Something more significant than financial guidance

I met Bruce and Theresa earlier this year, just before I gave up my Financial Services Authority authorization to offer financial advice. Bruce and Theresa have been my long-term clients for about thirty years. The meeting was scheduled to bid them farewell, end our professional (but strictly business-related) connection, and finalise their retirement preparations.

The discussion, which lasted for the majority of the day, focused primarily on how they would live in retirement, what they could and should do, how they would maintain family ties, decisions about their house, and nearly all other aspects of life in retirement. Their finances were on the agenda and were addressed during this time. Additionally, we discussed their relationship with money, focusing on how to shift their working-life mindset of conservatism and saving to finding the bravery to invest their time and money in making the most of their later days. While I was able to show them mathematically that they had more than enough income and assets to live a happy retirement, we still had to deal with some significant emotional barriers to spending, particularly the worry that they might run out of money.

More than just financial advice, this was. It was essentially “financial life coaching,” a relatively recent profession that views money and life as interconnected and takes a genuinely comprehensive approach. After receiving training from the Kinder Institute of Life Planning in the US in 2006, I began using this strategy. In actuality, coaching-based interventions have made up the majority of my client interventions since then. I’ve discovered that the coaching component is much more valuable to my clients than the financial product arrangements, which, in the context of most financial life plans, should be straightforward, affordable, and commoditized.

Is financial counselling accessible to all people?

I would contend that everyone needs a life coach since I have seen the remarkable transformations that clients may experience thanks to financial life coaching. The service is actually better suited to what Christopher Norton and Ross Honeywill refer to as the “New Economic Order” (NEO) than to what they refer to as “Traditionals” (Honeywill, Ross and Norton, Christopher) (2012). thirteenty-three million markets to one. ), and what James Alexander and the late Robert Duvall referred to as “Freeformers” in their research for the launch of Zopa (the first peer-to-peer lending enterprise) (Digital Thought Leaders: Robert Duvall, published by the Digital Strategy Consulting).

two different consumer types

These distinctions are crucial when considering a fundamental idea about money, which I shall discuss in a moment. Let’s start by comparing and contrasting the two groups. Traditionalists, according to Honeywell and Norton, are primarily focused on the price, the features, and the status. High Status Traditionals are a subgroup of “Traditionals,” for whom status is of utmost importance. Donald Trump is described as the perfect example of a High Status Traditional.

‘Traditionals’ and ‘NEOs’ are contrasted by Honeywill and Norton. The authors claim that NEOs purchase items for their authenticity, provenance, distinctiveness, and discovery. They tend to be graduates, are more likely to start their own businesses, believe that the internet can help them live simpler lives, are knowledgeable about investing (both personally and financially), and detest conspicuous consumption. They are very unique and show this by what they say, what they buy, what they do, and who they do it with.

NEOs were first found and described by Honeywill and Norton in the US in 2012, however Robert Duvall and James Alexander came up with a similar idea in the UK in the early 2000s. Prior to launching Zopa, Duvall and Alexander conducted research that led them to the discovery of a group of individuals they dubbed “Freeformers,” a new category of consumers “characterised by their values and beliefs, the choices they make, and where they spend their money.” They reject being categorised by others and have little faith in the government or big business. They seek to live “genuine” lifestyles and appreciate authenticity in the products they purchase. These individuals, according to Duvall and Alexander, form the nucleus of an IT society that values individuality, freedom of choice, and self-expression.

Two perspectives on money

In my own work as a financial planner, coach, and adviser, I have discovered two main ways of thinking about money. People might either view money as a means to an end or as an end in and of itself. I won’t claim to have done extensive research on this, but I’ve seen enough to draw a fair conclusion: Traditionalists view money as an end in and of itself, but Freeformers view it as a means to an end. (At the risk of upsetting Messrs Honeywill and Norton, and aware that NEOs and Freeformers are not exactly the same, I will refer to both as Freeformers in the remainder of this work because I believe the term is a better and more evocative description of the species than NEOs.)

Generally speaking, Traditionals want to receive the best offers and services in order to stretch their money as far as feasible. They associate wealth psychologically with ego and prestige. Freeformers, on the other hand, utilise their money to express their values, develop their individuality, and be authentic. They do not always spend without regard to price, but their criteria for spending are outlined in terms of authenticity, provenance, design, distinctiveness, and discovery.

mapping monetary and life-attitudes

According to my personal experience, Traditionals respond favourably to financial advice but not to financial planning or coaching, whereas Freeformers begin to value financial advice only when it is accompanied by a specific and individual life and financial plan that was developed through a thorough coaching and planning process.

Or to put it another way, coaching that focuses on both life and money does well with Freeformers because they are aware of the strong connection between the two. Traditionalists, on the other hand, don’t have the same strong ties to life and money, therefore they’re less likely to be receptive to the idea of “financial life coaching.” Traditional consumers make up the main market for financial services companies and packaged goods, particularly those that offer discounts and low rates, features (such flexible pension plans), and status (high risk, high returns). Freeformers are more likely to choose a platform (an online tool to consolidate all of their investments and tax wrappers) and focus on choosing investments that align with their values and objectives.

The range of financial assistance for individuals

You may now obtain a wide variety of aid for your personal finances in the UK and other parts of the world. Financial life coaching is at one end of a broad scale, with financial guidance at the other. Families and individuals can get financial planning, direction, training, mentoring, and education in the interim. Naturally, none of these are mutually exclusive, and some businesses or organisations will offer a combination, so it’s crucial to know what’s available and what each option’s advantages and limitations are.

fiscal guidance

Financial guidance is focused on products. Financial advise is defined as counsel to purchase, sell, or switch a financial product by the Financial Conduct Authority (FCA), which oversees personal financial advice in the UK. Although it is required by law to “know your consumer” and make sure any advise is “appropriate,” the main goal of financial counselling is to sell items.

The FCA must authorise financial advisers and they must follow its regulations.

financial preparation

More complex than financial counselling is financial planning. A plan is created to achieve the client’s short-, medium-, and long-term financial goals. The strategy must be broad and all-encompassing. All aspects of the client’s personal and family finances should be covered, and any recommendations made should uphold the integrity of the entire plan.

A six-step financial planning process is outlined by the Financial Planning Standards Board, which establishes the requirements for the international Certified Financial Planner credential:

Define and establish the client relationship
Gather information about the client, analyse it, and determine its financial situation. Then, you provide recommendations for financial planning and give them to the client.
Implement the advice from financial planning
Examine the client’s circumstance. For more details Mortgage Brokers Melbourne