Holistic financial planning is a balancing act in which the customer is the focus

When a client seeks financial planning advice from Brian Kennedy, Kennedy wants to know everything – his goals, his dreams – and whether he has a will, power of attorney, and a variety of other documents that may not at first glance have to do with finance Security.

“It means taking all of these things and putting them in a funnel, and that’s where I analyze it from,” said Kennedy, founder of KCA Wealth Management with offices in Camp Hill, Carlisle and Hershey. “Then I identify missed opportunities and look for gaps. And we talk about it and how we can close the gaps so that they become more successful. “

The process is known as “holistic financial planning,” Kennedy said, adding that the concept has been around for years but not all consultants do it to the fullest. During the pandemic, holistic planning got stronger as people began to ponder their will, beneficiaries of insurance policies, and a power of attorney – the person who makes financial decisions if a customer becomes incapacitated for any reason.

These are just a few aspects of what the holistic approach can cover. According to a June 2019 article by Investopedia, an online financial website based in New York, the holistic planning process could include coaching clients on how life-changing events like divorce or job loss can affect their plans.

“Not only does the process provide better inputs for a financial model, it also helps build a closer relationship,” the article says.

Kennedy divides the process into three phases: life planning; the financial services aspect; and then implementation.

Life planning can boil down to a number of questions about how someone likes to spend their time and what is important, he said. Questions about travel or volunteering are part of the equation.

“We can talk about money all day, but if you have no reason to spend it or do anything with it, what’s the point of it, right?” Kennedy explained. “So we get the life planning aspect first.”

The aspect of financial planning includes collecting all documents and analyzing them. The obvious ones are investment and savings documents. Estate papers and legal papers add another layer, as well as a look at all insurance, including life, health, auto and property. He will also collect tax returns and the sources of all income and expenses, among other things.

Implementation includes advice on the best ways and investment strategies to achieve the overall goals. When he takes a holistic view of the bigger picture, he may see gaps in insurance coverage or estate planning or legal documents that lead him to recommend a client to meet with an attorney or CPA to fill in the gaps. One problem he often sees, for example, is that wills in the various insurance and investment documents often do not match the beneficiaries.

He stressed that he was not a lawyer or an accountant. But he often finds that his clients, typically 50 and older, haven’t spoken to an attorney or CPA to tie any dots up.

“You need a team of people,” Kennedy said, adding that coordinating these discussions helps make the planning holistic. “Everything is a big circle. The problem is that a lot of people didn’t join the circle. “

A power of attorney can, for example, save trouble when people get sick and need someone to make decisions for them. “If you can’t get the money in an emergency, what is the use?” he said. “That’s the part that some people overlook.”

He charges a one-time fee for the overall plan, which is largely based on the complexity of the individual situation. Regardless, it will take a long time to make sure that all the boxes are checked. And the fee covers all meetings, phone calls, emails and “everything and what we have to do”.

He said he would understand if some customers embrace the plan and buy products themselves or go to other financial advisors for the insurance and investment products he might offer.

“Some customers want us to execute the plan and they go out and buy products or see other advisors, which is fine,” said Kennedy. “They basically hire us because we find the opportunities and gaps that have been missed, overlooked, or not discussed at all.”

Brian Trout, Assistant Professor of Accounting and Finance at Millersville University, teaches several courses, including one on financial planning. This course touches on a wide range of topics including taxes, investing, insurance, budgeting, the basics of buying home, and the behavioral component of personal finance.

The behavioral component examines the dynamic that people often do not act rationally when it comes to finances. His goal with the students is to at least understand their prejudices – risk aversion, for example – so that they can counteract predispositions.

“We are human and we don’t always act rationally,” he says, adding that a financial planner helps, especially when the consultant is entrusted with all the details thanks to the holistic approach. “The look at the details is an added value because it helps with the emotional aspect.”

“The idea of ​​creating a plan and starting with a goal in mind, with all of the personalized values, is a good one. Many of these things shouldn’t be decided in silos, ”said Trout. “If you have a consultant who knows what you value and what you want, then he or she can help you to keep your head in difficult times and prevent decisions that you may regret.”

The generation raised during the late 2000s downturn are more conservative and skeptical than previous generations about what affects their investments in the future, Trout said.

“No matter how old you were during the Great Recession, you saw how many things happened to the market and your parents,” he said. “That inevitably shapes our thinking about money.”

For example, some studies show that younger generations are more interested in travel when they are earlier in life, he said. A counselor who understands these needs can help better.

“Their values ​​are different and they want this to be built into their plans,” Trout said. “And this is where holistic financial planning would help ensure that you are investing in ways that can help.”

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