Holistic financial planning: what is it, and what are the pros and cons? 

If you have specific goals in mind that you want to work towards but are not sure how to achieve them, holistic financial planning may be able to help. 

By looking at your personal and financial circumstances, as well as your future goals, holistic financial planning can help you create a plan to reach them.  

What is holistic financial planning, and how does it work? 

Holistic financial planning is different from financial advice, as the latter tends to focus on a specific area that you need help with, such as retirement or investing. 

In contrast, holistic financial planning provides a more comprehensive view of your finances and takes a long-term and goal-oriented approach. 

First, holistic financial planning looks at your goals by exploring what you want to achieve. Depending on your goals, you may need to save or invest to ensure you have enough money. 

Once you’ve decided where you want to be in the future, you then need to look at your current financial situation, including your savings, investments, pensions, and insurance policies. 

This can help you or a financial adviser develop a plan to optimise your finances and ensure you’re saving enough, as well as make sure you’re prepared if the worst happens.  

How does holistic financial planning differ from financial advice?

Holistic financial planning and financial advice are closely related, but they differ in their scope, depth, and approach.

Here's a breakdown of the key differences:

Scope

• Financial advice: Typically focuses on a specific area of your finances, such as choosing a pension provider, investing in an ISA, or buying life insurance. It's often transactional and goal-specific.

• Holistic financial planning: Takes a comprehensive view of your entire financial life. This includes income, expenses, debts, savings, investments, pensions, tax planning, estate planning, and life goals. It connects all financial decisions to long-term objectives.

Approach

• Financial advice: Often reactive. You might seek advice because you have a particular need or issue (e.g. "Should I transfer my pension?").

• Holistic financial planning: Proactive and strategic. It involves ongoing planning, adjustments, and regular reviews to help you meet long-term goals like retirement, funding children’s education, or leaving a legacy.

Duration of relationship

• Financial advice: Can be a one-off or occasional interaction, depending on the need.

• Holistic financial planning: Usually a long-term relationship involving regular check-ins and updates as your life circumstances change.

Personalisation

• Financial advice: Can be tailored, but the focus is on solving a particular problem rather than aligning with your broader life goals.

• Holistic financial planning: Deeply personalised. It considers your values, aspirations, lifestyle, risk tolerance, and life events to build a complete financial roadmap.

What does holistic financial planning cover? 

Holistic financial planning covers various areas, including: 

• Retirement planning 

• Pensions 

• Investing planning and strategies 

• Cash flow analysis 

• Budgeting and saving 

• Estate planning 

• Long-term care planning 

• Business and succession planning 

• Significant life changes 

As holistic planning extends across multiple areas, a financial adviser may use other professionals with expertise in these fields to ensure that all aspects are covered.  

The most important aspect of a holistic financial plan is how it helps you meet your financial goals and identifies the most suitable options while also ensuring your finances are protected in the event of the unexpected, such as job loss or illness. 

Some advisers may use cashflow modelling to forecast your future finances and whether you are on track to meet your short and long-term goals. 

Cashflow modelling can be particularly useful for retirement planning as it helps ensure you have enough money to meet your retirement goals. 

What is the holistic financial planning process?

Different advisers and planners will have their own processes, but typically it's broken down into the four steps below:

Goal setting

The first step in holistic financial planning is understanding what truly matters to you.

Whether it’s buying a home, saving for your child’s education, or retiring comfortably, clearly defined goals provide the foundation for your plan.

This stage involves identifying both short- and long-term objectives and prioritising them based on your values and lifestyle.

Financial health check

Next, a financial health check takes stock of your current financial situation.

This includes reviewing your income, expenses, savings, debts, pensions, and insurance policies.

The aim is to get a clear picture of your financial strengths and weaknesses so you can make informed decisions moving forward.

Financial planning

With goals and current finances in mind, a personalised financial plan is developed.

This integrates budgeting, saving, investing, tax efficiency, and risk management to help you move closer to your goals.

The plan is designed to be flexible and adapt to life changes, ensuring you stay on track regardless of what the future holds.

Action plan

Finally, the action plan puts your strategy into motion.

It outlines specific steps, timelines, and responsibilities to ensure each part of the plan is implemented effectively.

Whether it's setting up a savings account, consolidating pensions, or increasing your insurance cover, this stage turns planning into tangible progress.

The pros and cons of holistic financial planning 

Now, we’ll explore the benefits and disadvantages of holistic financial planning. 

The pros of holistic financial planning 

• Your plan is tailored to you: As holistic financial planning focuses on your goals, it is tailored to your circumstances and future. A holistic financial plan can ensure your goals are achievable and realistic while also showing you how your finances can improve over time.  

• Your plan doesn’t involve isolated decisions: Holistic financial planning should consider how every decision affects your overall financial situation. In contrast, if you were seeking advice on a single area, the impact on your finances elsewhere may be overlooked. 

• An adviser can identify opportunities and potential mistakes: A financial adviser specialising in holistic planning can help identify ways to save on tax by using all available allowances or flag mistakes that can be easily overlooked.  

The cons of holistic financial planning 

• The process can be more time-consuming: As your adviser will take into account your overall goals and circumstances rather than focusing on one area, such as retirement planning, the process can be more time-consuming and complex. 

• It may be expensive: There’s a possibility that holistic financial planning can be costly, especially if your adviser needs to consult experts in other areas. 

Get expert financial advice 

While holistic financial planning may seem overwhelming to consider, it does offer a more comprehensive view of your finances to help you reach your long-term goals. 

By considering every aspect of your financial life, from income and investments to retirement, tax, and estate planning, it helps you make informed decisions that support your overall wellbeing, not just your bank balance.

A holistic financial plan can also offer peace of mind, knowing you're prepared for life's uncertainties and making the most of every financial opportunity.

If you’re seeking a financial adviser, Unbiased can help by matching you with a qualified expert.