For financial professionals only
For someone who has genuine wealth, what can financial advice add? Part 3 of our Money & Happiness series is based on my belief that no one can be certain they have achieved genuine wealth without a robust financial plan.
Covering only the basics of financial planning for the man or woman who has everything could seem like adding extra zeroes to intrinsically meaningless numbers. What’s the point in building up more than people need – when they have no defined need for most of it?
These questions are driving debate within the Initiative for Financial Wellbeing (IFW) – a body of planners and advisers whose aim is a business model that delivers results which can be measured both qualitatively and quantitatively.
Win-win
It’s a win all round. Promote and deliver something as fundamentally desirable as human happiness – and get well rewarded for doing so.
Most experienced advisers will know or have looked after people who sold a business that took them a lifetime to establish. For that individual client, the time was right to sell, the money was right, the purchaser checked out well, and everything went fine. What next?
Were they travelling the world, following their dreams… or stuck at home, at a loose end and at the end of their tether? Was something missing from their plan?
What’s the money for?
Let’s be clear. The Wellbeing initiative is not an alternative to getting the fundamentals spot on. What a robust model of assets and liabilities, spending, tax payments, capital outgoings, likely investment returns and longevity confirms for me is, do I have surplus capital? And how big is that surplus, proportionally, to the present value of my anticipated needs and my wealth?
This logic leads you to explore people’s ‘intrinsic motivations’, to borrow a favourite term from Chris Budd, Chairman of the IFW. This is more than a first pass on ‘the soft facts’ but a deeper exploration of what has driven someone to create wealth and what they feel about it, emotionally.
This approach can lead to very open-ended discussions about the personal ‘money history’ of the wealthier individual, with a view to opening their thinking to ways that money can add to life to its very fullest extent.
A richer proposition
And this is where the value proposition kicks in. To add value, year after year, to someone who has a pretty good notion that they are wealthy, you will be holding a discussion a little deeper than first checking the fundamentals are in place and then whether now is the right time to put funds in place for the kids.
You are going to be exploring their anxieties and history around money to see if something is holding them back from that next stage of development. What could that mean? Perhaps they learn to share an experience of philanthropy with the super-rich, build something in the community to leave a legacy or take credit from investing wisely to leave the world a better place, less polluted, fairer and with less oppression.
Higher skills
These are some of the skills advisers embracing the Wellbeing aspect of their practice are looking to develop. In the process, they are discovering that they can add tremendous value to all their clients: those who ‘have it all’, those who ‘have something to lose’ and of course the many who are ‘just starting out’.
Other articles in this series
Money & Happiness pt.1: Starting with nothing ➜
Money & Happiness pt.2: Having something to lose ➜
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.