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What Does it Mean to Provide “Integrated Planning for Life”?


Google the word “integrated financial planning” and you will receive more than three million hits. It’s not surprising, because the notion that true financial planning could be accomplished on anything other than an integrated basis is preposterous.


If the prevalence of the term “integrated” is any indication of the industry’s recognition of its importance in crafting a successful financial plan, one might be forgiven if one assumed that all financial planning is accomplished on an integrated basis. Experience tells us otherwise.

No one quite knows exactly when the term or process of “financial planning” originated; but at least one writer credits a gentleman named Loren Dunton who, at a meeting of 13 like-minded people at O’Hare Airport in Chicago in 1969, started the Society for Financial Counseling Ethics.

Prior to that time, the industry wasn’t much more than stock brokers and insurance salesmen selling their products. Forty years later, sales still play a prominent role in compensating some planners.

There is nothing inherently wrong with a method of compensation based on “the sale” as long as 
the planner remains focused on the promised objective: integrated financial planning in the client’s best interest.

When choosing a financial planner, satisfactory answers to two questions should be paramount in the decision. First, is the planner truly interested in going through the entire financial planning process with you? It’s impossible to accomplish true financial planning in anything other than an integrated fashion.

Yet there is much in the industry touted as such that upon closer examination might more accurately be described as siloed insurance planning, retirement planning, tax planning or very often, simply investment planning. As American psychologist Abraham Maslow said, “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”

In an interview with a potential financial planner, inquire about the planner’s approach and listen carefully to the answers. You should be hearing a process described that is intently focused on your goals and objectives.

Should you choose to engage that planner, you should expect to provide copies from a comprehensive list of documents and be asked a wide range of very personal questions.

From all the questions, you may wonder at some point if this person plans to write your autobiography; but this is all necessary information for the planner to approach your situation on an integrated basis.

For example; it may make a difference if your parents are wealthy. That information could affect your current family gifting strategies, education funding, investment approach and a whole host of other actions. In an integrated approach, virtually no piece of information exists on an island.

Once the planner has sufficient data, he or she will begin the analysis. Much like putting together a puzzle, each discrete piece must be examined to see how it fits with the others. Should some pieces be turned or modified to work more efficiently with others? Are enough pieces present to complete the picture or are all of the pieces necessary?

This detailed analysis must take place before the planner can develop and present recommendations to you. Only after these recommendations have been communicated and completely understood can the implementation take place.

Don’t be surprised if you end up implementing strategies that you may have once thought unrelated to your goal. You came in looking for a better stock fund and ended up implementing a health savings account because when all your objectives were truly understood, the tax-free growth of such a vehicle beat the additional risk of the new hot stock fund. That’s integration.

After the identified strategies have been implemented, follow up should occur continuously. Whenever something occurs that changes a goal or objective, changes in strategy must be evaluated.

If you accept a new job on Monday and learn you and your spouse are expecting on Thursday, you should expect to have at least two conversations with your planner that week. Now, thankfully, change does not typically occur at such a rapid pace; but the point is that an integrated approach necessitates constant communication of changing life circumstances. The fact that the Dow rose 50 points the same week does not adequately address either event. This follow up is where many plans fall short.

Assuming you are fortunate enough to find a planner who understands the importance of an integrated approach to planning, a second critical question must be addressed.

Does the planner have the resources, expertise and capability to successfully address and integrate the various pieces of your plan? It’s not enough to be aware of the importance of integration, the planner must also be able to execute with a high degree of competence.

Can the planner bring together a high level of expertise in the following areas that may impact your plan:

  • Health care/Medicare
  • Investment analysis
  • Investment management
  • Company compensation plans
  • Qualified plans – retirement plans
  • Social security strategies
  • Risk management
  • Education funding
  • Intergenerational family wealth dynamics
  • Estate planning and related vehicles
  • Charitable objectives
  • Long-term care
  • Lifestyle portfolios
  • Legacy portfolios
  • Business planning
  • Ex-patriate taxation
  • Innovative income tax planning
  • Income tax compliance

Awareness of the need to address each of these areas is a step in the right direction. But you should also feel confident the planner and his or her team is knowledgeable in all of these areas.

An objective way to determine this is to turn to the marketplace. The planner’s offering in each area should be strong enough to stand on its own. While it remains true that comprehensive financial planning must 
be accomplished on an integrated basis, 
not everyone is seeking to engage in financial planning.

When someone needs a standalone service, the planner’s discrete offerings should be strong enough to compete in the marketplace. Many people simply want tax planning and compliance. Does the community at large engage the planner’s team for this service as well?

You’re much more likely to get top-notch expertise and service in a particular area from an organization providing that service to the public as a main service line rather than simply a back-office accommodation.

To whom would you rather entrust decisions surrounding your compensatory stock options; the planner who has assembled a team with some past tax experience just to accommodate you or the planner organization engaged by Fortune 500 companies to provide this planning service to their executives? Who do you think will be more current on the issues?

It is possible for a planner who is mindful of his or her own limitations in a critical area to enlist the help of third parties to address those areas.

In fact, this is preferred over a planner trying to provide services in areas in which he or she is unqualified. It is then absolutely essential, however, that constant communication between all parties involved in serving the client takes place and that each service provider attaches equal import to the client relationship.

Further, it must be agreed in advance who is responsible for sharing critical information. As a financial planning client you should not have to call three different parties to tell them that college tuition is coming due and you...

a) need a distribution from an investment account that
b) will need trustee approval and
c) will cause your tax liability for the year to be affected. The key is integration.

Finally, even if the team of separate service providers works seamlessly, it is important to identify any overlap in services and more importantly any overlap in fees. Life events and market fluctuations are going to occur regardless of how well one plans, but fees are one area over which the client has some degree of control. Overpaying for duplicative services (or simply overpaying) is an enormous drag on investment performance, one that is not often overcome in the long term.

Finding best-in-class services from a single provider is not only more convenient for you as the client; but oftentimes will make it much more cost effective as well.

Everyone needs a financial plan, whether you are just starting out or deciding how to best preserve what you have accumulated for future generations. You are more likely to accomplish your objectives with a clear direction laid out in a plan that considers all aspects of your life in an integrated approach.