Why I Believe in Holistic Financial Planning and You Should Too

When you engage the services of an Independent Financial Adviser (IFA) you may receive two different types of service, transactional or holistic, in years gone by you probably wouldn't even be given the choice odds were that the adviser you were dealing with probably only offered one kind of service and that's what you received. If you have seen an IFA in the past, do you know what type of service you received?

Transactional or Holistic Advice?

Meat Loaf

Traditionally Independent Financial Advisers, in the UK at least, have offered primarily a transaction based service. "Transaction" doesn't sound like a nice word, it sounds like the kind of service you get from Tesco, and I bet you are thinking that's not what I get from my adviser, "we have a good relationship, we exchange Christmas cards and stay in touch, I know I can turn to him/her when I need help."

Odds are however that you are receiving a transactional service, let me tell you what a transactional service is so we can see if that is what you currently receive. In a transactional relationship, you have a problem, concern or issue and your adviser pops a long and helps you work out or resolve the matter usually by finding the best financial product available to take care of it. Then you will go back to exchanging Christmas cards etc. until you need help again, or the adviser makes a note to get back in touch when your policy comes up for renewal or some other key event like the end of a deal he arranged for you. Does this sound like your adviser relationship?

Now don't get me wrong, I have no problem with offering transactional based financial advice the majority of my clients, many of whom I now consider friends, come to me on a transactional basis they have a problem and I solve it everybody is happy.

But there is another way, holistic financial planning, the key word here being planning. When you get holistic advice your adviser takes a big picture view of your finances and your personal goals and aspirations, he or she deals with the issues a transactional adviser would but in the context of the "bigger picture". When it's over the adviser and you will agree a schedule for him or her to return so that you can carry out financial reviews that are not based around solving a problem or selling you a new plan or policy, at these reviews the adviser will give you advice on issues that will often be ignored by a transactional advice process, for example which funds your company pension plan should be in, a transactional adviser will rarely give you advice on something like that as they wont receive a commission from your employer, and there is no possibility of a product sale, so they would have to charge you a fee just for that.

If holistic advice is so good, then why do people still opt for a transactional service ?

I have pondered this one for quite some time, firstly I think that there are a large proportion of people who either don't realise that holistic advice exists as an alternative, or they think that they are already receiving it.

I also think that engaging an IFA to come and see you at regular intervals is perceived as something that only the very rich can afford to do, when in reality it is not the case at all. Added to this of course many people don't actually want to deal with their personal finances but prefer to wait until an actual problem appears before they do anything!

What are the big advantages of going down a holistic planning route?

There are a number of common sayings that cut straight to the core of why I believe in the long term everyone would be better off taking a holistic approach to the their financial planning, "Failing to plan is planning to fail", "It pays to plan ahead. It wasn't raining when Noah built the ark." and my personal favourite "If you don't have a plan for yourself, you'll be part of someone else's" There is a reason that saying's like this fall in to common day to day language, it's because we all know they have truth in them whether we want to admit it or not. Think about it does a General ever go in to battle without a plan? Does any business big or small ever succeed without a business plan? Why should the long term financial security and well-being of you and your family be any different? As Thomas Edison said "Good Fortune is what happens when opportunity meets with planning."

I know what you are probably thinking, I don't really have enough money or income to need holistic planning this sort of thing is for rich celebrities and not for little old me. Well think about this, income is not the be all and end all of financial planning, if you doubt me on this just think for a moment about people you know in your own life maybe they're a little older than you are now, but they've worked in similar kinds of pay brackets as you do, and they are comfortable financially maybe more comfortably off than you are, maybe they're thinking about retiring early or they have a couple of holidays a year. Do you think they got in to that position by accident, or do you think they arrived at this position because they have taken care of their finances over the years?

If income were everything we wouldn't have an endless list of celebrities with mega incomes going bankrupt, go on Google "bankrupt celebs" and see what you come up with. I found this little list, Kerry Katona, Stephen Baldwin, Gary Coleman, George Best, Larry King, Marvin Gaye, MC Hammer, Toni Braxton, Don Johnson, Henry Ford, Meat Loaf, Michael Barrymore, Mike Tyson, Bill Roache, Burt Reynolds...... the list goes on and on. All of these people have or had mega incomes but things still went wrong for them many of them learned hard lessons and went on to make it all back. Donald trump for example who had to put his Casino business in to bankruptcy in 2004 has said "I plan for the future by focusing exclusively on the present." that quote more than any other I have come across sums up holistic financial planning, plan for what you want in the future based on what you have now!

In the end if you want your financial adviser to come and see you to make the best of your available resources to help you achieve your long term goals and work with you to regularly review the situation and help smooth any bumps in the road, without needing to sell you something to cover the time they spend doing, then holistic financial planning is certainly the way you should go.

If you would like to discuss anything in this article then please feel free to get in touch.

Why I Believe in Holistic Financial Planning and You Should Too

John Bloomfield is an Independent Financial Adviser, who works with individuals, families and business's that wish to organise their finances now to achieve their goals in the future.
http://www.pwfs.co.uk

Tags : all clad stainless steel 10 piece cookware set calphalon tri ply stainless steel 13 piece