What is Holistic Wealth Management?

By Hightower Westchester on April 1, 2024

The term holistic comes from holism, which is defined by Webster’s as a theory that the universe and especially living nature is correctly seen in terms of interacting wholes (as of living organisms) that are more than the mere sum of elementary particles.

When we talk about holistic wealth management, we apply it to mean not merely making investment decisions or recommendations to a client in a vacuum but fully understanding all aspects of our clients. So, to relate it to the above, treat the client and his or her investment objectives in relation to their lives, their goals, and any special circumstances they may have in their investments. This can include their family dynamics, how they achieved their wealth, their goals and ambitions, special situations relevant to their family, the importance of charity in their lives, how they view money, what are their issues that surround their wealth, etc.

Another way to consider this is that two people of similar age and financial resources can have very different goals and objectives. If you simply view a client using a basic if/then statement, for instance if they’re this age and have x amount of money, then we recommend y, the planning will be incomplete and quite possibly not in your best interest, as it won’t be tailored to your story.

Another way to look at holistic wealth management is to look at a client and the team of advisors that surround the client. For many clients, their team should consist of their tax advisor or CPA, and their attorney. In order for our clients to get the most comprehensive advice, we like to coordinate with their other key advisors.

For CPA’s, this contact might be yearly, as we would like to discuss any tax issues the client may have in a given year. For example, perhaps the client has a large tax loss carryover or a large gain from other sources. By coordinating with their CPA, we can try to offset large gains with losses, or we might consider taking more gains in a given year knowing they have a large tax loss. For our clients who are entrepreneurs or self-employed, we work with tax advisors to consider and design a retirement plan that might make sense for the client. Some plans have no or minimal start-up or ongoing fees, and they might be sufficient for the client to help maximize tax deferred investing. For other clients, it can make sense to consider more complex retirement plans. These plans may have higher costs, but the tax benefit and increased savings might be the right solution for the client.

One additional tax consideration may be the conversion of traditional IRAs to a Roth IRA. In the conversion, taxes will be owed the year the conversion is done. Doing these conversions in years when the client might have lower tax burdens due to lower income can help keep the client in a lower tax bracket.

When it comes to attorneys it is largely the client’s estate plan that will require coordination. Be it simply titling accounts correctly. For instance, should your accounts be in an individual name or a joint name? If it’s an individual, would it make sense to make it a TOD (transfer of death) account? If it’s joint, should it be rights of survivorship or tenants in common? Or have you established revocable trusts? Too many times a client has established a revocable trust but fails to fund it or update their investment accounts to reflect the name of the trust. Usually, a quick call or email is all it takes to make sure your accounts are titled in concert with your estate planning. This simple step can save a lot of work and headaches down the road.

For entrepreneurs or business owners contemplating the sale of their business, the road to monetizing your life work can be long and may take several months or years of planning. Surrounding yourself with a team of advisors will help you maximize your life’s work, be it through certain structures, tax planning, or simply the timing of the sale.

Having your team of advisors work together helps to ensure that you are getting comprehensive advice. No one professional has a monopoly on ideas, and by collaborating with each other, placing you in the middle, you benefit from it.

When we view holistic wealth advice, it is through these two avenues that we help ensure we get to know our clients and provide value to our clients. When this happens, everyone benefits, and the client will feel well served by the team. In sports, the most successful teams aren’t always the ones with the biggest stars; rather, they’re the ones that collaborate to achieve a common goal; in our case, that goal is what’s best for the client.

Peter Lang – Managing Director, Partner – Hightower Westchester

914-825-8631 – plang@hightoweradvisors.com