The key question a financial planner asks

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-- Transcript --

Robin Powell
Chris Budd/ Financial wellbeing advocate

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RP: The terms financial adviser and financial planner are often used interchangeably.
But there is an important difference.
Broadly speaking, an adviser focuses on your money, and a planner on your life.
Of course, money is very important.
The danger is, we tend to forget that it’s only a means to an end.

CB: We always want more. There's never enough. It's like the false summit syndrome. When you get to. When you get to the top and you realize that there's more the other side.
Income creep is one of the names for this. The more money you get, the more money you spend. And in our society, we always see that somebody is better off than us.
Somebody is always got more than us. So we can never actually achieve that target. We're trying very often to impress others, whether it's obviously by driving a fancy car so that other people will go, wow, they can afford a fancy car or that there's just subtle, pride and, achieving things.
We're always looking to others. Our self-worth is external.
And if your happiness lives on the other side of somebody else's approval, you can never really get it.
You can never actually achieve it. So consequently, we're always striving and never getting there. And that is very stressful.

RP: So, what’s the answer to this conundrum?
It’s to stop focusing on money, and focus instead on what you really want from life.

CB: Buddha worked this out two and a half thousand years ago. Nothing I'm saying here is new psychology, theology, philosophy. They've been talking about this stuff for centuries, and they've worked out that what you need to do is stop focusing on the money and start focusing on your joy.
Now, that's not to say money can't bring some joy. If, for example, your children live in Canada and you could afford a flight to go and visit them, that's going to make you happy.
Great. So we can have a positive relationship with money, but if it's focused on having more and accumulating more money without understanding the point of that, that will not lead to well-being.

RP: So, the key question a financial planner asks is this, what’s your money actually for?
It’s a question many people never ask.

CB: Let's use a classic trope of the yacht, the classic cliche of wealth. If somebody comes to a financial planner and says, I want a cash flow to help me to buy a yacht, the planner should ask the question, what is the yacht for?
If the person says, I want to go to the Marina where all the other big yachts are, and I want the stand out in the back at dusk and a glass of champagne so that I can be seen by everybody on my yacht.
That would probably be making you less happy.
If, on the other hand, you say, well, I want to take it to the local reservoir where I'm a member of the sailing club.
I've been there all my life, and I've got all my friends. And when my adult kids come home at the weekend, we all go out together. That's much more of our internal self-worth and that will make you happy.
So the same financial plan could make somebody less happy or more happy. And so the financial planners should be asking that question: what is it for?

RP: Again, money is fundamental, and it’s vital to have good financial advice.
But you also need to see the bigger picture, and that’s what a financial planner can help you do.


Please Note: This video is intended to provide general information only, and it should not be construed as an offer of specifically tailored individualised advice.