What is Holistic Financial Planning & Why is it Important for you?

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27-Mar-2018 16:33:01
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Reading time: 2 min
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The Holistic Approach

John & Ria are an expat couple, looking to save for their retirement.

They meet 2 financial advisors; Smith and Shane to understand how to go about their retirement planning. 

Smith does some calculations based on their age and discretionary income and recommends a regular savings plan for the next 15 years.

While the Shane spends a lot of time asking many questions like; When, Where, Why and How; to understand John & Jane's retirement goals/dreams, net-worth, their other financial priorities and the impact of inflation. 

He helps the couple build their first financial plan, with a detailed action planned for each goal and an efficient review strategy to accommodate the changing life situations. 

Based on the financial plan, Shane recommends an aggressive investment plan for the next 5 years, to help the couple make the best use of the tax free income, while they are in UAE.

Shane's approach is holistic, based on the real-life plans aligned to the financial aspects of John and Jane. 

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Flaws in the Ad-hoc approach

I have met many expats who have invested in a 25 years savings plan, without considering their investment horizon and future cash flow needs. 

They usually end up surrendering their investment early, paying a huge surrender charge and losing a good portion of their capital invested.

Most expats in UAE buy an Insurance or Investment plan ad-hoc, without aligning them to an established financial goal or a need.

They usually do not calculate and comprehend the impact of such investment/insurance on their financial goals, future cash flow and potential changes in their residency.

Such investments usually do not sustain due to lack of motivation, change in financial situation or changes in investment attitude or horizon.

Very few expats take time to sit with an Independent Financial Advisor to review their overall financial situation, goals, tax implications, investment horizon and attitude towards investment.

Life Domains

Our lives consist of many domains like; Vocational(Work/professional), Financial, Marital, Parental, Social, Spiritual, Physical etc,

Your success as a person depends largely on the collective success in all the above domains, as they are inter-related.

For eg: Your physical/Mental condition has a big impact on your work, family and on your social life

Stress at work or working long hours and ignoring your family can impact your Marital, Parental, social and all other aspects of your life.

You cannot ignore one or more aspects and achieve happiness and peace of mind in your life.

Similarly, your Financial Success depends on collective success in all financial aspects of your life!. 

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What is Holistic Financial Planning?

Holistic Financial Planning goes far beyond buying or selling financial products. It helps you make projections and money decisions after taking into account every dimension of your life, like;

  • Your Income, Expenses & Net-worth
  • Your debts and repayment strategy
  • Life and health insurance needs
  • Your Retirement Goals & Income Planning
  • Your children and the goals/dreams associated with them
  • Provision for your aging parents and other financial priorities
  • What kind of legacy you want to leave for your family
  • How good you are at saving and investing
  • Your previous experience at investing 

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Summary

A Holistic Financial Plan helps you look far into the future to optimize your income and wealth in order to achieve success in all aspects of your finances. It is not an event, happening just once, but is process constantly evolving. 

The plan not only helps you set a course of action, it also helps you stay calm and remain focussed to your goals during volatile market situations.

Click here to learn Investment lessons from the story of the Deaf Frog

As an Independent Financial Advisor, I help my clients set up a holistic financial plan at the outset and recommend suitable solutions matching their needs and goals.

I can help you build your financial plan based on your goals and dreams and review it regularly to ensure we are progressing towards achieving them.

Arrange a Free Consultation to set the ball rolling... 

Click Here to Arrange a Free Consultation

 

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