Question: A number of financial services firms are offering to provide proprietary financial plans to my employees. Should I entertain these offers?
A: Many employers are proactively considering additional valued-added benefits for their employees, including financial planning services. Offering these ancillary benefits can be a good employee retention strategy, as it shows you are interested in their financial well-being.
However, before you enter into an agreement with one of these financial services firms who will offer their customers, your employees, a financial plan, it is essential to understand what Financial Planning IS and IS NOT.
Financial planning is not merely investment planning.
While the adage “kill two birds with one stone” may apply in some circumstances, it does not apply when you are trying to provide a financial planning benefit to your employees. Generally, the “discount financial firm” is offering no more than a portfolio review, an insurance analysis or a retirement assessment. While partially valuable in their own right, these stand-alone services and many others like them are merely part of financial planning.
Additionally, in some cases the motive of the discount firms is to sell products to earn commissions. For firms to market the stand-alone product or service as though they constitute the whole is misleading.
Consider the entire financial situation.
It is important to distinguish between individual, partial elements of financial planning and the value of true holistic planning. Without considering the entire financial situation of an individual, recommendations regarding specific elements of planning can be short-sighted and can prove to be questionable in the long run.
Let’s talk about holistic financial planning. It includes thorough, inclusive and thoughtful considerations around investments, insurance, cash flow/budget, tax, education funding, retirement, estate, and other areas that are personally relevant and important to an individual and their loved ones.
It is important to approach the financial planning process as a comprehensive individualized strategy.
There is much to consider when it comes to financial planning considerations. Each plan should be created based on the unique situations and circumstances of the individuals involved. The right decisions will be those that are based on many factors. They involve open, honest and often vulnerable conversations about a financial plan with an individual’s spouse, in some cases children and other loved ones, as well as your trusted advisers to ensure decisions are thoroughly considered and the individual is well-educated on the potential short-term and long-term risk of each strategy.
The best financial planning is comprehensive.
The best financial planning occurs when the adviser takes a comprehensive approach to the plan and incorporates their client’s goals and lifestyle. If you choose a financial advisory that acts as a fiduciary for the client, such as a certified financial planner, you can be confident that they provide your employees with a true benefit.
Crystal Faulkner is a Cincinnati market leader with MCM CPAs & Advisors, a CPA and advisory firm offering expert guidance and beyond the bottom line thinking for today’s public and private businesses large and small, not-for-profits, governmental entities and individuals. Tom Cooney is with Wealth Dimensions, an investment advisory firm. For additional information, call 513-768-6796 or visit online at mcmcpa.com. You can listen to Tom and Crystal daily on WMKV and WLHS on “BusinessWise,” a morning and afternoon radio show that profiles highly successful people, companies, organizations and issues throughout our region.
This article originally appeared on Cincinnati Enquirer: What Financing Planning is and is not