According to an article by FTAdviser, just 16% of independent financial advisers are deemed to be “holistic” advisers, analysis by the Financial Conduct Authority has found. While the definition of “holistic advice” can vary, broadly speaking, it’s where a financial planner considers every element of their client’s wealth instead of dealing with a wealth need as an individual issue.

As the different elements of wealth typically dovetail into each other, working with a planner who uses a holistic approach could help your clients achieve their financial goals more quickly. Furthermore, a holistic approach could also ensure that action taken to solve an issue does not create a problem in another area of your client’s finances, such as an unforeseen tax liability.

Read on to discover more about holistic financial planning and three important ways it could provide your client with peace of mind about their wealth.

Holistic financial planning typically uses a top-down approach

Holistic financial planning uses a top-down approach that considers your client’s wealth, goals and lifestyle instead of concentrating on an individual need. A planner who uses a holistic approach is more likely to create a financial strategy that helps your client identify:

• What their life goals and aspirations are
• What their financial situation is and how close they are to meeting the goals
• What actions need to be taken both now and down the line to achieve them.

As good financial planning is about helping your clients achieve their aspirations, a holistic approach starts with their assets, investments, pensions, liabilities and expenditure. This creates an accurate overall view of their wealth, which the planner will then use to help your clientsattain their life goals and achieve peace of mind.

A bottom-up approach, on the other hand, is more likely to focus on how much your client can afford in order to meet a financial need or solve a problem. This might mean, for example, that the adviser concentrates on your client’s earnings to create a strategy that achieves a particular goal, without taking a broader view of how it could affect other areas of their wealth.

We will look at this in more detail now.

A holistic approach ensures a more joined-up approach to financial advice

If your client invests in the stock market to meet a financial goal, they could become liable to certain taxes. This includes Inheritance Tax, which is typically charged at 40% on any element of your client’s estate that’s exposed to it.

This could substantially reduce the amount your client may be able to leave to loved ones.

As a holistic financial planner considers every aspect of your client’s wealth, they will understand whether your client could face an IHT liability if the investment performs as hoped. If this is the case, the planner might recommend investments that are not typically liable to IHT, or an intergenerational wealth plan that could reduce, or even negate, exposure to the tax. 

While ensuring every element of your client’s wealth works together to help them meet their goals in the most tax-efficient way is important, it’s not the only benefit of holistic financial planning. Let’s look at three more important reasons your client might want to consider working with a holistic financial planner. 

1. Helps provide peace of mind

In addition to considering your client’s wider financial situation, a holistic planner will typically aim to develop a long-term working relationship. As a result, the planner can help them identify future financial opportunities (and risks) that need to be considered so that your client can meet their financial objectives as quickly as possible.

Furthermore, as the planner has a clear understanding of your client’s situation, they can provide financial coaching that could help provide greater financial wellbeing. According to a study by Royal London, 34% of 4,000 customers who were questioned said having access to financial expertise made them feel more confident and in control of their wealth.

Furthermore, 32% said having contact with an adviser provided peace of mind. 

2. Provides increased flexibility to adapt to life events

Creating a holistic financial strategy means that your client will have a clearer understanding of their options when life events happen. Whether it’s a new job, divorce or a wedding, your planner will be able to help your clients understand their financial options so that they can continue to meet their life goals and aspirations. 

3. Helps ensure your client’s investments remain on track

Once you’ve invested your money, a holistic financial planner will monitor its performance and have regular meetings with your client. This provides your client with a better understanding of what’s happening in the markets, and any options they may want to consider. 

As a result, your client could have more confidence around their wealth, which could help them make better decisions and avoid ones they later regret.

Get in touch 

If you would like to discuss how we use a holistic approach to the advice we provide, please contact us. We can be contacted on hello@ardentuk.com or by calling 01904 655 330 and would be happy to discuss it further with you or your client directly.

As an award-winning financial advice company that was a 2022 VouchedFor Top Rated firm, you can be sure that your clients will receive excellent advice and high-quality service.

Please note

This blog is for general information only and does not constitute advice. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. 

The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.