This article explores what ‘financial wellbeing’ really means, why it’s so relevant to advice and planning and how you can find out more.
Financial advice uses technical knowledge about pensions, investments, and tax, to provide advice to clients on what’s best for them.
After that financial planning was born – powered by cash flow forecasting, planning builds and giving advice on how the client might get to where they want to be (or say they want to be).
Financial wellbeing
Financial wellbeing is what you could call the third stage in the evolution of advice and adds two important skills to our technical and planning knowledge:
- Understanding what makes us happy – a huge amount of research has been done on happiness, yet it’s rarely applied to the financial planning process. Financial wellbeing helps brings these two things together.
- Coaching skills – this may mean focusing more on listening and questioning, something that’s much harder than it may sound. By changing the focus of the meeting away from just being about investments for their future, the client outcome is much more likely to be on their wellbeing.
Why is this relevant?
It’s important because what clients tell their financial adviser they want from their financial plan, is not often what will maximise their overall wellbeing and ultimately their happiness.
A question many of us have heard is ‘What does money mean to you?’, but the minute we mention ‘money’ it sends us running down a particular track. We can open up the conversation by instead asking ‘Tell me what’s important to you in life?’, or ‘What does a good life look like to you?’- by reframing the question we allow our clients to slow down their thinking and give them a safe space, to process, talk and think.
Financial coaching can involve looking much deeper into the clients’ relationship with money, by asking more thoughtful questions and engaging in high-quality conversations we can better understand what motivates clients, what inspires them – and what will make them happier, not only wealthier.
How to find out more
Parmenion has partnered with the Institute for Financial Wellbeing (IFW) since their inception in 2019. The IFW is a not-for-profit founded by advisers to help people make better choices about how they use their money. Their goal is to evaluate where we as an industry, help support better client outcomes, and lead the way in innovating and questioning the norm – something we hugely support.
You can watch our recent webinar with the Chair of the IFW, Ruth Sturkey in conversation with Pat Ingram where they explored the link between financial advising, financial planning and financial wellbeing in more detail.
Watch now
You can also join us at the Institute for Financial Wellbeing’s annual conference ‘Invest in Wellbeing’, next Tuesday on 23rd May 2023 in Bristol. It will be a worthwhile day and you should return to your office armed with insight and tools to influence how you advise your clients and help them to become happier, not just wealthier.
Tickets are still on sale here
Alternatively, you can join the IFW as a member for £15 per month plus VAT.
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.