.)

The Kitces Report, Volume 1, 2023

Paraplanner

Financial Planning Specialist

Client Service/Adminstrative

Associate Advisor

Conducts ﬁnancial planning analyses and provides similar ﬁnancial planning support for more senior advisors but is not responsible

for delivering recommendations to clients.

Serves as a centralized planning resource to support all advisors of a practice; may include Director of Financial Planning.

Interacts with clients only with respect to administrative requests.

Supports more senior advisors on a team to deliver advice in a client-facing capacity but typically has no primary responsibility for

client relationships.

Financial Planning Approach

Financial Planning Depth

Calculator

Targeted

Comprehensive

Narrow

Custom

Broad

Collaborative

Extensive

Description

Financial plan analysis is used to calculate the client’s needs or gaps, which helps the advisor identify products to implement.

A ﬁnancial plan that covers 5 or fewer ﬁnancial planning topics.

Printed output of planning software is used to show a more holistic picture of the client’s current and projected ﬁnancial situation.

A ﬁnancial plan covering from 6 to 9 different ﬁnancial planning topics.

A custom-written ﬁnancial plan is developed for each individual client’s circumstances.

A ﬁnancial plan covering 10 to 12 different ﬁnancial planning topics.

Planning software is used as a collaborative tool (e.g., via screen share or a conference room monitor) live in client meetings.

A ﬁnancial plan covering 13 or more ﬁnancial planning topics.

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