The Holistic Approach: A Guide to Comprehensive Financial Planning
Comprehensive financial planning takes a holistic view, addressing all aspects of a client’s financial and wealth management needs. In comprehensive financial planning, advisors intimately understand a client’s goals, values, risk tolerance, etc. The key to not being transactional in your financial advisory practice is to use digital experiences to clearly explain your client’s financial health.
Asset-Map is an invaluable tool for financial professionals to deliver comprehensive financial planning services, starting with the whole family, extended relationships, and the current state of all financial decisions. It uses innovative visualization and mapping tools to engage clients and help them better understand the financial planning process.
In this article, we will review the benefits of comprehensive financial planning, its key components, how to integrate technology into the planning process, and how to solve common challenges.
The Benefits of Comprehensive Financial Planning
Why would a certified financial planner (CFP®) or financial advisor decide to provide comprehensive financial planning services? There are several key benefits of this type of financial planning, including:
Enhanced Client Relationships. By being involved in every aspect of a client’s financial life, comprehensive financial planning can strengthen client relationships. Build long-lasting trust with this holistic approach and provide comprehensive planning services that touch on all aspects of a client’s financial future.
Improved Client Outcomes. Looking at the whole picture and making strategic recommendations can support client outcomes. This approach promotes both better financial outcomes and improved client satisfaction. Net Promoter Score (NPS) is typically much higher for advisors providing comprehensive financial planning services vs. needs-based or transactional planning.
Risk Mitigation. In traditional financial planning, tax and legal ownership are too often ignored. Comprehensive financial advisory services help clients mitigate risk and avoid costly mistakes by taking a holistic view. This involves tax planning, estate planning, insurance, investment management, and other risk factors.
Key Components of Comprehensive Financial Planning
Comprehensive financial planning has a handful of components, ranging from goal setting to cash flow management. We’ll highlight each of these financial objectives in more detail below.
Goal Setting. Comprehensive financial planning starts by helping clients set clear and achievable financial goals for themselves. These goals will be the driving force behind future financial planning sessions and play into the strategic recommendations an advisor will make.
Financial Assessment. A thorough financial assessment helps both the advisor and client understand the client’s current financial situation. Using Asset-Map, advisors can create easy-to-read financial assessments to serve as a baseline for comprehensive financial planning.
Risk Management. Managing risk should be a top priority when creating a comprehensive financial roadmap. To manage risk effectively, ensure clients have enough liquidity and proper insurance coverage, have diversified investment portfolios, and use hedging techniques to limit economic downturn exposure.
Retirement Planning. Retirement planning is another huge part of comprehensive financial planning. This involves retirement savings, investment strategies, and retirement income distribution planning. Additionally, you will need to weigh the pros and cons of IRAs and the benefits of employer plans, such as contribution matching and loan provisions.
Estate Planning. Estate planning is essential for protecting assets and minimizing taxes to ensure an intentional legacy. Naming beneficiaries, drawing legal documents like wills and trusts, and planning business succession are all part of estate planning. This helps guarantee that a client’s wealth and assets are passed on to future generations. Utilize Relationship Maps within Asset-Map to highlight both immediate and extended family members, business associates, trust relationships, and other relevant connections to discuss matters like generational wealth transfer, estate planning, or business succession plans.
Tax Planning. Tax planning explores strategies for minimizing tax liability and maximizing after-tax returns. These strategies can include using tax-advantaged accounts like 401(k)s, IRAs, etc., allocating assets across taxable, tax-deferred, and tax-exempt accounts, holding investments for lower capital gains tax, and strategic charitable giving. In the case of IRAs and ROTH IRAs, considering the contingent beneficiaries and what state they live in can make a difference in distribution.
Insurance Planning. Ensuring adequate insurance coverage is an extremely important part of comprehensive financial planning. Different types of insurance policies each have options for longevity, conversion, and adaptability. Financial advisors should consider a client’s life insurance, health insurance, disability insurance, long-term care insurance, and property and casualty insurance.
Debt Management. In 2024, Americans carry a whopping $1.142 trillion in credit card debt. Managing debt—whether in the form of credit cards, student loans, etc.—is necessary for financial freedom. Financial advisors can help clients reduce interest costs, lower monthly payments, and improve their financial health overall.
Cash Flow Management. Effectively managing cash flow and budgeting ensures that clients are setting themselves up for success in the future. Cash flow management involves income tracking, expense tracking and categorizing, budgeting, prioritizing savings and investments, and debt management.
Integrating Technology Into Comprehensive Financial Planning
Technology is a crucial component of comprehensive financial planning because it helps the client engage with the advisor and their recommendations. Digital tools like Asset-Map, Wealthbox CRM, and Orion can enhance your services as a modern financial advisor.
Using Asset-Map for Comprehensive Financial Planning
Asset-Map is a premier tool for financial advisors to manage comprehensive financial planning services using innovative visualization and mapping features. Read on to learn how financial planners use Asset-Map to streamline their services.
Centralized Data Management. Asset-Map helps advisors organize and manage their clients’ financial information in one place using a singular view of the household. The Asset-Map Report serves as a detailed visualization of a household’s financial picture.
Goal Setting and Tracking. Financial advisors can help clients set and track goals with the Target-Maps feature, monitoring progress with visual representations. Target-Maps analyzes specific scenarios to see how well-funded a client would be in both planned and unplanned situations.
Risk Assessment and Management. Asset-Map can also assess and manage risk through its Signals feature, which serves as a “check engine light” for financial wellness. With Asset-Map, you can anticipate your clients’ potential financial weak spots before they occur to mitigate risk.
Scenario Planning. Target-Maps can also be used to create different financial scenarios and analyze potential outcomes, helping clients make informed decisions. Using Target-Maps, financial advisors can project the current funding level to meet goals such as retirement and education and calamity situations like loss of life, disability, and long-term care outcomes.
Client Communication. Leverage Asset-Map to facilitate communication and collaboration with your clients, providing a secure platform for sharing information and discussing financial plans. Using Asset-Map’s Client Portal, you can collaborate on read-only views of the advisor's current understanding.
Common Challenges in Comprehensive Planning
What are common challenges CFPs and financial advisors face in comprehensive planning? Complexity, client resistance, and time constraints are three of the most common challenges in this space.
Complexity. Comprehensive financial planning can be highly complex. Balancing the various areas in a holistic plan takes tact and skill. Simplifying the process is important to make it more accessible to clients. Helping clients see and navigate their own complexity using an Asset-Map Report is a great place to start.
Client Resistance. To overcome client resistance to change or advice, focus on educating clients on the long-term benefits of their actions today. Build trust and rapport through clear communication and candid conversations. Asset-Map makes it easy to engage all parties in the conversation, not just the financial engineers in the room.
Time Constraints. Effectively managing your time is key to delivering a comprehensive financial plan and providing personalized attention to each client. According to Kitces, traditional financial plans take a median of 10 hours, whereas Asset-Map can be effective in less than an hour. This makes Asset-Map a more scalable and approachable option.
Deliver Comprehensive Planning with Asset-Map
Comprehensive financial planning delivers a holistic action plan for clients, helping enhance client relationships, improve client outcomes, and mitigate risk. From goal setting and financial assessment to debt and cash flow management, comprehensive financial plans take everything into account.
Asset-Map is an incredibly valuable tool for financial advisors seeking to engage clients and enhance their services. With scalable, approachable, and collaborative technology, Asset-Map simplifies financial planning for improved client comprehension.
Sign up for a free demo of Asset-Map today and start providing your clients the support they need.