Why Healthcare Is a Critical Component of Comprehensive Financial Planning
Clients have no shortage of options when it comes to hiring a financial advisor, but that doesn’t mean advisors have their pick of any and all clients. Many financial planning professionals choose to specialize in certain areas or to have a niche, while others choose to provide something called “comprehensive financial planning.”
But here's the thing:
Many financial advisors use the term comprehensive financial planning to describe what they do a little too loosely. There’s not a lot of standardized guidance on what comprehensive financial planning really is, and there are certainly no regulatory requirements stating who can use the term and in what way.
Today we’re going to break down what comprehensive financial planning really is, while also discussing an often overlooked but ever-so-important component of your clients’ comprehensive financial lives: health insurance and healthcare planning.
What Comprehensive Financial Planning Is Not
With a topic like this, it can sometimes be easier to start by defining what it’s not. Simply put, comprehensive financial planning is not advice that is focused (or even mostly focused) on one single area of clients’ financial lives.
For example, broker-dealers who only design, manage, and rebalance their clients’ portfolios are not comprehensive financial advisors.
Life insurance agents who only sell life insurance, even as retirement planning products, are not comprehensive financial advisors.
CPAs who offer peripheral financial advice while engaging in tax planning sessions are usually not comprehensive financial advisors.
And even a financial advisor who specializes in retirement planning may not automatically be a comprehensive financial advisor unless they specifically provide advice on matters outside of retirement plans, such as estate and tax planning. Even then, they would need to take into account someone’s entire financial picture to be considered a comprehensive financial advisor.
So What Is Comprehensive Financial Planning?
Comprehensive financial planning, also known as holistic financial planning or life planning, is the process of creating a financial plan that takes into account all of life’s events and a client’s goals to ensure financial success. Most comprehensive financial advisors help clients plan for the following components of their life:
Cash flow analysis and planning
Debt repayment strategies
Investment strategies
Investment management and portfolio rebalancing
Risk management and mitigation
Tax planning
Healthcare planning
Insurance analysis
Education planning
Retirement planning
Long-term care planning
Estate planning
Business planning, if applicable
To engage in comprehensive financial planning, financial advisors must get to know their clients on an intimate level to understand their values, needs, and goals for the future. Comprehensive financial planning goes well beyond numerical goals.
Comprehensive financial advisors propose strategies and develop plans based on what is most important to the client in terms of values, goals, and life events.
So Why Has Healthcare Been Historically Left Out of Comprehensive Financial Planning?
Even though 40% of survey respondents reported they're looking for insurance advice as a product/service beyond core investment management, and 65% of financial planning clients expect to receive health insurance advice from their advisors, healthcare costs and coverage have mostly been left out of financial planning. Healthcare planning has become more popular in recent years, but it isn’t a staple of comprehensive financial planning (yet.)
The reason most advisors shy away from health insurance and healthcare planning is that it’s an incredibly complex topic and industry. Financial advisors have enough on their plates without having to also learn the ins and outs of healthcare policy and the difference between a deductible and an out-of-pocket maximum.
But with third-party healthcare planning companies, advisors don’t have to become healthcare experts to offer guidance to clients on healthcare coverage decisions.
Why You Should Include Healthcare in Your Client’s Financial Plans
Remember the stat above about 65% of financial planning clients expecting healthcare planning advice from advisors? Well, that same survey revealed that only 4% of those same clients reported actually receiving healthcare planning advice. The gap in the availability of healthcare advice is an incredible opportunity for comprehensive financial advisors to provide better service to their clients and increase their value.
As fiduciaries, financial advisors are committed to always working in their clients’ best interests—helping clients build medical costs into their financial plan, analyzing their health insurance options, and providing guidance on the options that are right for them is absolutely in their best interest.
Even clients who have health insurance through an employer don’t have many places to turn to with questions. Although HR departments have traditionally been able to answer questions about the benefits offered through the company, the rising complexity of health insurance plans and the fact that multiple options are often offered prevents even HR reps from being able to give clear answers, let alone dive into how someone’s personal financial goals and health needs impact their healthcare coverage decisions.
When you, the advisor, offer healthcare planning in your suite of services, you:
Increase your value to existing and prospective clients.
Add value and clarity to your clients’ lives.
Create opportunities to save your clients tens of thousands of dollars.
Provide truly comprehensive financial advice.
How to Include Healthcare Planning In Your Comprehensive Financial Plans
Here’s the thing: You don’t have to become a health insurance expert to start providing health insurance advice to your clients.
Instead, you can partner with a company like Move Health.
At Move Health, we partner with financial advisors all over the country to equip them with the healthcare planning capabilities they need to incorporate clients’ health insurance and medical costs into their comprehensive financial plan. When advisors partner with Move Health, they gain access to our award-winning software and an expert team to provide insights and planning opportunities based on clients’ unique circumstances. From initial analysis to enrollment, our tech-enabled, human-driven approach to healthcare planning ensures you and your client have clarity and confidence at every step of the process.
If you’re interested in exploring healthcare planning as a valuable component of comprehensive financial planning, click here to book a call with our team.
