If you work in financial services then it is going to be important you understand the connection between client wellbeing and financial advice. There is a new advice model emerging. It is Interesting so take 2 minutes of your time and read on.
Some of you will be familiar with the work of Gallup (they developed the science of strengths) and the work of Tom Rath – author of Strengths Finder. It is this work coupled with the science of positive psychology that tells us the future model for delivering advice will be a ‘whole person’ solution and it wont just encompass the financial goals of someone’s life. Let’s learn why by exploring the five essential laws of wellbeing.
- Career Wellbeing – loving what we do each day. Having purpose in our life. A reason to get out of bed every single day.
- Social Wellbeing – having good, positive relationships and a good social circle.
- Financial Wellbeing – taking care of our economic life. Having peace of mind. Enough money for a rainy day.
- Physical Wellbeing – having enough energy to get things done. Eating well, sleeping well and doing exercise.
- Community Wellbeing – liking where we live. Feeling safe.
Traditionally, in Financial Services, we take care of the third element, which is our Financial Wellbeing. More recently, we have heard more about the integration of the forth essential element of wellbeing being, our physical wellbeing. However, which element of all of these five do you think is the most important when it comes to our overall wellbeing?
Tom Rath, author of Strengths Finder, suggests that the most important element of all five elements is Career Wellbeing. The second most important is Social Wellbeing, then Financial Wellbeing followed by Physical Wellbeing and Community Wellbeing.
The research by Gallup suggests that we are not getting the most out of life until we are effectively living in all five of these areas. Fascinating isn’t it?
We know that career wellbeing is an essential element in our overall wellbeing and if we have it, we are more than twice as likely to thrive in life overall. We also know that people who use their top five strengths on a daily basis are 600% more engaged in work and 300% more satisfied with their own lives (Gallup).
So how does all of this relate to the world of financial advice?
Unfortunately, for many people, their career is a negative contributor to wellbeing and will likely impact every other area of their life – including their financial situation.
Overlay this research with the fact that 26% of people see a GP for anxiety and depression coupled with the fact that there has been a 56% increase in mental health issues in the workplace (Minter Ellison) and a new model in advice begins to emerge.
So what does the future financial advice model look like?
Because we are fully integrated, holistic human beings – every part of our life affects each other. Our health and lifestyle choices will impact our financial situation. Our financial situation will impact our overall wellbeing. Our overall life satisfaction will impact our health and lifestyle choices and our financial situation. Every aspect of our life is integrated and so we cannot look at our life in compartments.
Let’s take this one step further and explore what we know about positive psychology.
We know through the work of Barbara Frederickson and her work on positivity that we have a positivity ratio and that ratio is 3:1. That is, three positive thoughts or feelings to every one negative thought or feeling. We spiral up or we spiral down. We also know through the research that we tend to spend more money when we don’t feel good. Surely this must bring wellbeing into the financial conversation? Take this one step further and look at the positivity ratio for a business. Frederickson determines this also to be 3:1. If your business has a positivity ratio of greater than 3:1, it is considered economically sound. Less than 3:1 and it is considered to be financially in trouble. So now we are seeing the correlation between wellbeing and the profitability of a business. Interesting isn’t it?
Overlay all of this research with some findings by Caroline Miller and we see that there are studies now being done in Europe where the nations prosperity is being linked to the levels of hypertension (stress and low wellbeing) to the people that reside within that country. Even more intriguing is the suggestion that doctors and economists will probably need to work together in the future to define economic policy. Taking all of this into account it is no wonder the role of the financial adviser is changing. The advice model of the 21st century must encompass more than just a conversation about money or even health. It needs to be a fully integrated solution.
As an adviser in the new advice based world or as an institution in financial services, how do you begin to integrate every aspect of a client’s life into your solution?
How do you transition your business so it offers advice based on a more holistic approach?