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Comprehensive Wealth Planning: What It Is, Why It Matters

By   Brad Kelley

June 15, 2016

Just what is “comprehensive wealth planning?” As you invest and save for retirement, you will no doubt hear or read about it – but what does that phrase really mean? Just what does comprehensive wealth planning entail, and why do knowledgeable investors request this kind of approach?

While the phrase may seem ambiguous to some, it can be simply defined.

Comprehensive wealth planning is about building wealth through a process, not a product.
Financial products are everywhere, and simply putting money into an investment is not a gateway to getting rich, nor a solution to your wealth issues. 

Comprehensive wealth planning is holistic. It is about more than “money”. A comprehensive wealth plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others?

Comprehensive wealth planning considers the entirety of your wealth life. Your assets, your liabilities, your taxes, your income, your business – these aspects of your wealth life are never isolated from each other. Occasionally or frequently, they interrelate. Comprehensive wealth planning recognizes this interrelation and takes a systematic, integrated approach toward improving your wealth situation.

Comprehensive wealth planning is long-range. It presents a strategy for the accumulation, maintenance and eventual distribution of your wealth, in a written plan to be implemented and fine-tuned over time.

What makes this kind of planning so necessary? If you aim to build and preserve wealth, you must play “defense” as well as “offense.” Too many people see building wealth only in terms of investing – you invest, you “make money,” and that is how you become rich.

That is only a small part of the story. The rich carefully plan to minimize their taxes and debts, and adjust their wealth accumulation and wealth preservation tactics in accordance with their personal risk tolerance and changing market climates.

Basing decisions on a plan prevents destructive behaviors when markets turn unstable. Impulsive decision-making is what leads many investors to buy high and sell low. Buying and selling in reaction to short-term volatility is a day trading mentality. On the whole, investors lose ground by buying and selling too actively. The Boston-based investment research firm Dalbar found that from 1994-2013, the average retail investor earned 5% a year compared to the 9% average return for U.S. equities – and chasing the return would be a major reason for that difference. A comprehensive wealth plan – and its long-range vision – helps to discourage this sort of behavior. At the same time, the plan – and the wealth professional(s) who helped create it – can encourage the investor to stay the course.1

A comprehensive wealth plan is a collaboration & results in an ongoing relationship. Since the plan is goal-based and values-rooted, both the investor and the wealth professional involved have spent considerable time on its articulation. There are shared responsibilities between them. Trust strengthens as they live up to and follow through on those responsibilities. That continuing engagement promotes commitment and a view of success.

Think of a comprehensive wealth plan as your compass. Accordingly, the wealth professional who works with you to craft and refine the plan can serve as your navigator on the journey toward your goals.

The plan provides not only direction, but also an integrated strategy to try and better your overall financial life over time. As the years go by, this approach may do more than “make money” for you – it may help you to build and retain lifelong wealth.

 

Financial Advisor offers Investment Advisory Services through Eide Bailly Advisors LLC, a Registered Investment Advisor. Securities offered through United Planners Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with United Planners.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of United Planners Wealth Services. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Neither United Planners nor its wealth professionals render legal or tax advice.  Please seek such advice from your own tax and legal counsel. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - fool.com/investing/general/2015/03/22/3-common-mistakes-that-cost-investors-dearly.aspx [3/22/15]