financial wellbeing


The link between your value proposition, financial advice, and financial wellbeing

Financial wellbeing seems to always be linked to one specific word:Money! Money can provide one with wellbeing or at least have a profound impact on the wellbeing of an individual. However, our relationship with money is not limited to the extent that our physiological and security needs are met, but also influences our satisfaction with life.

Society is globally better off today than ever before. As an example, life expectancy is higher, mankind is better educated and the standard of living for most of the world population is higher, yet research shows that mankind does not experience more wellbeing in life.

Wellbeing is generally viewed as the ultimate state of being and has been found to contribute to better relationships, better physical and mental health, an increase in life expectancy and an improvement in the productivity of individuals. A recent survey conducted by Forbes magazine found that the number one thing people want in life is happiness which is a subset of wellbeing. We can therefore infer from this that individuals will place a high value on any value proposition that help them achieve a higher state of wellbeing.

Now, you may ask: What does this have to do with financial advice? Well, it turns out that money is one of the most important contributors to wellbeing. Research conducted by a psychologist by the name of Netemeyer found that financial satisfaction plays a prominent role in the overall wellbeing of people. The question we as financial advisors need to ask ourselves is: does our advice proposition help clients experience financial wellbeing?

A while back we had a webinar on developing a centralised investment proposition and when preparing for this webinar we were surprised and shocked at how few advisors actually have a CIP in their practice. But lets come back to the main point in question: What does financial wellbeing, a CIP, and financial advice have in common? What is the connection between these concepts?

The research shows that the advisors model is changing. Typically the business is still made up of three areas:

  • Alpha generating performance
  • Asset allocation
  • Costs

Many advisors try and deliver value by selecting the best fund for their client. But over time it has become increasingly difficult. There's the rise of robo advisors, an ongoing compliance burden, and then just overall difficulty in beating the market. This means a new advice model must be adopted.

The shift towards making your clients happier, not wealthier

There are some initiatives breaking through the industry, emphasising the importance of financial wellbeing for advisers and highlighting the need to make clients happy. Mostly it is clients behaviour and mindset. Consumers place more focus on trust and soft skills. There's research to prove that focusing on client's financial wellbeing is likely to forge a better relationship and to increase loyalty.

But without a set value proposition in place, how do you implement these concepts in your business?

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