When it comes to wealth management, many investors are missing the broader picture. Many working people tend to invest in what they know – stocks or bonds, for example – and skip other investment vehicles they’re not as familiar with. They may even seek investment advice and receive it…from someone who either has an agenda to push a favored investment product or does not have enough knowledge to help broaden the investor’s strategy.
It’s important to note, however, that one-dimensional financial assistance can result in lagging results, delays in retirement, and simply not making the most of investment assets.
Why You Need Holistic Financial Planning
Holistic financial planning is a way to examine all aspects of an investor’s personal and financial life before creating a plan for investing. A good holistic financial plan will first examine where the investor is today and where they want to be in the future to create a detailed “master plan” to help the investor get there.
Seeking an advisor who uses a holistic approach to financial planning is a great way to build a comprehensive strategy that will include the investors’ values, goals, and his /her experiences with money management. This contrasts rote investment approaches that might focus on individual life stages or specific products that are “typical” for someone in a certain demographic, which seldom results in a properly customized approach. Instead, holistic financial planners examine every aspect of an investor’s financial life and help them make the most sensible choices.
A Top-Down Approach to Investing
One of the ways holistic financial planning can be differentiated from typical planning is that it operates using a top-down approach, rather than a bottom-up model. In working with a holistic financial advisor or planner, investors use their goals as the driving force to create unique investment solutions. Specifically, a holistic financial advisor will help investors determine what their goals are, where they are on the journey to achieve them, and what they can do to speed up the achievement of the goals. This might mean making small changes scrapping an existing investment strategy in favor of a new one…or anything in between.
One Size Does Not Fit All
Advisors who use the bottom-up approach are likely focusing more on how much the client can afford to invest, or steer investors toward certain types of products. Often, these “bottom-up” advisors will rely heavily on numbers such as the investor’s age or income to make assumptions about their financial plans and determine how much they need to save or invest to reach a specific goal.
A Comprehensive Strategy Tailored for the Investor
Investors should look for an advisor who is willing to work from the top down, evaluating plans, expectations, current assets, estate wishes, and more to devise a holistic investment strategy. Ideally, investors should seek financial advisors who can help them run through various options and scenarios – the whole “big picture” — to create the best possible approach.
Arizona-based Prime Wealth Advisors is a full-service tax, retirement planning, estate, and wealth management firm that provides clients with a holistic approach to investing and planning. Call 623.77.PRIME or visit our website for more information.
