What Is Integrated Financial Planning?

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Financial planning is the process of determining what financial steps will best take you from your current situation to fulfilling your life goals. While each component of financial planning is personal to your unique situation, each component part is also integrated with other components creating a dynamic and interconnected system. Integrated financial planning takes a holistic approach to how each component is set into the context of your situation and affects other areas of your finances.

You may have one person who prepares your taxes, another who manages investments, a third who sells life insurance, and a fourth who drafts estate planning documents. These services and products are often done in isolation from one another and often even in isolation from your personal situation. Personal financial planning and integrated financial planning are inseparable as changes in one part of your finances have a ripple effect to other parts of your finances.

Tax Preparation vs. Tax Planning

The person who prepares your tax return does so after your taxable events have already occurred. There are only a few changes which can be made after the end of the year and before April 15th. Most of a tax preparer’s job is simply to comply with the the tax code. The main savings they can produce comes from taking every deduction legally possible. Their primary focus is on minimizing the tax owed by law for the filing year.

In contrast, integrated financial planning engages in tax planning, the process of modeling many years of tax projections in order to maximize your after-tax net worth. Although it begins with your current tax situation, it models how possible choices will interact with current and future taxes. Many different scenarios have an impact on tax planning and you cannot determine which are best with a simple back-of-the-napkin calculation based on tax paid.

The goal of tax planning is not to minimize your tax bill. Minimizing your tax bill is easy: make less money. Instead, the goal of tax planning is to maximize your after-tax net worth. Systematic Roth funding and conversions may pay more tax initially, but such a strategy may also produce a higher after-tax net worth. And Roth conversions are only one of many options that change your tax projections. Only by modeling tax planning well beyond age 70 can such planning be done.

Tax planning requires sophisticated analysis and results in custom and personalized recommendations.

Insurance Sales vs. Risk Management

The person who sells you insurance products does not get paid to help you avoid them. Insurance, on average, loses money for the consumer by definition. The commissions, overhead, and corporate profits drain much of the value. Many types of insurance are best avoided if it is possible to reduce the risk or self-insure. But to an insurance salesperson if you have more money to spend they have additional products to offer.

Agents of an insurance company are not required by law to act in your best interest when pretending to give you advice or selling you products. By law, they are subject to a lower standard. Perhaps you have a current need for life insurance. A life insurance salesperson may have many sales pitches about “permanent” insurance and “buying” your insurance instead of “renting” it, but all of these pitches are designed to sell you a very expensive product which produces a large commission.

In contrast, integrated financial planning is required to act in your best interest as a fiduciary. And a fiduciary’s goal is not to sell insurance products, but to identify potential risks in advance, analyze them, and then take steps to reduce those risks. That may involve insurance products for a period of time, but the ultimate goal may be to grow your investments to the point where you don’t need that insurance. Insurance products are sometimes the best course of action, but only an integrated approach to financial planning can determine which risks to avoid, which risks to mitigate, which risks to insure, and which risks to self-insure.

Risk management requires an integrated approach in order to know the potential lost opportunity costs to each course of action.

Investment Products vs. Portfolio Management

The person who runs an investment management service manages investments. They often run a fund which is simply trying to beat its benchmark. The disclosure section of a fund’s prospectus often warns, “In choosing a Fund, investors should carefully consider the amount they plan to invest; their investment objectives; and the Fund’s investment objectives, risks, charges and expenses before investing.” In other words, the fund acts as an isolated investment product and it is up to the investor to judge for herself if the fund is appropriate for her specific situation.

In contrast, integrated financial planning builds and manages your entire portfolio in light of your specific goals and existing investments. Your allocation between stocks and bonds should be set based on your anticipated future withdrawals, allocating five to seven years of safe spending to stable bond investments. Not running out of money is worth more than a higher average return. The more frugal your lifestyle spending in relation to your net worth the more leeway you have to move more conservative or more aggressive. As a result your asset allocation is integrated with your projected spending, your asset location is integrated with your projected required minimum distributions and Roth conversions, and your asset design is integrated with your willingness to regularly rebalance.

Portfolio Management requires managing investments in light of your entire financial situation.

Estate Documents vs. Estate Plan Implementation

An estate planning attorney crafts estate planning documents. They often include a will, an advanced medical directive (sometimes called a living will), and a power of attorney. If your estate is complex, they may also prepare trust documents. Only estate planning attorneys licensed in your state of residence can prepare estate planning documents. Preparing estate planning documents is considered the practice of law and states make it illegal to practice law if you are not authorized by the state. We have seen a number of estate planning attorneys who offer a generic binder of impersonal estate planning documents. An excellent estate planning attorney is worth their fee because they craft personalized estate planning documents. The services beyond preparing estate documents vary by estate planning attorney, but usually do not include implementation.

In contrast, integrated financial planning helps you implement your estate plan. It begins with recognizing a need for estate planning and helping you determine what you want in advance of an estate attorney’s hourly rate. That might include a net worth statement, charitable intentions, and to whom and how you want to leave your assets. A financial planner may help you choose a competent estate planning attorney. And then integrated financial planning will work toward ensuring that your estate plan is implemented properly, including appropriate beneficiary designations for your individual retirement accounts. Implementation may include setting beneficiary designations on your digital and social media accounts, taxable accounts, and other uncommon assets. It may also include keeping a directory of basic information about your assets. Implementation of leaving money to a charity might include a testamentary donor advised fund so that changing your charitable intentions doesn’t require rewriting your estate planning documents. Finally integrated financial planning will help your chosen executor close your estate.

Estate documents are important, but without appropriate thought beforehand and implementation afterwards they won’t accomplish what you hope they will.


These are just some of the examples of what it means for financial planning to be integrated. Each area of the financial planning process is integrated within your entire financial plan. Wise decisions cannot be made in isolation from their impact on other areas of your financial life. Components are inextricably connected and safe advice could only come from an analysis of the inter-workings of your comprehensive financial situation.

Call us to begin integrating your finances into a purposeful whole.

Photo by Ricardo Gomez Angel on Unsplash

Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.