Something greater than financial advice
Earlier this year and shortly before I surrendered our Financial Services Authority permission to provide monetary advice I met Bruce and Theresa, my long standing clients of some thirty years. The particular meeting was arranged to say goodbye and to close our professional (but not social) relationship, and to finalise their plans for their retirement.
The meeting lasted for most of the day, and whilst their finances were in the agenda and were dealt with, a lot of the meeting revolved around the way they were going to live in retirement, what they could and should do, how they had been going to maintain family ties, choices about their house and nearly all aspects of life in retirement. We furthermore covered their relationship with money, dealing in particular with how to alter their working life attitude of saving and prudence to finding the courage to spend their time and money on making the most of their lives in retirement. Whilst I was able to demonstrate mathematically that their income and assets had been more than sufficient to allow them to live a good fulfilled life in retirement, we had to deal with some deep emotional blocks to spending, in particular the fear which they would run out of money.
It was far more than financial advice. It amounted to ‘financial life coaching’, a relatively new professional field that treats money and life as intertwined and is truly holistic in its approach. It is an approach I started to adopt in 2006 after training with the Kinder Institute of Life Planning in the US. In reality, most of my client interventions ever since then have been holistic, coaching interventions. I’ve discovered that the coaching element is of far greater value to my clients than arranging financial products, which, within the context of most financial life plans, should be simple, low priced and commoditised.
Financial coaching is for everyone?
I have witnessed the impressive changes that financial life coaching can bring about in clients, and I would argue that everyone needs a life coach. In reality, the service is less suited to what Ross Honeywill and Christopher Norton call ‘Traditionals’ and more suited to what they call the ‘New Economic Order’ (NEO) (Honeywill, Ross and Norton, Christopher (2012). One hundred thirteen million markets of one. Fingerprint Strategies. ), and what James Alexander and the late Robert Duvall in their research for the launch of Zopa (the first peer-to-peer lending business) called ‘Freeformers’ (Digital Thought Frontrunners: Robert Duvall, published by the Electronic Strategy Consulting).
Two types of purchaser
These distinctions are important in the situation of a key concept about cash, which I will cover shortly. First, lets consider the differences between the two groups. Honeywell and Norton describe ‘Traditionals’ as primarily interested in the deal, features and status. A sub-group involving ‘Traditionals’ is ‘High Status Traditionals’ for whom status is the best priority. They cite Donald Overcome as the epitome of a High Status Conventional.
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Honeywill and Norton contrast ‘Traditionals’ with NEOs. According to the authors, NEOs buy for authenticity, provenance, uniqueness together with discovery. They are more likely to start their business, are usually graduates, see the world wide web as a powerful tool for shortening their lives, understand investing (money and personally), and are repulsed simply by conspicuous consumption. They are highly personal and express their own individual prices through what they say, buy, accomplish and who they do it together with.
Honeywill and Norton discovered NEOs in the US and wrote about them in spring but Robert Duvall and Wayne Alexander arrived at a similar concept in england in the early 2000s. In their researching prior to launching Zopa, Duvall together with Alexander identified a group of people they referred to as ‘Freeformers’, a new type of consumer ‘defined by their values and beliefs, your options they make, where they spend their funds. They refuse to be defined by means of anyone, they don’t trust corporations or maybe the state. They value authenticity about what they buy and they want to business lead “authentic” lives. ‘ Duvall together with Alexander saw these people as the main of an IT society based on self-expression, choice, freedom and individuality.
A couple attitudes to money
In my personal career as a financial adviser, coordinator and coach I have identified 2 prevailing attitudes to money. One can find those who see money as an end in itself, and those who see cash as a means to an end. I cannot say to having carried out detailed research within this, but I have seen enough to make a reasonable assumption, namely that it is the particular Traditionals who see money just as one end in itself, and it is the Freeformers who see money as a means for an end. (At the risk of upsetting Messrs Honeywill and Norton and cognizant that NEOs and Freeformers are certainly not exactly the same, I am going to refer to both just as Freeformers in the rest of this paper as I feel the word is actually a better and more evocative description of the species than NEOs. )
Throughout very general terms, Traditionals usually are intent on making their money get as far as possible by getting the best prices and features. Psychologically, they equate money with ego and status. Conversely, Freeformers use their money to achieve their individuality and authenticity and to express their values. Whilst they just don’t spend entirely irrespective of cost, their particular spending criteria are written with regards to authenticity, provenance, design, uniqueness together with discovery.
Mapping attitudes to life in addition to money
In my own experience Traditionals respond to financial advice, but not fiscal planning or coaching, whilst Freeformers only start to value financial guidance when it is supported by an individual and distinctive life and financial plan delivered out of a deep coaching together with planning process.
Putting it another way, Freeformers understand that the link between life and money goes deep, thus respond well to coaching that addresses their life and cash. Traditionals, on the other hand, do not harbour this type of powerful connection between life and money, and are less likely to respond on the concept of ‘financial life coaching. ‘ Traditionals form the key market regarding financial services institutions and packaged solutions, especially those that provide deals (discounts hcg diet plan competitive fees), features (pension strategies with flexibility, for instance) and even status (high risk, high returns). Freeformers are more likely to select a platform (an online service to aggregate all their assets and tax wrappers) and concentrate on selecting investments to suit their ideals and goals.
The spectrum of help with personal finances
In the UK and also other parts of the world you can now find numerous forms of help for your personal funds. Its a wide spectrum with economical advice at one end and financial life coaching at the different. In between, families and individuals can access financial planning, guidance, teaching, mentoring and education. Of course none of these are mutually exclusive and some firms or maybe organisations will provide a combination so it is crucial that you understand what is available and the limits in addition to benefits of each.
Economical advice is product oriented. In the UK the Financial Conduct Authority (FCA), which regulates personal financial advice, defines financial advice as assistance to buy, sell or switch financial product. Whilst there is a regulatory qualification to ‘know your customer’ and ensure any advice is ‘suitable’, often the thrust of financial advice is the sale of products.
A financial adviser must be authorised by the FCA and abide by it has the rule book.
Fiscal planning goes deeper than monetary advice. It aims to ascertain some sort of client’s short, medium and permanent financial goals and develop a want to meet them. The plan should be thorough and holistic. It should cover every area of the client’s personal and family members finances and recommendations in any part of the plan should maintain the integrity from the plan as a whole.