Holistic Financial Planning as a discipline has come increasingly to the fore within sectors of the UK’s IFA community where a client’s whole circumstances are taken into account in the construction of a plan to cover a broad spectrum of need both current and into the future. The difficulty with holistic planning is that there is seldom a single plan that will meet all needs exactly, consequently requirements must normally be prioritised and compromises made. The job of the holistic planner therefore is to present options and recommendations in a joined-up way, which together are flexible enough to allow adjustments to the plan as changes occur in client requirements, tax laws and investment conditions. This type of planning is normally, although not exclusively, provided by well qualified individuals typically holding advanced financial planning and taxation exam passes and will more often than not be on a fee only basis. Private client departments of high street banks and merchant banks have historically offered a service designed to look and feel like holistic financial planning, however high targets and the need for uniformity of recommendations often means that these organisations struggle to provide a planning service that is truly individual in nature. The high street banks did make a half hearted attempt approximately four years ago to re-establish control of this market sector. The banks lost their dominant position when their culture changed from being client and service orientated to sales commission and target driven. And they failed to re-establish themselves because other more nimble players were doing it better. The inability of the banks and other large financial institutions to provide a personalised investment and financial planning service to higher net worth investors has presented a huge opportunity to smaller specialist firms such as Brooks Macdonald over the past decade. As an indication we have grown from zero client funds under management to over £350 million in a little over a decade with an average client portfolio size now standing at circa £500,000. Practically speaking holistic financial planning services should be provided by advisers who in addition to possessing the right level of knowledge start each new client meeting with no preconceived ideas about the client’s needs and or what solutions might be appropriate. Holistic planning is a very different animal to independent financial planning. In reality much advice is simply a pre-ordained set of recommendations or a limited set of options the benefits of which the firm’s sales partners must sell to each investor as a personalised plan. For example one firm may recommend that all of their clients put their capital into an offshore trust, which is used to purchase an insurance policy from where the capital is invested into a range of investment funds. The justification used on each occasion being tax efficiency and asset protection. In automotive terms this is like everyone driving the same make and model of car, it’s a great bit of marketing, but it will never be right for everyone as we all have different budgets, tastes, priorities and requirements. Many investors will benefit from a holistic financial planning approach as they will see fairer charges, increased access to capital, better terms and bespoke investment selection.
