Many financial advisors seek to provide comprehensive financial planning — with the emphasis on “comprehensive.” Some prefer to say that they adopt a “holistic” approach.
XAutoplay: On | OffRegardless of which word they use, these advisors analyze myriad elements of a client’s financial life. Along with managing investments, they can assist with taxes, insurance, retirement planning, and saving and spending habits.
Why do financial advisors take pains to highlight their wide-ranging service offerings and eagerness to wear so many hats?
Blame the robots.
The growth in automated portfolio management platforms over the last decade has led independent advisors to set themselves apart. Algorithm-driven asset allocation models may take the emotion out of investing, but human experts strive to fill a wider array of financial needs while delivering customized service and, when appropriate, a bit of hand-holding or a shoulder to cry on if tragedy strikes.
As robo-advisors proliferate, savvy financial planners know that they must add value. Underscoring their commitment to navigate virtually all aspects of a client’s financial future helps distinguish them from their digital rivals.
“It’s a differentiator in that we offer this expandable service to fit the client’s needs,” said Andrew Crowell, a Los Angeles-based advisor. “It’s not one-size-fits-all. Clients’ needs are different, and our offerings have to be malleable enough to accommodate all of them.”
Positioning your practice as “comprehensive” or “holistic” presents a series of challenges. For starters, you need to explain what that means. After all, some people assume that an advisor’s primary job is to steer them into market-beating investments.
“It’s rare that a client walks in on Day One and says, ‘I’m looking for a holistic advisor,’ ” Crowell said. “In the first meeting, we’ll frame the discussion. If they come in with a narrow focus, I’ll tell them we can help with that, but I’ll also want them to know we offer our own suite of services.”
For enterprising financial advisors, that suite of services keeps growing. They may couple their investment advice with estate planning, insurance, and risk management, and even life coaching, fraud prevention and grief support.
Advisor As Quarterback
Simple, eye-catching graphics double as an educational tool for some advisors. At Signature Estate & Investment Advisors, advisors show clients an eight-tiered pyramid diagram that represents what the firm calls its “holistic wealth management process.” With investment management at its base, upper levels include business advisory services and wealth counseling.
“A lot of us went to UCLA and we subscribe to (former basketball coach) John Wooden’s pyramid of success,” said Theodore Saade, a certified financial planner at the firm’s Los Angeles office. “It’s the framework we use to say, ‘This is what we do.’ “
Along with educating clients, financial advisors who promote their comprehensive approach need to acquire the in-house expertise to follow through. If you’re going to market your firm’s long list of services, you must possess the specialized knowledge to deliver — or partner with outsiders with a shared interest in serving your clients.
Willie Schuette, an advisor in Avon, Ohio, views his role as a “quarterback” who guides clients forward in their financial lives. He works closely with estate planning attorneys and tax specialists to round out his practice.
To expand his financial acumen, Schuette joined a firm that provided a mentor program. Paired with senior advisors at the firm, Schuette picked their brains as they coached him on different technical topics, from taxes to practice management.
“It was a kind of finishing school for me,” he said. “It polished my skills. As my needs changed and I wanted to learn something new, I got a different mentor.”
In recent years, Schuette has added Medicare-related financial planning to his repertoire. He helps clients manage their health care costs while they’re still in their early 60s — before they qualify for Medicare — to determine whether they should buy Medicare supplement insurance policies. His interest in Medicare piqued when clients kept fretting, “How am I going to afford health care in my retirement?”
“It’s all about continual learning,” he said. “If I didn’t develop Medicare expertise, I’d have to partner with an outside expert.”
Invest In Knowledge
In some cases, financial advisors build on their investment know-how to branch off into more-esoteric areas. This can prove both intellectually stimulating and beneficial for their clients.
After more than 25 years as an advisor, Anthony LoCascio decided in the late 2000s to delve more deeply into tax planning. A certified financial planner in Clinton, N.J., he became an enrolled agent with the IRS and grew especially interested in charitable lead trusts and other philanthropic-planning vehicles.
“It sets me apart from other advisors,” said LoCascio, who burnished his tax credentials after making two key observations.
First, he says that many high-net-worth individuals “have an inherent anxiety about taxes.” He figured that as their longtime advisor, he could alleviate their tax concerns while continuing to manage their investments.
Second, he noticed that even when his clients conferred with their accountants, they didn’t necessarily come away with what he calls “in-depth, proactive tax planning” strategies. He concluded that he could further differentiate his firm by filling the void.
LoCascio’s efforts to strengthen his tax knowledge have not come cheap. He estimates that he spends an average of about $20,000 a year to stay current on tax rules and strategies, which includes traveling to tax seminars and paying membership dues to professional groups.
Because new clients may not understand the nature of holistic financial planning, advisors often follow a formal onboarding process. They may start by asking newcomers to complete a detailed questionnaire about their attitudes about money, financial goals and family dynamics.
From there, they may craft a multipage financial plan that they present to clients in a thick binder with a long list of action steps and recommendations. Ideally, clients are impressed with the extensiveness of the process and the scope of subjects — from elder-care costs to health-and-wellness tips — covered in the plan.
But not all advisors follow the same playbook.
“Having a client on Day One sit down and go through a three-hour discovery process won’t work for everybody,” Crowell said. “If you go to the doctor with foot pain and that’s your initial need, the doctor has to address that need first. If the doctor is effective, the relationship naturally expands over time.”
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