For some time now, models have been used in finance to determine what outcomes will arise from what inputs. With the ability to calculate formulas with specific values, in our field there may be no end to the continued tweaking of financial models in the hopes of finding that magic formula for financial success. However, what many people may overlook is that at the heart of every model are assumptions, and the ability to manipulate the data in order to support desired results.

Realizing the downside to financial models but also understanding the usefulness of them posed two questions for our firm: how do we lose the assumptions, and how do we help our clients make smarter financial decisions? Our answer came when we took a revolutionary health-based approach to finance, and combined it with technology and innovative thinking.

The Problem

One of the biggest problems in our industry today is that financial planning is flawed. It’s almost impossible to plan for an unknown future, and life isn’t set to adhere to a “plan.” Many advisors take a micro-specialist approach and only focus on one area of your financial life, causing your information to lie scattered among multiple advisors; what a big disadvantage for you.

There are only a few things that we know when it comes to your financial life, two of them being that all we can control is your current financial position, and that your financial life is complex. Since a financial model can break down complexity and input data based on your current situation, many will say that this is the solution. But again, models tend to operate on assumptions, and when we first started using them the outcomes wouldn’t hold true for long, because the information surrounding the data was constantly changing; a trend which made us see that it’s not the data going into the model that’s important, but the information surrounding the data.

Information Under Management

Assumptions operate at the heart of many financial models because no one is managing the changing information that affects the data you are inputting, and while they may produce outcomes, assumptions typically don’t lead to smart decision making. A conclusion that shows information is key to smart decision making, and caused us to turn our focus to information under management.

Now, if you’re thinking that we’re trying to tell you financial models are a waste of time, you would be wrong; financial models can actually be very helpful in clarifying your goals and putting things into perspective. But, it’s important to understand that the true value in our financial model is not found in its number crunching ability, but in the information behind the data. Harnessing all of your financial information into one, comprehensive picture of your current financial position allows you to capitalize on that collective knowledge, weighing and measuring financial decisions before they are made, ultimately giving you the tools to make smarter financial decisions

Assumptions operate at the heart of many financial models because no one is managing the changing information that affects the data you are inputting, and while they may produce outcomes, assumptions typically don’t lead to smart decision making.

For example, almost every financial decision has a tax impact, but typically financial advisors and CPAs are kept separate. As one of the most radically changing landscapes in the industry, tax law is part of that information that is important to manage for our clients. By working with our in-house CPA firm, Prestige Business Enterprises, owner Marta Skik Harich and our team have been able to take our clients from tax preparation to actual tax planning, enhancing our holistic philosophy, and allowing our clients to take a more proactive approach than handing everything over to their CPA at tax time. Mapping out what financial decisions you want to make, the current tax impact, and what changes are happening allow for smarter decision making along the way. For our clients who already have a CPA, we can still manage that information for them, acting as a resource while they keep their current outside advisors.

A Health-Based Technology

Much like the human body, your finances are a complex, living organism, responding to changes in their environment, experiencing adverse effects from harmful agents, having interconnected components, and requiring nurturing for positive growth. By taking an uncommon view toward finance, we offer a wealth management platform rooted in a health-based approach to your financial life.

First and foremost, our platform allows us to pull in all of your financial information, and break down its complexity into four domains: protection, assets, cash flow, and liabilities. Once we have all of the pieces connected into one big picture, then we can see how everything is working together, and diagnose problem areas. This comprehensive picture also produces real-time feedback, allowing us to see your current financial position, and how your four domains can be affected due to changing information. That information feed allows you to make smarter decisions today, and keeps you optimally balanced for a changing tomorrow.

How Our Approach is Different

While there is no shortage of technology available today to help you get financially organized, and the emergence of the “Robo-Advisor” gives you the ability to pull down data, these “advisors” are only reporting on what is in one area of your life.

Our wealth management platform takes it one step further, and integrates the information surrounding your data in all of the components of your financial life in one, digital destination. Centering your current financial position on the information coming in allows us to build and implement effective risk management strategies, so that you can positively react to the changes happening around you.

We believe that information and knowledge are power. By breaking down the barriers of the traditional financial industry, we give you the tools to make smarter financial decisions as we educate, guide, and counsel you toward reaching your full financial potential.

About The Author


Jarred Bunch Consulting

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