Personal Financial Planning

by

Table of Contents

CHAPTER 1 INTRODUCTION2

Introduction2

Aims and Objectives2

Hypothesis3

CHAPTER 2 LITERATURE REVIEW4

Client Trust4

Relationship Commitment4

History and Theoretical Foundations of Financial Planning4

The Strategy-Making Process in Financial Planning5

CHAPTER 3 METHODOLOGY7

Research Method7

CHAPTER 4: ANTICIPATED RESULT8

REFERENCES9

Chapter 1 Introduction

Introduction

Client trust and commitment are two of the most powerful predictors of a successful financial planning engagement. A client's trust in the financial planner and commitment to the financial planning relationship can lead directly to a number of positive outcomes. These include high acquiescence, a low propensity to leave, a high degree of cooperation and functional conflict. These qualities in turn tend to lead to long-lasting relationships for which financial planners have both a process-motive and a profit-motive. Higher levels of commitment and trust have been shown to be associated with greater client openness in disclosing personal and financial information as well as, greater cooperation in implementing planning recommendations. The profit-motive arises from the fact that it typically costs much less to retain existing clients than it does to attract new ones, as it makes long-lasting relationships more profitable than those of shorter duration. Relationships exhibiting high trust and commitment are also associated with a greater client propensity to make referrals. It is therefore, of great interest to financial planners to know what they can do to foster client trust and commitment and thus reap these many benefits.

Aims and Objectives

The aims and objectives of this research are threefold:

To develop an integrating framework into which the dominant modes of strategy-making (including related skills or competencies) can be organized.

To use this framework of empirically test the relationship between the different modes of strategy-making by financial planners and client trust and commitment.

To develop an assessment tool that individual planners and planning firms can use to ensure that they have mastered, and are using the competencies that lead to the greatest trust and commitment on the part of clients.

Hypothesis

The hypotheses presented in the following section flow from the underlying purpose of this research, which is as follows:

Hypothesis 1

The data-driven, policy-driven, and relationship-driven modes of strategy making will be more associated with client commitment and trust than will the planner- the driven and client-driven modes.

Hypothesis 2

Client commitment and trust will be positively associated with a financial planner's mastery of multiple strategy-making modes (capabilities,).

Hypothesis 3(a)

Larger firms will exhibit significantly higher use of the planner-driven mode of strategy making.

Hypothesis 3(b)

Firm size will be inversely related to client trust and commitment.

Hypothesis 4

Client commitment and trust will be positively related to the complexity of a client's personal circumstances.

Chapter 2 Literature Review

Client Trust

The belief on the part of the financial planning client that the financial planner is both competent and ethical and someone who will consistently make recommendations that are in the client's best interest.

Relationship Commitment

The belief on the part of the financial planning client is that the relationship with his or her financial planner is as valuable as to warrant the maximum effort to maintain and a corresponding commitment that relationship indefinitely.

History and Theoretical Foundations of Financial Planning

The foundations upon which financial planning ...