Introduction to financial wellbeing - Chris Budd

by Damian Davies on 04·11·2021

You may have seen the phrase ‘financial wellbeing’ become increasingly used over the last few years. It first appeared in the title of Chris Budd’s book, ‘The Financial Wellbeing Book’, back in 2016.

We asked Chris, who founded the Initiative for Financial Wellbeing (IFW) for the advice community, if he could provide an introduction to the context of financial wellbeing, and explain how it can significantly enhance client outcomes as part of the financial planning process.

Back in 2015, I came up with the term Financial Wellbeing in the title for my book to describe anything that relates to the relationship between money and how we use it to be happy.

The term has since been used by the likes of MaPS and a number of advice firms to describe managing finances and dealing with debt. This is a much narrower definition (I’d actually call this ‘financial resilience’), and so we established the IFW to investigate and promote this much broader approach to the topic.

We have 5 parts to our definition of financial wellbeing:

• A clear path to identifiable objectives
• Control of daily finances
• Ability to cope with financial shocks
• Having financial options
• Clarity and security for those we leave behind

As you will see, one of these is indeed, control of daily finances, however, the overarching objective is to help clients live a life of meaning and purpose where money is their slave, not their master.

Financial Wellbeing Oriented Advice

What is a client’s objective when they seek financial advice? It may well be that they are looking for a pension review, or to make or manage investments, or to create financial plans.

This is what they get, but this is not the real outcome, because surely the only point of financial advice is to make clients happier, not just wealthier.

We therefore see a disconnect between what clients come to you, and what they really value. To make a client happy with your advice, give them what they want. To keep clients over the long term, however, you need to more than this – and this is where financial wellbeing sits, on top of technical advice on investments, pensions and tax, and as part of the financial planning process.

Research

There is a huge amount of research available on what makes us happy. For example, we know for certain, that a person who sees money as the objective of their life will be less happy than they would otherwise be.

In many ways therefore, what we are doing at the IFW is unpacking this research and applying it to the financial planning process.

Understanding the theories of what makes us happy such as set point theory and the hedonic treadmill can help us to steer clients to making better financial decisions. And by better I mean financial decisions that are more aligned with what will make them happier.

We are also conducting our won research, in conjunction with Partner Members such as Aegon.

The IFW

The IFW is a not-for-profit organisation, established to provide a meeting place for like minded people. We hold lots of events, which are run by our members. These include;

• Regional meetings
• Wellbeing Café (bring your sandwich and listen to a talk)
• Roundtable debate (where we learn about and discuss issues such as behaviours, risk, wellbeing principles
• Annual conference – https://initiativeforfinancialwellbeing.org.uk/events/
• Forum for financial coaches and advisers
• Providing presentations for the workplace available for members to use

We also help provide content and a focus to many different types of organisations in how they interact with their clients about money. Our mission is to get the whole of financial services to recognise that its purpose is to make the world a happier place, not to just make rich people richer.

In this way membership of the IFW is about helping to define the future of financial advice, as well as improve your own skills and knowledge.

Training For Advisers

The prescribed training to be a financial planner is almost exclusively focussed on technical knowledge.

We are therefore developing a training and learning centre. For example, there is the Financial Wellbeing Certificate – https://shop.quivermanagement.com/products/financial-wellbeing-certificate. We also accredited courses that align with financial wellbeing, including coaching and protection courses.

Audit For Firms

We have been asked by some firms who want to use our logo in their marketing. First, however, we want to ensure that they really are embedding financial wellbeing in their practice, and not just using it in their marketing.

We therefore have the Financial Wellbeing Audit. Firms can submit an application, based upon 22 questions, in order to demonstrate that they do, indeed, deliver a financial wellbeing orientated service.

The audit serves as a guide for firms on how they might adapt their service proposition to be focussed on a client’s happiness not just their money.

Ambition

Ultimately, the ambition of the IFW is to make the world a happier place. We have some 300 members after less than 2 years in existence, with support by partner members such as Aegon and Parmenion.

Our ambition, however, is considerably greater.

The cost of membership is only £10.00 per month plus VAT and you may consider joining just to help support us in our work. We do hope, that you might join us and get involved with the events, and help to shape the future of financial planning as being based on the client’s happiness, not just wealth.

If you want to know more, join up from the website, or come to our forthcoming Discover session https://initiativeforfinancialwellbeing.org.uk/events/

We look forward to meeting you!