What is Holistic Financial Planning?
If it hasn’t already happened, there will come a time in which you find yourself needing professional financial advice. As our lives become more complicated and as our assets grow, so does the need for competent and sound advice. What kind of financial advice you need depends on your situation. Some folks may need one or two questions answered, while others need an entire review of their overall financial picture, covering all aspects of their financial life, and then guided on where to go next. If the latter sounds like your situation, then holistic financial planning is most likely the route for you to take.
Holistic financial planning is a very well-known term within the financial services industry itself. However, for many individuals, I have found that it is not very clear what this actually means. This term covers all aspects of your financial journey. It is a tailor-made plan just for you that dives deep into all aspects of your financial life.
While investments tend to be the focus for many financial advisors, when they take a holistic approach, they are looking at so much more. At its core, a financial planner that does holistic financial planning is helping you identify your values and goals in order to build your wealth during your working years, help to protect your wealth, and then help you to maintain your wealth during your retirement years so that you don’t outlive your money. It is designed so that all parts of your financial life work together so that you achieve your goals.
Holistic Financial Planning includes:
Getting to know you and your goals
Before we make any recommendations or build out a financial plan, we get to know you. We take the time to listen to what is most important to you. We gain an understanding of your values and what you wish to achieve. Afterall, money means different things to different people and each person’s journey will look different. At the end of the day, your money is the facilitator of all your goals. The financial actions you take should be purposeful and intentional. The only way to accomplish that is to gain a solid understanding of what matters most to you.
Reviewing the current state of your finances
After we get to know one another, we review all aspects of your current financial picture. That means we take the time to review what is currently in place, such as insurance policies, estate planning documents, investment strategies, spending and saving strategies, and whatever else you have that relates to your financial picture. If we find that there are gaps given your values and goals, this is where we provide recommendations to bridge the gap.
For example, if you tell us, you have specific plans for your assets upon your death, yet your estate planning documents do not support this, then we work with you and your attorney to cover these gaps. Another example is if we find you need more, or less insurance, we make a recommendation and work with an insurance broker and you to adjust your insurance coverage.
Reviewing your retirement plan
Retirement means very different things to different people. What individuals want to accomplish in retirement and when they retire can be all over the map depending on their values and experiences. We want to help you put a plan in place that helps you to get across the finish line of your working years, and transition seamlessly into retirement. The only way to accomplish this is to understand what it truly takes to get there from a savings and spending perspective. Throughout your financial journey, we are there to help you maintain the discipline to accomplish your goals. Through annual retirement plan reviews, we help to keep you on track and tweak the plan if necessary.
Taxes are a necessary part of making money or having money. Throughout your financial life, and as your assets evolve, so does your tax situation. In your retirement years, after you no longer have wages, if you have a large enough portfolio to support your lifestyle, there is a need for tax planning and tax efficiency. We are constantly considering the tax implications of every financial decision as we put together financial plans for our clients. At the end of the day, it is not about how much money you make, it is more about how much money you get to keep. Proper tax planning can optimize this for you as you build your portfolio and go through your financial journey.
If you are a charitably inclined person, perhaps part of your financial plan is to give money to organizations that matter to you. Depending on your level of wealth, it will dictate the type of strategy needed so that you maximize your philanthropic desires, while also benefiting yourself from a tax perspective.
Business and succession planning
Building a business is an admirable, challenging, and fulfilling way for many people to build wealth. Aside from the complexities of running a business, there are financial decisions to be made that ultimately impact the owners and employees of the company. Working with an advisor that can help navigate these issues is key to maximizing the bottom line for a self-employed person. To accomplish this, we work closely with your CPA and come up with strategies year in and year out depending on the trajectory and path of your company. In addition, when it comes time to think about succession planning, we can serve in a crucial role as it relates to the financial transaction of handing your business over to the next generation or selling it entirely. The tax impact of such a transaction, if not done correctly, can be huge.
One example of how we can help is to help you identify the best retirement plan option for your company given your level of income, number of employees, type of company, etc. There are a lot of options for self-employed individuals and picking the right one is a big part of maximizing your bottom line.
Another example of how we help our self-employed clients is being a sounding board during the sale of your business. With us involved, we can help you better understand the impact of your long-term financial plan. Are you ready to walk away from work entirely? Or, do you want to continue to work? The dollar amount proposed and the ultimate goals you have will dictate whether this is a good move for you and your long-term financial plan.
Establishing college funding
If you have children and wish to help fund their college education, we incorporate this into your financial plan so that we help you better understand the impact of the amount saved year in and year out for both the college funding and your retirement goals. As parents, we often put our kids’ needs ahead of our own. With college planning and retirement planning, it is very important to consider the balancing of each so that you can achieve both goals without sacrificing one or the other.
Establishing and managing your portfolio
Once we have reviewed your financial information and put your plan together, from there we determine the best path forward for your investments. Your investment portfolio is really the facilitator of all your financial goals. While the investments are incredibly important, it is certainly not the most meaningful aspect of your financial journey. The meaningful part is whether you achieve your goals or not. By building out a portfolio that supports this and your risk tolerance, and then managing accordingly through the years, it serves as your major resource for achieving your goals.
Major life changes
Building a financial plan is not a one-time project. It is a living and breathing process that can and should be updated as you go through life. We can project to the best of our abilities, yet life often throws us curve balls along the way. Any time you are in the midst of a curve ball, such as a divorce, birth of a child, marriage, death of a loved one, sale of a business, etc., consider it an opportunity to reevaluate your financial plan and update it accordingly.
Monitoring your financial plan over time
Finally, as mentioned, financial planning is not a “set it and forget it” exercise. Life happens, laws change, and so do people. Your financial plan should evolve as life evolves. An advisor with a holistic approach will monitor your plan year in and year out so that if any changes need to be made along the way, it can be done in a timely manner.
Holistic financial planning is tailored and personalized to you. The main advantage to this approach is that it provides a big picture of where you stand today, where you want to go, and how to get there in a realistic way. Anything that is related to your financial well-being should be top of mind for any advisor that takes a holistic approach.
If you think holistic financial planning is the right path for you, ML&R Wealth Management is here to help. We will provide financial advice for all aspects of your life based on your tailored plan. As you go through your financial journey, we will be there for every step along the way so that you can ultimately achieve your goals and be able to focus on what matters most to you.