In one of the more famous parables in the Changdogya Upanishads, an ancient Sanskrit text, a father demonstrates to his son the “oneness” of everything by dissolving salt into water, pointing out that the salt and water are still there, no longer separate, but something new. This perspective is, without a doubt, of the most important elements of financial planning, and yet still remains one of the most overlooked.

A financial plan is more than just the numbers in a brokerage or savings account.

Emergent Financial Services has a number of diverse clients, all with different perspectives, lifestyle choices, dreams, wants, needs, and circumstances. And all of these are different elements that manifest in their financial plans.

Who is an aspiring entrepreneur? A small business owner?  Who dreams of buying their first home? Who owns a second home? Who owns a boat? Multiple cars? Who has children with pre-college education needs? Will their children go to college? Will they abstain from higher education and start a business?

These are some of the questions we, as most financial planners, have to incorporate into our clients’ financial plans. A failure to view our clients holistically is like trying to look at just the salt or just the water; one is missing the whole.

For instance, a family that has two homes, one in which they’re living and a second home in the mountains as their summer “getaway” place, is already invested in the real estate sector. Having a home is an investment. However, if that family goes straight to a robo-advisor with no financial planning, or uses a financial planner that doesn’t implement the holistic view, then no one will properly evaluate this important fact about their investments. The robo-advisor might invest the client in the real estate sector (often through REITs, or real estate investment trusts that trade like stocks but own real estate), when that really is not appropriate for the client.

 It takes planning to formulate quality investment portfolios for clients, and planning requires research.

Clients may also value their possessions unequally. Some may have more objects of value in their second home than they do in their first. After all, during a winter vacation, vacationers will spend more time indoors than when they are working or during the summer. If the place is a winter getaway, the client may want their ski set, their favorite barware, their better plates at their vacation home.  But would a financial planner reviewing their insurance who fails to take a holistic view or take the time to really talk with their clients be able to sit down and suggest, “Before we finish talking about insurance, let’s take a look to see if you’re properly insured for these items that mean so much to you and your lifestyle”?

Probably not.

A holistic financial planner is also a forward-looking one. Many investment advisors rightly use models to help with asset allocation when creating an investment portfolio for their clients. But a model alone is insufficient; after all, a model can’t see the person or family who is the client.

There’s a classic saying that “a child only needs to look at one picture of a dog to know what a dog looks like. A computer needs to look at ten million.” A model or computer may be able to use historical trends to try and predict the next 12 months, but can it think ahead 10 years, 20 years? Can it see the hopes and dreams and personal interests and goals of a client? Will it have the foresight to pause, think about rebalancing and asset allocation, and call the client to ask, “Before I rebalance you into the same asset allocation we had last year, how are you? How have your circumstances changed?”

A financial planner can and should take a holistic view of a client’s situation and take that into account when making decisions. Individuals who want to make investments “on the side” in online trading accounts or use robo-advisors should always be aware of the limitations of these “on the side” plans that don’t take into account your whole financial life. Similarly, a financial planner should take that same view.

Just as in the wise words of the Changdogya Upanishads, the salt and the water are one thing when mixed, so a client’s financial life cannot be pieced apart and analyzed as though each part were independent of the other.

A financial life requires a financial plan.

Nickolas Urpi